What happened

Shares of Geron Corporation (NASDAQ:GERN), a clinical-stage biotech developing a cancer therapy, popped this morning after the company included a pipeline update with its fourth-quarter earnings report after Friday's bell. The improved outlook for imetelstat has pushed the stock 28.8% higher as of 11:29 a.m. EDT on Monday.

So what 

After losing $27.9 million last year, Geron Corporation finished December with $109.2 million in cash and marketable securities. As a precommercial biotech, though, investors were a lot more concerned with the company's lead candidate.

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Image source: Getty Images.

Friday's update didn't tell us imetelstat hit its main goal in the IMbark trial, but it's the next best thing. Geron's collaboration partner, Johnson & Johnson (NYSE:JNJ), recently completed its third internal data review of the two-arm study with high-risk myelofibrosis patients.

Efficacy outcome measures were in line with previous observations and there weren't any new safety signals to report. At a median follow-up period of 19 months, investigators didn't notice a significant overall survival benefit between patients given a 9.4 mg/kg dosage and those randomized to receive 4.7 mg/kg.

Now what

Johnson & Johnson still needs to decide whether it will maintain license rights for imetelstat and continue its development. The healthcare behemoth is building out its oncology department, and it's hard to imagine the company walking away now.

The IMbark trial will probably begin an overall survival assessment by the end of the second quarter. Geron expects Johnson & Johnson to make a decision by the end of the third quarter this year.

If J&J decides it wants imetelstat, Geron still has some options. The company can chip in 20% of expenses going forward in return for a royalty percentage that tops out in the low 20s or let J&J do all the heavy lifting in return for a percentage that tops out in the mid-teens.

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