Shares of Geron Corporation (GERN -0.96%), a clinical-stage developer of drugs designed to treat blood cancers, tumbled by 13% in 2017, according to S&P Global Market Intelligence, marking its second year in a row of double-digit percentage declines despite a strong year for healthcare overall. The impetus for the move lower appears to be growing uncertainty over the company's partnership with Johnson & Johnson (JNJ -0.63%) regarding imetelstat.
Geron was actually outperforming the healthcare sector until August began. That's when the wheels fell off the wagon. The catalyst that really sent shares tumbling was a development update on lead (and only) experimental compound imetelstat, which is being examined in two separate studies for myelodysplastic syndromes (IMerge) and myelofibrosis (IMbark).
With the IMerge study, Geron announced that despite a 13-patient treatment-naive subset showing an increase in durability and rate of transfusion independence, this subset was being expanded by 20 additional patients. Essentially, partner Johnson & Johnson narrowed the target population of the myelodysplastic syndromes study (it was already a 32-patient study), which could allow imetelstat to stand out from an efficacy perspective, but at the cost of a reduced patient pool.
With regard to IMbark, Johnson & Johnson still hasn't made a concrete call on what it'll do moving forward. The latest quarterly filing paperwork with the Securities and Exchange Commission suggests that J&J has the ability to walk away from the deal if imetelstat doesn't live up to expectations, and that clearly has Geron's shareholders worried. Considering that nothing else is in Geron's pipeline, it likely doesn't have the capital to go it alone.
Yet, despite a lack of data to really pore over in 2017, Geron shareholders can lean back on the early efficacy of imetelstat to calm their nerves.
Don't forget that prior to its partnership with J&J, imetelstat became the first clinical treatment ever to incite a complete or partial response in a phase 1 study involving myelofibrosis patients. The only Food and Drug Administration (FDA)-approved drug to treat myelofibrosis is Incyte's, and it does nothing more than alleviate some of the symptoms associated with the disease. Meanwhile, imetelstat offers the potential for actual disease reversal, which could be worth a billion dollars in annual sales alone.
Additionally, J&J's focus on a group of treatment-naive myelodysplastic syndrome patients can still be viewed as a positive, especially if J&J is merely trying to boost imetelstat's chances of being approved by the FDA.
For now, Geron has ample cash on hand and a partner that's skilled in bringing blockbuster drugs to market. Yes, I admit to being biased as a shareholder, but I foresee brighter days ahead.