Breaking Down Geron Corporation's Stock-Tanking Disclosure

Seven sentences is all it took to send Geron (NASDAQ: GERN  ) down as much as 20% today. That was the total length of Geron's disclosure in an 8-K filed with the Securities and Exchange Commission today.

Let's break it down and see what's got investors hitting the sell button.

In November 2012, Dr. Ayalew Tefferi (the "investigator"), of Mayo Clinic, initiated an investigator-sponsored clinical trial to evaluate imetelstat in patients with myelofibrosis and other myeloid malignancies (the "Myelofibrosis IST"). 

Nothing new here. Geron spent most of 2013 waiting for data from Tefferi's investigator-sponsored clinical trial before deciding what to do with imetelstat.

Mayo Clinic has informed Geron Corporation (the "Company" or "Geron") that effective January 22, 2014, the Myelofibrosis IST has been closed to new patient enrollment, and that the remaining patients in the study will continue to receive imetelstat treatment and be followed under the Myelofibrosis IST protocol.

Closing enrollment is new, but not unexpected. This was a proof-of-concept study, investors can't expect the Mayo Clinic to do all the work; Geron is going to have to run a trial of its own. In fact, you could argue that ending enrollment in the trial is helpful because it allows Geron to enroll any new patients that would have gone to Mayo's trial.

The Company believes that approximately 79 patients have been enrolled in the Myelofibrosis IST, including nine patients with blast-phase myelofibrosis and nine patients with refractory anemia with ringed sideroblasts ("RARS"), a subpopulation of myelodysplastic syndromes, and that approximately 20 patients have discontinued from the study since its inception.

It seems like the last part of that sentence is what's setting off investors. Oh no, 20 patients out of 79 have discontinued; that's 25% of the patients!

Except we know nothing about the patients. It's possible patients are dropping out because of safety concerns, which would obviously be bad.

But my guess is most dropped out because imetelstat wasn't working for them. Progression of myelofibrosis can lead to fatal leukemia, so there isn't much reason to continue on a drug that isn't working.

When Geron updated investors at the American Society of Hematology meeting in December, there were nine discontinuations out of the 33 patients that had safety data to draw from, or 27% of the patients, essentially the same as the current dropout rate. Of the nine dropouts, six discontinued because of lack of efficacy. Assuming the same rate, investors have little to worry about with this new disclosure.

Remember, the corollary to 25% dropping out is that 75% of patients stayed in the study, presumably because they had some belief that imetelstat works.

In December 2013 at the American Society of Hematology Annual Meeting, the investigator presented preliminary data from the first two cohorts of patients in the Myelofibrosis IST, including preliminary efficacy data for 22 patients and preliminary safety data for 33 patients.

Nothing new here. It's pretty clear imetelstat is able to send some patients into remission, something we haven't seen from Incyte's (NASDAQ: INCY  ) Jakafi, the only approved drug for myelofibrosis.

Based on this preliminary efficacy and safety data, the Company plans to initiate a Geron-sponsored, multi-center, Phase 2 clinical trial of imetelstat in patients with myelofibrosis in the first half of 2014.

That's the expected next step. Investors are likely getting antsy about the trial beginning, but planning trials takes time.

The Company also believes that the total accrued patients in the Myelofibrosis IST will be adequate for gathering additional and updated safety and efficacy data to support the imetelstat development program.

And that's a good point. Data from the other half of the patients will help determine who should be enrolled, and the dosing regimen for Geron's trial. Speed is clearly important, here; if waiting will improve the likelihood of success for the next trial, investors should be patient.

The Company expects that the investigator will present at a future medical conference additional and updated safety and efficacy data, including longer-term durability, for those patients previously reported and for additional remaining patients in the Myelofibrosis IST.

With data from Geron's trial a year or more away, investors will be following Tefferi around to every conference, hoping for a new nugget to give increased confidence that imetelstat is working.

Data on the rest of the patients are important, but investors should also be looking for long-term data on patients that went into remission. To be clearly better than Incyte's Jakafi, imetelstat not only has to send patients into remission, but it has to keep them there for an extended period of time.

Rocky road
While Geron is down today on seemingly innocuous news, the stock is still up over the last five days. Don't expect this kind of volatility to end anytime soon.

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Read/Post Comments (4) | Recommend This Article (7)

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  • Report this Comment On January 27, 2014, at 11:19 PM, johnson12345 wrote:

    This article is right on. The Phase 2 trial starting at end of 2nd quarter is what was promised, so no change there- if there was any concern, that would be pushed back. What IS new is the 9 new patients with MDS and the 9 new patients with AML- very large population pools compared to just MF. Also, just a week ago the CEO, Dr. Scarlett, updated investors that all patients in remission from the IST and which were discussed at the ASH conference held 3 months ago, were ALL still in remission. That's pretty significant.

    The stock drop may have been a perfect storm of a down market, Teferri missing a plane, and a down biotech group. All news thus far has been extremely positive considering patients are going into remission in MF for the for time ever- under any drug- in a disease that is a 100% short term death sentence. This could be a miracle drug if results continue.

    That ironically was probably the motivation for stopping new enrollment as the Mayo Clinic was bombarded by requests to join in the IST/trial and obviously isn't able to handle hundreds and thousands of needy patients.

  • Report this Comment On January 28, 2014, at 5:01 AM, leviek wrote:

    I'm finally reading something that makes logical sense. I'm really stoked that the trial ramped up to 79 patients so quickly and the dropout rate actually somewhat declined. Also, it was only a couple of weeks ago that The Mayo Clinic said they were sponsoring two new trials, AML and MDS, and, as you put it so well, the MF trial reached it's targeted numbers. I'm going to guess the complete remission group has grown, hopefully commensurate with the % of the original 22 patients in MF. Imagine 18 patients, or the same 22% going into complete remission out of the 79? Now that would be something never done before. Good luck to the cancer patients and Geron holders just need to be patient.

  • Report this Comment On January 28, 2014, at 11:50 AM, goldenthroat wrote:

    Agree with the above comments. Geron not the best at making clear that the end of taking new patients has nothing to do with the potentially near-miracle efficacy of Imetelstat.

  • Report this Comment On January 28, 2014, at 4:59 PM, mruyog wrote:

    Johnson's contention that the Mayo Clinic was "bombarded by requests to join the IST" should be one of the reasons and perhaps the only reason for an abrupt stoppage of enrollment by Mayo because one of the late-stage patient's wife has stated on Yahoo board that a lot of sick patients lined up to join the trial after hearing about the CR(complete recovery)s and PR(partial recovery)s. The patients know very well that there is no other drug that gives a cure and, therefore, must have begged for admission into the program and, since Geron is beginning its own multi-center trial, Mayo must have advised them to join Geron's program which will start in a few months. Admitting more patients also means a lot of cost and tying up resources to Mayo which undertakes a lot of such ISTs.

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Brian Orelli

Dr. Orelli is a Senior Biotech Specialist. He has written about biotech, pharmaceutical, and medical device companies for The Motley Fool since 2007.

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