2023-07-18 16:47:08 ET
Summary
- After decades of work and delay, Geron Corporation is finally approaching its first approval.
- That should be done by about H1 2024, and although the stock looks properly valued based on revenue projections, there are other factors in play.
- One of these is market enthusiasm, and if that is assumed, these prices are not going to return.
Geron Corporation ( GERN ) has been a broadly upbeat stock since January, when it announced IMerge Phase 3 data in lower-risk myelodysplastic syndromes ('MDS'). The data, which I covered in my January article, was robust. Since then, they have filed an NDA (June 20), which the FDA has 60 days to accept. That means, by August 20, we will have a PDUFA date. Since imetelstat has a fast track designation, this date will be no later than February 20, 2024.
The question is: does the FDA provide for a shorter NDA acceptance period for fast track drugs? I checked out a few examples, and it does not appear that the FDA gives any such pre-acceptance time concession for the few examples I came across. So we will have to wait until August 20, give or take a few days, for a PDUFA date. But the date will be within 6 months of acceptance of the NDA. If all goes well.
The IMerge trial took in ring sideroblast agnostic patients. Sideroblasts are immature red blood cells (erythroblasts) that contain iron deposits in their mitochondria. In MDS, these sideroblasts exhibit a characteristic appearance known as ring sideroblasts. About 25% of post-ESA MDS patients are ring sideroblasts positive, and luspatercept or Reblozyl from BMS is approved for MDS patients with RS only. That means, a vast majority of MDS patients do not get any benefit from reblozyl, the current standard of care - this is where imet with its RS-agnostic data, has a huge possibility. Data shows that in the RS+ patient set, both drug and placebo showed a higher response, but overall, both RS+ and RS- arms compared well with placebo, with statistical significance.
The other difference between imet and reblozyl data is that in higher risk, higher transfusion burden MDS patients, imet did thrice as well, numerically, as reblozyl. 19 out of 56 of these patients had 8-week transfusion independence, which is 33%, while for reblozyl the numbers were 6 out of 66, or 10%.
In my previous coverage, I noted that this translates to an additional 33,000 US patients and $1.2bn in annual revenue.
I also noted the following data:
Data showed that the primary endpoint of 8-week TI was met by 47 patients in the drug arm, which is 39.8%, versus 9 patients in the control arm, which is 15.0%, and this represents a p-value of <0.001, which is highly statistically significant. Patients had a continuous sustained transfusion independence, with 83% of 8-week responder patients showing such a continuous TI. As to a key secondary endpoint of TI duration, Median TI duration was 51.6 weeks for imet versus only 13.3 weeks for placebo, which had a hazard ratio of 0.23 and a statistically significant p-value of <0.001. At least 3 imet patients had TI of more than two years. 33 imet patients, or 28% of n, met the key secondary endpoint of 24-week TI, versus just 2 patients or 3.3% of the placebo group, which has a p-value of <0.001.
Additional data presented in June showed that at one year, ~18% of patients on imetelstat achieved transfusion independence ((TI)) compared to ~2% on placebo (P=0.002).
All this data compares well with reblozyl data. However, note again that reblozyl took in a different set of patients, patients who were RS+. So the data is not truly comparable. Even in the Commands trial, where reblozyl took in RS- patients, data presented just this May showed that it did not do as well as Geron. In and of itself, imet has done superbly well. Over a decade ago, Dr. Ayalew Tefferi told us that it would. His statement, made controversial by its failure to be replicated in a later trial, has now been borne out.
Besides MDS, Geron is also progressing with its IMpactMF study in myelofibrosis patients, and with the current enrollment rate, they should be able to produce interim data in 2024 for this only relapsed/refractory MF trial with overall survival ("OS") as a primary endpoint. Thus, their catalysts are stacked up well, in a manner designed to move the stock up and keep it there. This is a new avatar of Geron, a company that used to be known for delays and catalyst deserts.
Financials
GERN has a market cap of $1.64bn and a cash balance of $409mn, a figure which includes the $213mn they received through a secondary offering in February and the $58mn they acquired through the cash exercise of outstanding warrants.
Research and development expenses for the first quarter of 2023 were $27.2 million, while General and administrative expenses for the first quarter of 2023 were $12.9 million. The G&A figures will increase by perhaps around 30% later this year because Geron currently has 120 employees and plans to add 50-60 more employees by the end of the year in anticipation of a commercial launch. Anyhow, at the current rate, they have enough cash to last them 7-8 quarters, or enough time to get into the first couple of quarters of imet revenue.
GERN stock has a nice 35% retail ownership, and the rest is owned primarily by institutions and by others. Key holders are RA Capital, BlackRock, and a relatively less-known fund called Deep Track Capital.
Bottom Line
Geron Corporation is looking very good right now. The stock is up quite a bit in the last 12 months, and I have been in the stock for a while now. I will double down if the stock ever dips below $2 again, which I doubt is going to happen. Investors new to the stock may want to take a position even at these prices, although some analysts consider GERN's price to be just about right, given its sales projections. Sales projections and valuations are, after all, merely indicative of a stock's actual price, which often runs a bit further than is reasonable, merely on enthusiasm. Geron Corporation investors certainly have seen a lot of that.
For further details see:
Geron Stock: These Prices Are Unlikely To Return