What happened

Shares of Geron Corporation (GERN 2.07%), a clinical-stage biotech company focused on the development of oncology drugs, sank 12% during the month of November, according to data from S&P Global Market Intelligence. The reason for the poor performance, you ask? It looks to be a combination of the company's third-quarter earnings report and collaborative concerns with Johnson & Johnson (JNJ 1.11%).

So what

November began on a sour note after Geron reported its third-quarter operating results. As a company without a Food and Drug Administration (FDA)-approved product, expectations were already pretty low. However, Geron wound up reporting a near-doubling in its net loss, to $6.9 million from $3.6 million.

With clinical studies ongoing for imetelstat, its only drug in development, higher expenses are to be expected. Nonetheless, with no other sources of revenue at the moment aside from its collaboration with Johnson & Johnson concerning imetelstat, Geron's expanding losses can be worrisome. 

A biotech lab technician examining a vial of blood and making notes.

Image source: Getty Images.

The other issue appears to be ongoing concerns that Johnson & Johnson could, at some point in the future, back away from its collaboration with Geron. Risk factors in the company's 10-Q filing with the Securities and Exchange Commission paints a pretty grim picture of what could happen to Geron financially if it's forced to move forward with imetelstat's development while relying on its own wallet.

This isn't to say that J&J is itching to head for the exit, by any means. Its management seems pretty intrigued by some of the early data associated with imetelstat in myelofibrosis and myelodysplastic syndrome. Still, the ease at which J&J could walk away is leaving some shareholders uneasy. 

Now what

Though it wasn't the best month for existing Geron shareholders, it was the long-awaited entry point for yours truly, who finally took a position after watching it on my radar for months.

Despite worries that J&J could walk if the data isn't up to par, I've been personally satisfied with the progress of imetelstat, based on the data we've been given up to this point. In particular, it wound up demonstrating partial and complete response rates in early-stage myelofibrosis patients. No previous drug had ever demonstrated any response against the disease, with the lone approved therapy from Incyte, Jakafi, merely tackling some of the symptoms of the disease, such as enlarged spleen. Assuming the drug proves safe, I believe this data should carry over into success in either myelofibrosis, myelodysplastic syndromes, or both.

As a bonus, Johnson & Johnson brings leadership and marketing expertise to the table if imetelstat is successful. In my view, now is the time for biotech-savvy, patient investors with a high-risk tolerance to consider adding Geron to their portfolios.