What: Shares of Geron (GERN -6.17%), a wholly clinical-stage biopharmaceutical company focused on developing imetelstat to treat blood-based malignancies, surged by 65% in November, according to data provided by S&P Capital IQ, after a trio of positive news events shook the stock.
So what: First up was the long-awaited Food and Drug Administration decision on imetelstat. As a refresher, the FDA had placed a full clinical hold on imetelstat in March after the occurrence of persistent low-grade liver function test abnormalities in select patients. The concern at the time was whether or not these abnormalities would be permanent and whether imetelstat had any chance of being taken for extended periods of time. On Nov. 3, Geron announced that the FDA had removed its clinical hold with the understanding that Geron plans to pursue imetelstat's development as a treatment for myelofibrosis and not for essential thrombocythemia or polycythemia vera.
Source: Geron.
Secondly, Geron presented additional data on imetelstat in the form of an abstract just days after the clinical hold was lifted. According to the abstract, which you can read about here, seven patients experienced either a complete or partial response (21.2% of all patients), with six of those seven patients remaining in remission for a median of 9.9 months. Overall a 21.2% partial or complete success rate might sound unexciting, but imetelstat could be the very first myelofibrosis drug to treat the underlying cause of the disease rather than just mitigating its symptoms.
Lastly, a week after releasing the abstract data, Geron announced a worldwide licensing agreement for imetelstat with Janssen Biotech, a subsidiary of Johnson & Johnson. Under the terms of the deal Janssen will pay Geron $35 million upfront with Geron earning the rights for as much as $900 million more in additional milestone and regulatory revenue. The two will also share the costs of developing imetelstat. In short, Geron ended its immediate cash crunch and now has the ability to earn big bucks with its lone developing drug.
Now what: It's been a long time since I could say this, but Geron shareholders finally have something to smile about. The FDA's clinical hold removal is about as good a scenario as investors could have hoped for. Additionally, the abstract release demonstrates consistent response rates from what's been previously reported. In other words, imetelstat may have a real shot at being the first real treatment for myelofibrosis. Not to mention it has a world-class partner to help share the costs of that development now.
And still, I wouldn't buy it. Buying into a company with a single drug is just downright dangerous – even if you have J&J in your corner. There are just too many things that could go wrong here, such as bad or mediocre late-stage data, an FDA complete response letter, a poor launch if approved, and so on. I'm not a fan of biotech companies putting their eggs in one basket, and that's exactly what Geron is doing with imetelstat. With a market value nearing $600 million again, I believe Geron may be fully valued, if not overvalued, here.
