Why Geron Corporation Shares Were Mauled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Geron (NASDAQ: GERN  ) , a clinical-stage biopharmaceutical company focused on developing therapies to treat hematologic myeloid malignancies, were pummeled, falling as much as 68% after it announced a full clinical hold of its investigational new drug, imtelelstat, which has ongoing studies in essential thrombocythemia and multiple myeloma.

So what: According to Geron's press release before the opening bell this morning, the Food and Drug Administration gave verbal notice to the company yesterday afternoon that the full clinical hold would be "due to the occurrence of persistent low-grade liver function test (LFT) abnormalities observed in the phase 2 study of imetelstat in [essential thrombocythemia] patients and the potential risk of chronic liver injury following long-term exposure to imetelstat. The FDA was also concerned whether or not these abnormalities will be reversible." This clinical hold will likely delay the start of a phase 2 myelofibrosis study, and puts a halt to the ongoing study of essential thrombocythemia and multiple myeloma, which had eight and two patients still being tested, respectively.

Now what: This is a monumental letdown for Geron shareholders as imetelstat is Geron's entire pipeline at the moment -- but it shouldn't be a complete shock. If you recall, in late January we discovered through an 8-K filing that the investigator-sponsored myelofibrosis trial being conducted by the Mayo Clinic and utilizing imetelstat had an inordinately high number of dropouts (20 of 79 patients). If there were a clue that problems may have been on the horizon, I believe that was it. If there's some sort of LFT abnormality that persists following additional study from the FDA, it could present a death knell for the drug. Of course, we have to keep in mind that plenty of drugs have also been removed from clinical hold after a review and allowed to continue their development without a hitch. In the meantime, Geron will need to fall back on its remaining $56 million in cash and ride out the storm, hoping in the back of its mind that the FDA lifts the clinical hold. As for me, I'd suggest keeping a very safe distance from Geron.

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Comments from our Foolish Readers

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  • Report this Comment On March 12, 2014, at 3:30 PM, leviek wrote:

    Please do your homework, again!!!

    Geron has close to $150 million after the stock offering. Also, They didn't stop the trial for Myelofibrosis trial at The Mayo Clinic because it is saving lives.

    They simply put on hold two trials totalling 8 and 2 patients. They probably know taking these patients off for now in ET and MM is not a life threatening thing to do until they get more information on how the Mayo and Geron would respond to raised liver enzimes, over a long time frame, a common issue with many approved drugs.

    In my opinion, the market has overreacted, especially because so many individuals don't understand what a clinical hold entails. This is likely one of the best buying opportunities around, a company that has the potential to cure cancer.

  • Report this Comment On March 12, 2014, at 5:02 PM, zeitgezunt wrote:

    I've been following Geron because my dear cousin has myelofibrosis, and imetelstat looked like her only hope for survival (& maybe a cure!). My stomach dropped when I received the email from Geron this a.m.

    I hope that we will learn why there was a 25% drop-out rate from the Phase I trial & that Geron is able to move on.

    Thanks, zeitgezunt.

    p.s. I've stayed on the sidelines, share-owning- wise

  • Report this Comment On March 12, 2014, at 6:56 PM, AmericanExports wrote:

    Well I find the rather fascinating. For many years I have had a great deal of respect for Motley Fool, but with this article I'm beginning to have doubts about the Fool! Seriously, do you have one analyst ready to back a stock if things seem ok, and then another to bash it if there is a glitch? Case in point, this article by Sean Williams vs. Article by George Budwell (is that a pen name??) on January 30th http://www.fool.com/investing/general/2014/01/30/geron-corpo...

    Fool analyst Budwell explained the non-significance of the study fallout. Yet suddenly today Sean sees it as a retroactive omen. What utter non-sense. I fully agree with commentor teviek that SEAN failed to do his due diligence as a FINANCIAL JOURNALIST when he wrote this KNEE JERK article to distance FOOL from GERN. Really, emotionally reactive unverified facts are useful to whom??

    The sequence of such a Clinical Hold by the FDA can take up to 90 days to resolve (if resolved favorably). If GERN's response is well prepared, and I'm sure they will be, it's more likely to be less than 60 days. GERN is in a position to satisfy whatever the FDA may require.

    As such this could be a decent buying opportunity. I wonder how much farther it will fall as a result of panic, bashing and negative hype before it stabilizes pending the outcome.

    I really feel for those whose very lives are hanging on the edge waiting on Imetelstat trials and approval.

    Looking at it rationally, it seems GERN has a good chance of a positive outcome.

  • Report this Comment On March 12, 2014, at 10:08 PM, AmericanExports wrote:

    In this case what doesn't kill GERN, might actually make it stronger. Having some issue like this properly vetted by the FDA and researchers would be good for those potentially taking and administering Imetelstat (btw, just noticed that Sean didn't know how to spell it! hasty writing indeed). There are a lot of drugs, even over the counter medications (like Acetaminophen) which are not particularly good for the liver, and quite a few require monitoring of liver enzymes - it's not that strange. Remember that Imetelstat passed Phase I safety trials. I would not be surprised if Acetaminophen is actually more dangerous for the liver. How that stuff got through the FDA especially for over the counter use is truly amazing.

  • Report this Comment On March 12, 2014, at 10:18 PM, AmericanExports wrote:

    For reference to my previous post, do a web search for this phrase: Acetaminophen overdose sends as many as 78,000 Americans to the emergency room annually and results in 33,000 hospitalizations a year, federal data shows. Acetaminophen is also the nation’s leading cause of acute liver failure, according to data from an ongoing study funded by the National Institutes for Health.

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