Summary
- Geron recently raised funds, but its stock did not go down.
- This was because of the excellent IMERGE data.
- The company is hiring a sales team in anticipation of commercial launch of imetelstat next year.
Since my coverage of Geron (GERN) on January 4, the company made a successful $198mn secondary offering, and also added to its commercial team in anticipation of imetelstat's launch. I call the secondary successful not only because they were able to raise more money than they originally intended, but also that the stock rose 6% premarket on the day of the offering, which is generally an indication that the market thinks highly of the stock.
It is received wisdom that stocks go down when they dilute, and this is quite logical, in most cases. Sometimes, however, a company does something right, and the stock goes up. If the company makes an offering from such a position of strength in order to acquire some funds that are needed for further critical development, the market will actually reward such a timely offering by allowing the stock to go up. Here, for example, Geron had just announced superlative data, and was on a bullish streak. The stock had crossed the $3 ceiling on January 4, the day they announced the offering. The price they set was also lower than the day's price - at $2.45. Thus, for long-term shareholders who had bought lower than these prices, this wasn't really a dilution but a much needed cash infusion. Thus, Geron was able to get its $198mn fund as well as keep the stock from falling on dilution.
In my previous article, I discussed the data they announced that led to this sort of market enthusiasm. Long-suffering GERN shareholders know how it is to believe in a molecule's promise for years, simply to see their shares go down in value. So when the company finally announced really beautiful data, it must have brought sighs of relief to many shareholders. This data from the IMERGE trial saw imetelstat beat placebo with high statistical significance. Not only so, if you take imet's closest rival in the MDS indication, Bristol-Myers Squibb's (BMY) newly approved Reblozyl, and do a cross-trial comparison, you can see that imet beat reblozyl in every comparable metric. Also noteworthy, patients enrolled in the IMERGE trial were ringed sideroblast agnostic, unlike reblozyl's where only ringed sideroblast positive patients were enrolled. Since these patients only account for 25% of the post-ESA MDS market, imet targets a much larger market than reblozyl.
Thus, this is the strong positive data which placed the company in a position of enough strength to ask for nearly 20% of its market cap in additional dilutive funding, and yet the stock did not go down. Geron's current outstanding shares are 450 million, and the dilution was for 55,876,297 shares and pre-funded warrants to purchase 25M shares, as well as another 12 million shares to its underwriters.
Geron is planning to submit marketing applications for imetelstat in lower-risk MDS in the U.S. and Europe in mid-2023 and H2 2023, expecting market launches in H1 2024 and by the end of next year, respectively. In anticipation of that, the company has added new talent to its team. According to Seeking Alpha :
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Recent additions to the Geron's commercial leadership include Lorraine Shui, former U.S. brand lead for sickle cell marketing at Novartis ( NVS ) (NVSEF), who now serves as the company Vice President, Marketing.
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Former Daiichi Sankyo (DSKYF) (DSNKY) executive Peter Avalos has joined the company as Vice President, Trade and Channel Relations.
To critics, this may sound premature, given that anticipated launch is still more than a year away. Critics may opine that adding to the commercial lineup once the NDA has been submitted, or even accepted, which would give the company 6 months to add to the team. However, note the following :
In light of the positive top-line results from IMerge Phase 3, combined with data from earlier clinical trials, the Company plans to submit an NDA in the U.S. in mid-2023 and a Marketing Authorization Application ((MAA)) in the EU in the second half of 2023. With Fast Track designation for imetelstat from the U.S. Food and Drug Administration for the treatment of adult patients with transfusion dependent anemia due to Low or Intermediate-1 risk MDS that is not associated with del(5q) who are refractory or resistant to an ESA, a request for rolling submission of the NDA was submitted and has been granted.
So imet is going to submit a rolling NDA, and with the fast track designation, approval will be much more fast paced. Thus, this is not a bad idea to start with a few core hires. More importantly, this leverages Geron's bargaining position for any sort of future commercialization deals, because it tells prospective collaborators that Geron is all set to go it alone if need be. I think more than anything else, this is the real reason the company is loudly announcing its new commercial hires.
Interestingly, Endpts notes the following from the conference call in January:
When asked in the investor call, Geron's chief commercial officer Anil Kapur said the biotech was open to talking with potential partners, but didn't comment further.
It will be interesting to see if Geron does decide to partner out with somebody, since emerging pharma commercial efforts are usually unsuccessful. If they plan to partner but are still hiring a sales team, that could be construed as leverage in negotiations. This will be interesting to watch in the next few quarters, especially since their cash position, as I noted in my last two articles, will last them only till 2024. Of course, that was before the fund raising, which will extend that runway to at least the end of 2025.
Bottomline is Geron is taking some smart steps, and the market is plenty upbeat right now. Although the stock is up a lot since last year, I think there's a lot more upside if all goes according to plan.
For further details see:
Geron's Commercial Plans Are Taking Shape