Geron (NASDAQ:GERN) is a small biotech that's experienced plenty of ups and downs. Unfortunately, there have been more downs than ups over the last year. In this Motley Fool Live video recorded on Aug. 18, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss what investors need from Geron going forward.

Keith Speights: Brian, let's talk about Geron really quickly now. This is a small drugmaker that we're frequently asked about. We haven't had an opportunity to talk much about it, but Geron reported its Q2 results this week. What do you think about the company's update and what should investors be watching going forward?

Brian Orelli: This is a company that just keeps on giving, I think it went public in 1996 so it's 25 years old as a public company, but it still doesn't have any meaningful sales. In 2018, it appeared the company might finally be able to break out of its funk, but its partner Johnson & Johnson abandoned the company and the stock really hasn't recovered since then.

It expects to fully enroll a phase 3 clinical trial before the end of this year and the trial studying patients with lower-risk myelodysplastic syndromes, MDS. The data from that clinical trial is expected in the first quarter of 2023. If you're an investor, you got to wait a year-and-a-half, basically, before you see any meaningful binary events.

Geron is cheap enough, its market cap is $400 million. I'm not really going to say it's overvalued, but sitting waiting for 18 months, there may be better places for your capital between now and then, and if you want to look at it again as that binary event approaches, that might make more sense than sitting on a $400 million company waiting for 18 months.

Speights: I was looking at the company's Q2 update and they reported a little over $239 million, I think, in cash and cash equivalents. That should be enough to fund operations through the end of next year. But if we're looking at an 18-month time frame, Geron is probably going to have to raise some more cash before then.

Orelli: Yeah. I don't know exactly what their burn rate is, but I think the biggest issue is that you would rather them raise capital at the highest valuation possible because that will create the least amount of dilution.

If they have to raise $100 million right now, that's going to create 25% more shares and now each one of your shares is that much percentage less than the overall company, and so that creates problems for the share price going up, even if the market cap goes up substantially because there's a lot more shares outstanding.

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