Image source: Getty Images.

What happened

Shares of Geron Corporation (NASDAQ:GERN), a clinical-stage small-cap biotech focused on the development of treatments for cancer, plunged 18% in October based on data from S&P Global Market Intelligence. The reason for the drop can likely be traced to the impatience of investors.

So what

In September, Geron and licensing partner Johnson & Johnson (NYSE:JNJ) (via its subsidiary Janssen Pharmaceuticals) provided updates on two critical studies involving Geron's lead drug, imetelstat.

Within the phase 2 IMbark study for myelofibrosis, Geron and J&J announced that the lower dose of 4.7 mg/kg would be discontinued, but that the higher-dose 9.4 mg/kg warranted further evaluation based on encouraging data trends. This additional data won't be available until the 24-week mark, which means Geron and Johnson & Johnson won't have more to say on IMbark until the second quarter of 2017.

Additionally, the early portion of the phase 2/3 IMerge study for myelodysplastic syndromes was announced as fully enrolled, with top-line data expected to be released during the second quarter.

Long story, investors are getting a bit antsy having to wait for data given that Geron has very little going on its pipeline beyond imetelstat. Having to wait for data exposes Geron to the short-term anxieties and emotions of traders, which looks primarily responsible for the beating it took in October with the entire healthcare sector moving lower.

Image source: Getty Images.

Now what

Now we wait patiently for Geron and Johnson & Johnson to decide the future of imetelstat.

There's little denying that there's a lot of intrigue surrounding imetelstat. In early stage clinical trials in myelofibrosis, imetelstat generated objective responses that in some rarer cases included complete responses. No clinical study for myelofibrosis up to this point has generated a clinical response. In fact, the only Food and Drug Administration-approved drug, Incyte's (NASDAQ:INCY) Jakafi, is targeted solely at reducing the severity of the symptoms associated with the disease, such as enlarged spleen and anemia. Assuming imetelstat proves safe and effective in a phase 3 study, it could gobble up the $850 million to $855 million in sales Jakafi is expected to produce in 2016.

Geron also has the backing of J&J, a company with a pretty good track record of finding first-in-class therapies to license, and a premier sales team. If imetelstat is approved, shareholders should have confidence that J&J will launch imetelstat successfully.

On the other hand, if imetelstat fails there's not much left in the tank for Geron. Failure would likely mean losing well over half of your investment with nothing else even close to be pharmacy shelf ready. Geron's survival in such an instance would be very much at risk.

For investors looking to add a potentially high reward dart throw to their portfolio, and who fully understand the risks involved, Geron could be an intriguing company worth a small nibble here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.