Here's Why Geron Has Been So Volatile This Year

Geron's stock has been on a rollercoaster ride in 2014. Here's why.

Feb 14, 2014 at 3:09PM

The share price of Geron (NASDAQ:GERN) has been volatile, to say the least, during the first six weeks of 2014. Indeed, the biopharmaceutical company has seen its stock range from a low of $4.20 in mid-January to a high of $5.70 by the end of the month -- a gain of more than 35% in just a matter of a week or two! Now, though, it has reversed some of those gains to trade at slightly more than $5 at the time of writing.

Why the volatility?
The main reason for Geron's share price volatility surrounds its sole product candidate, imetelstat, which is a cancer treatment and a potent and specific inhibitor of telomerase (telomerase is an enzyme that enables cancer cells to maintain telomere length, which provides them with the capacity for limitless, uncontrolled proliferation).

The drug was subject to a phase 2 clinical trial for essential thrombocythemia. This condition is characterised by an increased number of platelets in the circulating blood, with its most common complications being tendencies toward blood clotting and/or bleeding, although  a rare consequence can be acute leukemia. The results from the trial were encouraging, and Geron now plans to initiate a phase 2 clinical trial in the first half of 2014 of imetelstat in patients with myelofibrosis, a condition that affects the bone marrow, usually in people over the age of 50.

To facilitate the trial, Geron announced a public offering of 22.5 million additional shares of common stock at $4 per share. The offer closed on Feb. 4, and the bulk of the net proceeds of around $90 million will be used for the trial, as well as further research and development.

Improved third quarter results
The public offering came after Geron reported its third quarter results in November. Geron showed a net loss of $8.3 million compared to a $16 million loss for the comparable 2012 period. However, the company retains a substantial cash balance of $67 million, while operating expenses fell by 46% to $8.9 million, with research and development spending, as well as general and administrative expenses, being down from the comparable quarter in 2012. Geron's fourth quarter results are due out shortly.

Further volatility In oncology stocks
Other relatively small health care companies that are focused on the development of oncology drugs have joined Geron on something of a stock roller-coaster ride so far in 2014.

Ariad Pharmaceuticals (NASDAQ:ARIA) saw its share price rise from a low of $6.40 in early January to a high of $9 less than three weeks later -- a gain of more than 40%! Shares subsequently fell to $6.90 before rising to their current price of $8.70, as an Australian specialty drugmaker was given the rights at the end of January to sell Ariad's leukemia treatment, Iclusig, in that country.

Although no financial details were released, the deal is set to last for seven years and came just a month after Ariad received approval to relaunch Iclusig in the U.S. after addressing safety concerns raised by regulators in the fall.

Meanwhile, investors in Inovio Pharmaceuticals (NASDAQ:INO) have also had an eventful 2014, with shares in the cancer immunotherapy-focused company falling from $2.90 at the start of the year to a low of $2.45 in mid-January before picking back up to $2.70.

While there have been rumors as to which major pharmaceutical companies Inovio is in discussions with regarding potential partnerships (it currently has an exclusive worldwide partnership with Roche to develop and commercialize products from Inovio's prostate cancer and hepatitis B immunotherapy programs), the company has remained tight-lipped and has instead focused on updating the market on progress with pipeline updates. For instance, it recently released details of a preclinical trial involving a new DNA-based cytokine immune activator, interleukin-33, which revealed that when used in combination with optimised DNA vaccines delivered by electroporation, it increased the efficacy and potency of the therapeutic response to the DNA vaccines. This means that interleukin -33 could be an effective immune booster when used in combination with DNA vaccines to generate therapeutic immune responses against cancers in humans.

Looking ahead
Even with their volatility so far this year, Geron, Ariad, and Inovio stocks have the potential for further significant movements throughout 2014 as the companies provide further updates regarding progress in potential cancer treatments.

While there is no date set publicly for the release of Geron's fourth quarter results, they should be due soon and could make an impact on the share price. It could be an exciting year ahead for shareholders in the stock.

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