Wall Street calls Geron (NASDAQ:GERN) a strong buy, so there is clearly a good deal of excitement about the stock, but also a good deal of risk. The question of whether to buy shares of the biotech company today isn't an easy one to answer for one good reason: Geron, at least as of now, is essentially a one-drug company. There's no hedging one's bets in this story -- the company's future and the future of your investment depend on what happens with imetelstat, an investigational drug for lower-risk myelodysplastic syndromes (MDS).

A researcher notes clinical trial data on a notepad while another researcher in the background watches.

Image source: Getty Images.

Janssen Biotech, a Johnson & Johnson company, ended its collaboration and license agreement with Geron in 2018 after a strategic review of its portfolio, and as of last year, Geron assumed full responsibility for the clinical development and future commercialization of the drug if approved. The positive here is that Geron gets the whole pie for a drug that could find its niche in an underserved area. MDS is a type of cancer, and the term actually refers to a group of disorders in which the bone marrow doesn't make enough functioning blood cells. According to a paper published in the International Journal of Molecular Sciences last year, patients with lower-risk MDS make up two-thirds of the disease population, and the only treatment approved for their anemia -- erythropoiesis-stimulating agents (ESA) -- results in response rates of below 50%. Geron has reported promising results in a phase 2/3 study of red blood cell transfusion-dependent patients who are refractory or resistant to ESA treatment.

Room for both players

But Geron isn't alone in this space. Bristol-Myers Squibb and Acceleron's luspatercept represents competition, and the companies' biologics license application is currently being reviewed by the FDA, with a decision date set for early April. So eventually there will be options beyond ESA treatment. Still, some say there is room for both players. Yahoo! Finance cited Needham analyst Chad Messer last year as saying imetelstat will show better efficacy in patients with a higher transfusion burden. That factor means each treatment could be used on a slightly different patient population, and this is positive news for Geron.

Now the question is how Geron can push imetelstat through the clinic, and eventually to market, alone. Geron finished the third quarter with $159.3 million in cash and marketable securities, declining license fees and royalties, and a net loss of $15.2 million. Operating expenses more than doubled, and research and development expenses climbed more than 300% to $11.1 million. A paper in JAMA Internal Medicine showed that in a study of 59 new drugs, the median cost of pivotal efficacy trials was $19 million. On top of using resources to finish clinical studies, Geron also has to consider staff and related costs to market the drug, if approved. This doesn't paint a brilliant financial picture for investors.

Results by mid-2022

Geron's technology is attractive. The company's product focuses on inhibiting telomerase, an enzyme linked to the proliferation of malignant cells. And data from imetelstat clinical trials has been encouraging, showing significant transfusion independence and "potential disease-modifying activity," according to the company. Enrollment is ongoing for the Phase 3 trial, and Geron aims for top-line trial results by mid-2022. The company is pursuing a second indication, for myelofibrosis, a rare bone marrow cancer, and in December held an end-of-phase-2 meeting with the Food and Drug Administration to discuss trial results.

One big risk for Geron -- and investors -- is the fact that so much depends on one drug. In case of failure or even lackluster market performance if approved, the source of earnings evaporates. The second problem is, with Geron's earnings reports already looking grim, how will they look as expenses for the imetelstat program mount?

Is Geron a buy?

Geron presents a tempting prospect for biotech investors due to its clinical data and the share-price upside predicted by some analysts. Investors might even wonder if the investigational drug will attract buyers or another licensing agreement in the future. Wall Street analysts might not be overly optimistic, as any positive data from the ongoing clinical trials could spark share gains. But the risks overshadow the potential for gains, making it difficult to recommend buying the shares -- at least until we see how further development of imetelstat affects the company's bottom line.