What happened
Geron Corporation (GERN 3.10%), a small-cap clinical-stage biotech, saw its shares rise by as much as 33.8% in early-morning trading today. Although its stock has cooled off somewhat in the interim, Geron's shares are still up by a healthy 14.8% as of 1:48 p.m. EDT Thursday.
The apparent reason for this continued surge is an all-out exodus by short-sellers. As proof, Geron's stock is up on a monstrous 15 times the average daily volume today.

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So what
This purported short squeeze is likely being driven by two factors:
- Johnson & Johnson (JNJ 1.05%) and Geron's blood cancer collaboration for the telomerase inhibitor, imetelstat, is potentially producing unprecedented clinical benefits for patients with both advanced myelofibrosis and myelodyspastic syndromes.
- Geron's stock crossed over the pivotal $5 mark today. By doing so, the biotech's stock is now marginable, and a larger swath of institutional investors can buy its shares.
Taken together, these two factors should be enough to make short-sellers rethink their position.
Now what
Previously, J&J has suggested that it may apply for a regulatory approval for imetelstat in advanced myelofibrosis before year's end. The good news is that imetelstat's overall survival curve for this unmet medical need seems to warrant an accelerated approval -- even without an active comparator arm or a placebo-controlled trial.
The fact of the matter is that myelofibrosis patients have no viable treatment options, and imetelstat appears to be extending their lifespans in a clinically meaningful way.
What does this all mean? My guess is that Geron's stock will continue to tick higher in the months ahead until imetelstat's top-line data are released. If positive -- and the trend is favorable -- I think Geron can easily reach $20 a share. However, this stock remains a high-risk growth play, and investors shouldn't risk more than they are willing to lose.