What happened

After it announced on Jan. 31 that a former, key Johnson & Johnson (JNJ 0.66%) researcher was becoming its chief medical officer, shares in Geron (GERN 4.26%) rallied 27% in February, according to S&P Global Market Intelligence.

So what

J&J disappointed Geron shareholders last fall when it discontinued codevelopment of Geron's imetelstat, a myelodysplastic syndromes (MDS) and myelofibrosis therapy.

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If J&J had agreed to advance imetelstat into trials that could support Food and Drug Administration (FDA) approval, Geron could've received hundreds of millions of dollars in additional milestone revenue, plus potential royalties. However, limited efficacy in myelofibrosis and unconvincing data in MDS weren't enough to maintain J&J's interest.

J&J has given up on imetelstat, but one of its key researchers hasn't. On Jan. 31, the researcher who formerly led imetelstat development at J&J, Aleksandra Rizo, signed on as Geron's chief medical officer following a brief stint at Celgene. Rizo will now be in charge of executing Geron's soon-to-start phase 3 trial program in MDS, and of determining imetelstat's fate in myelofibrosis.

Check out the latest earnings call transcript for Geron.

Now what

Imetelstat failed to reduce spleen volume in myelofibrosis patients by the targeted amount in trials, forcing future development in that indication to focus on overall survival. Overall survival is a tougher bar to clear, so Geron is debating its options in myelofibrosis to conserve cash.

Now it's focusing on MDS, where it believes imetelstat has a clearer pathway to succeeding. A phase 3 study in that indication is scheduled to begin this year. Investors might want to keep some optimism in check, though. R&D expenses are heading higher, and that could mean Geron faces a cash crunch next year. For that reason, it will be important to keep tabs on cash burn throughout 2019.