The Potential for New Data Lifts Geron Corporation in November

Geron shares rocketed higher by 47% last month, but is this move sustainable?

Sean Williams
Sean Williams
Dec 4, 2015 at 11:42AM
Health Care

GERN Chart

Shares of Geron (NASDAQ:GERN), a clinical-stage biopharmaceutical company focused on the development of therapies to treat cancer, rocketed higher by 47% during the month of November, according to data from S&P Capital IQ. The catalyst behind the big move? Primarily its announcement of three big presentations in the first-half of December.

As announced in a press release toward the end of November, Geron will be presenting at the Piper Jaffray 27th Annual Healthcare Conference on Dec. 2, the Oppenheimer 26th Annual Healthcare Conference on Dec. 9, and at the American Society of Hematology's (ASH) annual meeting on Dec. 5. Of the three, it's the ASH meeting on Dec. 5 that holds most of the weight.

ASH is a must-watch conference for Wall Street and investors in stocks focused on treating blood-related cancers. Presentations during ASH are usually where drug developers like to divulge new study data, update data from an ongoing study, or discuss preclinical findings for up-and-coming drugs. The move higher in Geron shares that correlated with this announcement suggests that Wall Street and investors are expecting new and/or positive updates on lead myelofibrosis drug imetelstat.

Geron may have had a fantastic November, but the real question is whether or not this clinical-stage small-cap drug developer has room to run. My suggestion is yes, but I would continue to keep your expectations for growth modest.

The biggest positive Geron has is its licensing deal with Johnson & Johnson (NYSE:JNJ) for imetelstat. Under the terms of the deal, Johnson & Johnson handed over $35 million to Geron upfront and could pay another $900 million in development, regulatory, and sale-based milestones to Geron based on the success of imetelstat. This isn't Johnson & Johnson's first rodeo with a big deal, either. It partnered with a relatively unknown company named Pharmacyclics (which was recently purchased by AbbVie for $21 billion) back in 2011 to develop ibrutinib, which became known as Imbruvica and has the potential to generate $5 billion or more in peak annual sales. Investors are hoping that lightning strikes again for Johnson & Johnson with Geron.

Also working in favor of Geron is the pathway by which imetelstat works on myelofibrosis, a rare cancer of the bone marrow that leads to scarring. The only approved drug on the market to treat myelofibrosis is Incyte's Jakafi, a JAK2 inhibitor. The "problem" with JAK2 inhibitors is they only work by suppressing symptoms associated with myelofibrosis -- they do nothing for the disease itself. Imetelstat has actually demonstrated partial and complete responses in clinical studies, meaning it potentially offers patients a chance at a cure, or at worst a durable response with improved quality of life.

Image source: Geron.

The downside to watch out for? Geron's research had previously been halted due to safety concerns regarding elevated liver values. It remains to be seen if imetelstat can be taken for extended periods of time, and safety data in its studies should be closely monitored in upcoming data releases.

Geron certainly possesses promise, but investors in this stock better exhibit plenty of patience and a high tolerance for risk if they hope to turn a tidy profit.