3 Things Investors Need to Watch With Geron

Geron Corporation (NASDAQ: GERN  ) is on a roll.

Up until yesterday's close, shares of the biopharmaceutical company have more than doubled in just the last three months. Nearly 37% of those gains came since mid-September. Shares are up a hefty 27% this morning on news that investment bank MLV & Co. has started coverage on the stock with a "buy" rating. Can the hot streak continue, or will Geron's surge taper off? Here are three things that investors interested in the company need to watch closely. 

1. Mayo Clinic study
The most important thing to focus on for the immediate future is the investigator-sponsored mid-stage study of Geron's imetelstat currently under way by Dr. Ayalew Tefferi at Mayo Clinic. Tefferi initiated the study in November 2012, with enrollment of the initial cohort of 11 patients with myelofibrosis wrapping up in March. Enrollment of the second cohort of 11 patients completed in May.

Source: Geron Corporation 

Mayo Clinic's Institutional Review Board also approved a third cohort a few months ago. These additional 11 patients have what is known as blast-phase myelofibrosis, an acute form of leukemia. 

Initial results from this study are expected to be announced at the American Society of Hematology, or ASH, meeting in December. Key things to look for in these results include the overall response rate, as well as the percentage of patients achieving partial or complete remission. Observations about the safety profile of imetelstat will also be critical, particularly since Geron encountered some concerns about liver biochemistry abnormalities in the past. 

2. Internal phase 2 myelofibrosis study
If the Mayo Clinic trial goes well, expect Geron to kick off its own mid-stage study of imetelstat in treating myelofibrosis in early 2014. Assuming it does so, the company will join a handful of others hoping to eventually compete against Incyte's (NASDAQ: INCY  ) Jakafi, which is currently the only drug approved to treat the disease.

Cell Therapeutics (NASDAQ: CTIC  ) stands as one of those potential rivals. A phase 3 study is under way with another one planned for pacritinib, a JAK2 inhibitor like Jakafi. The planned study, which Cell Therapeutics expects to initiate by the end of this year, will be a head-to-head comparison of pacritinib against Jakafi.  

Gilead Sciences  (NASDAQ: GILD  ) also has a JAK2 inhibitor ready for phase 3. The company bought YM Biosciences late last year, picking up momelotinib. Gilead's pipeline includes another drug targeting treatment of myelofibrosis, monoclonal antibody simtuzumab, which is in phase 2 trials. When the acquisition of YM was announced, Gilead indicated that phase 3 studies of the smaller biotech's drug would begin in the second half of 2013. 

Sanofi (NYSE: SNY  ) appears to be in best position to earn the second-to-market distinction in myelofibrosis behind Jakafi. The company's fedratinib met its primary endpoint in a pivotal phase 3 study in May. Like the other drugs mentioned, fedratinib is a JAK2 inhibitor.

Geron's approach with imetelstat differs from these other drugs, though. Imetelstat inhibits telomerase, an enzyme that allows cancer to replicate. The company believes that its drug has the potential for disease modification with myelofibrosis. If the internal phase 2 study helps provide evidence of this, Geron could be in a league of its own.

3. Cash
That internal clinical study might require more cash than Geron has on hand right now. The company is projecting a cash burn in 2013 of $37 million -- up $4 million from earlier predictions. Geron expects to end the year with $50 to $55 million in cash and investments.

If the internal phase 2 study of imetelstat ends up being bigger than anticipated, more money will be needed. That typically means one of two options: a secondary offering (which leads to share dilution) or bringing in an outside partner. Either way, this is something investors should watch. 

Looking ahead
So far, the studies of imetelstat have been small. It's really too early to know for sure how well Geron will do over the long run. 

There is plenty of potential, though. If the Mayo study and Geron's internal study show positive results, expect even higher market interest than we've seen this year. While the three things listed above are important for investors to watch, I'd throw in one more thing to watch: Geron's stock.

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