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Geron (GERN) Q3 Loss Narrower Than Expected, Sales Miss

Geron Corporation GERN reported a loss of 4 cents per share in the third quarter of 2017, which was narrower than the Zacks Consensus Estimate of a loss of 5 cents. In the year-ago quarter, the company had recorded a loss of 2 cents.

Quarterly revenues were significantly down to $0.16 million from $5.11 million in the year-ago quarter. However, revenues in the year-ago quarter included a $5 million upfront payment from Johnson & Johnson’s JNJ subsidiary Janssen related to a licensing agreement. Revenues also missed the Zacks Consensus Estimate of $0.59 million. Revenues comprised royalty and license fee revenues received under various non-imetelstat license agreements.

Shares fell 1.8% in after-hours trading on Wednesday. However, so far this year, Geron’s shares have outperformed the industry, rising 4.9% during the period compared with the industry gain of 2.7%.

Research and development (R&D) expenses declined 39.5% to $2.6 million due to lower costs for the proportionate share of clinical development costs for imetelstat. General and administrative expenses rose 2.1% to $4.7 million due to increased stock-based compensation.

The company ended the quarter with $112.7 million in cash and investments compared with $117.2 million at the end of the second quarter.

Pipeline Update

Geron develops anti-cancer therapies based on telomerase inhibitors. The company’s sole pipeline candidate, imetelstat, is in mid-stage studies and is being evaluated in hematologic myeloid malignancies like myelofibrosis (MF) and myelodysplastic syndromes (MDS). Geron is conducting the studies in collaboration with J&J.

Last year, Janssen announced unfavorable findings from the planned internal reviews of initial data from two studies of imetelstat — IMbark (phase II) for the treatment of MF and IMerge (phase II/III) for the treatment of MDS.

Following an internal review in April this year by J&J, the two studies, IMbark (phase II) on MF and IMerge (phase II/III) on MDS, evaluating imetelstat were continued unmodified.

In the fourth quarter, 20 more patients will be enrolled in part 1 of IMerge in refined MDS indication to confirm the clinical benefit and safety observed earlier. Discussions are currently on with the FDA on data package and proposed refinements to the trial design for part 2 of IMerge. If J&J decides to proceed to Part 2 of IMerge (a larger, 170 patient, phase III study), patient enrollment is expected to begin in the fourth quarter.

Last month the FDA granted fast track designation to imetelstat based on data from part 1 of IMerge.

Meanwhile, for the IMbark study, the clinical benefit and a potential overall survival benefit observed during internal review, supported continuation of thestudy without modifications. Data from the study is expected in the third quarter of 2018.

Geron Corporation Price, Consensus and EPS Surprise


Geron Corporation Price, Consensus and EPS Surprise | Geron Corporation Quote

Zacks Rank & Stocks to Consider

Geron currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the pharma sector includes Agenus Inc. AGEN and Exelixis, Inc. EXEL. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Agenus’ loss estimates remained stable at $1.17 for 2017 and narrowed from $1.40 to $1.36 for 2018 over the last 30 days. The company delivered a positive earnings surprise in three of the four trailing quarters with an average beat of 4.27%.

Exelixis’ earnings per share estimates remained stable at 26 cents for 2017 and increased from 63 cents to 64 cents for 2018 over the last 30 days. The company delivered positive earnings surprises in all the four trailing quarters with an average beat of 543.59%. The company’s shares are up 62.5% so far this year.

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