Introduction
From the formation of their collaboration in November 2014, Geron (NASDAQ:GERN) and Janssen, Johnson and Johnson's (JNJ) pharmaceutical arm have moved steadily forward in their efforts to prove the beneficial impact of imetelstat as a critical lifesaving therapy in the battle against certain cancers. Step by methodical step, they have advanced their understanding of imetelstats detailed clinical merits. Two clinical trials are gathering and assessing necessary data and have undergone formal clinical reviews.
Today they announced another advance. Insofar as it involves still more data collection, the market is showing frustration with the pace of progress. Shareholders can only wince and go forward. Todays announcement constitutes progress, albeit progress of the frustrating type for those impatient for final resolution.
Last night's press release from Geron, followed by this morning's conference call, provided new data points to consider in the lingering imetelstat saga. The conclusion I drew from the carefully scripted presentations was that all's well for those who have plenty of time and are willing to wait patiently while this multipart drama unfolds on its own time schedule.
My initial introduction to this latest bit of news was quite disconcerting. This morning I was checking out the stocks I follow and saw that Geron had taken a big hit. Then I saw a SA news headline, "Geron down 13% in early trading on extended timeline for imetelstat study, risk that Janssen will bail".
Oh no, I thought; the worst is happening. Then I realized after reading the release that this was nothing more than business as usual in the imetlstat world. Any statement about Janssen potentially bailing was mere surplusage. As is true in most, if not all such deals, the big dog has a retained right to bail. It is a background fact, akin to gravity...no need to keep repeating it, particularly in a news item. I guess the point that gave it piquancy was the stock price drop, suggesting something more was afoot. Not so.
Let me address the basics of the announcement and its significance as I see it.
First, the Imerge trial addresses patients with low-to-intermediate risk myelodysplastic syndromes (MDS) who failed to respond to prior treatment with an erythropoiesis-stimulating agent.
Janssen has analyzed data from the Imerge trial and has determined that a subset of 13 patients show positive results at a higher rate than the remaining group of patients. These 13 patients share the commonality that they had not received prior treatment from "... a hypomethylating agent (HMA) or lenalidomide".
Janssen further determined that it should enroll an additional cohort of 20 patients to bring this subset of patients to 30, the number that it considers sufficient for its next analysis.
Rather than being negative or neutral, I consider this decision to be on the whole positive. It shows that Janssen is actively interested and engaged with the imetelstat data.
It also shows that this is going to be a lengthy process. The timing is uncertain but the press release states that active recruitment will begin in Q4, 2017. Certainly the work of recruiting, enrolling, processing and then analyzing data from 20 additional patients implies a considerable time lag.
In the written press release Geron states:
Detailed results for the original 32 patients in Part 1 of IMerge, including key secondary endpoints of hematologic improvement and rate of RBC-TI lasting at least 24 weeks, as well as duration of response and detailed safety information, will be submitted for presentation at a major medical conference. [Emphasis added]
The more Janssen interacts with imetelstat in the public sphere, the more encouraged I become that it will proceed to bring the therapy to market. Certainly its previous announcement of imetelstat as future blockbuster in its pipeline was a big positive indication. I take its intention to present Imerge results at a major medical conference in the same vein.
Janssen's Phase 2 IMbark trial, assessing imetelstat in patients with treatment-resistant intermediate/high risk myelofibrosis (MF) is on an entirely different track.
The IMbark trial will continue without modification. According to the press release:
Janssen will conduct an internal data review in Q1 2018 to enable a protocol amendment to allow long-term treatment and follow-up. Janssen will notify Geron earlier, probably in Q4, whether it intends to pursue development of imetelstat for any indication after a primary data analysis is done on IMbark (should start no later than the end of Q3)
As I see this, today's CC simply confirms the ongoing process to which Janssen has committed itself. As far as any tell on the efficacy of imetelstat, it has to be more on the positive side than the negative.
Although, when one looks at a five day chart of Geron's stock, it doesn't look positive.
GERN Price data by YCharts
What caused this violent stock reaction? I suspect it was impatience.
For those who are timing imetelstat's progress towards continuation by Janssen and ultimately FDA approval, today was something of a disappointment. Optimists have hoped that Janssen would take its next big step forward by issuing a continuation decision under its Geron collaboration agreement sometime in 2017 or early in 2018.
The following language from its press release suggests to me that Q3, 2018 is a more likely target date:
Continuation Decision
The Joint Steering Committee has agreed that the timing of the protocol-specified primary analysis for IMbark will begin upon the earlier of either a pre-specified number of deaths occurring in the trial or the end of the third quarter of 2018. Following completion of this primary analysis, which includes an assessment of potential survival benefit associated with imetelstat treatment, Janssen will notify Geron whether it elects to maintain the license rights and continue the development of imetelstat in any indication, i.e., the Continuation Decision.
Generally my own optimism for Geron's imetelstat prospects focuses more on the likelihood that Janssen proceed, rather than any expectation that it do so on an expedited basis. However, today's drop suggests that I may be in the minority on that score.
Geron had cash and equivalents of $121MM according to its Q1, 2017 10-Q. This was stated as sufficient for expected needs for at least one year. However, insofar as net cash expended during Q1, 2017 was <$8MM, Geron should not face a cash crunch if indeed Janssen waits to issue a continuation decision until 2018.
At the close of Geron's 8/1/2017 call, Geron announced that because of the proximity of its upcoming earnings release, it would not do an earnings CC this quarter. Rather, it said it would issue its earnings press release. Geron will next address investors at its presentation to the Cantor Fitzgerald Healthcare Conference taking place September 25-27, 2017.
Geron is soldiering boldly ahead as it works to bring the development of imetelstat to fruition. There are no guarantees in this drug approval business. However, Geron has managed to put itself on a path where it has reasonable prospects for a highly remunerative future.
Geron offers a binary bet on its imetelstat cancer therapy. Although I know from researching Geron articles that it has other irons in the fire, I also know these other irons have no current impact on Geron's stock price.
Today's announcement seems to have disturbed the market. I submit that it should not have done so. When Johnson and Johnson boasted about imetelstat's future prospects, it was referring to the year 2021.
Anyone who has counted on this playing out as near term story has been fooling themselves. Geron appears to have the cash resources to follow this to its conclusion. Investors in Geron should likewise consider that they are in it for the long haul.
Disclosure: I am/we are long GERN.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Read more:
Geron: SLOW Progress - Seeking Alpha
- Progress Lighting - Home - December 22nd, 2016 [December 22nd, 2016]
- Home - Progress Lighting Outlet - Authorized Progress Dealer - January 13th, 2017 [January 13th, 2017]
- What does progress mean? - Definitions.net - January 13th, 2017 [January 13th, 2017]
- Progress Fire Company Harrisburg, PA - January 13th, 2017 [January 13th, 2017]
- Homepage Center for American Progress - January 13th, 2017 [January 13th, 2017]
- Progress being made on possible grocery store co-op in Winston-Salem - myfox8.com - February 7th, 2017 [February 7th, 2017]
- Nioh Review-in-Progress: FromSoftware's Formula Evolved - Shacknews - February 7th, 2017 [February 7th, 2017]
- Deutsche Bundesbank Cites Progress With Blockchain-Based Settlement - CryptoCoinsNews - February 7th, 2017 [February 7th, 2017]
- IMF: Greece's debts are still unsustainable despite progress - The Seattle Times - February 7th, 2017 [February 7th, 2017]
- Think Progress Editor Mocks Audi for Equal Pay Super Bowl Ad - Breitbart News - February 7th, 2017 [February 7th, 2017]
- Progress apparent on defense - Pittsburgh Steelers - Steelers.com - February 7th, 2017 [February 7th, 2017]
- IMF: Greece's Debts are Still Unsustainable, Despite Progress - Voice of America - February 7th, 2017 [February 7th, 2017]
- Can US disrupter-in-chief trigger some progress? - Jerusalem Post Israel News - February 7th, 2017 [February 7th, 2017]
- The Cost of Progress - Slate Magazine - February 7th, 2017 [February 7th, 2017]
- Cavaliers' pitching rotation a work in progress | Cavalier Insider ... - The Daily Progress - February 8th, 2017 [February 8th, 2017]
- High schoolers create 'zines for progress' with WolfsonianFIU - FIU News - February 8th, 2017 [February 8th, 2017]
- Cries of 'dictator' show Pope Francis is making progress - Crux: Covering all things Catholic - February 8th, 2017 [February 8th, 2017]
- Officials: City is making progress in effort to address opioid crisis - The Union Leader - February 8th, 2017 [February 8th, 2017]
- IN OUR VIEW: Work Ready in Progress for Carter - The Independent - February 8th, 2017 [February 8th, 2017]
- BP's Earnings Keep Showing Progress, Even if the Headline Results Don't Say So - Motley Fool - February 8th, 2017 [February 8th, 2017]
- Women's Progress in the Boardroom Took a Hit in 2016 - Inc.com - February 9th, 2017 [February 9th, 2017]
- Blight Elimination Progress, Uplifting - MyWabashValley - February 9th, 2017 [February 9th, 2017]
- Rauner 'heartened' by progress in Springfield - Bloomington Pantagraph - February 9th, 2017 [February 9th, 2017]
- David Johnson showed off the insane progress he's making in rehab from his knee injury - USA TODAY - February 9th, 2017 [February 9th, 2017]
- Through the looking glass: Tower view showcases progress on Amazon's unique biospheres - GeekWire - February 9th, 2017 [February 9th, 2017]
- Britney Spears Says Niece Maddie Is 'Making Progress' After ATV Accident: 'Let's All Keep Praying' - PEOPLE.com - February 9th, 2017 [February 9th, 2017]
- Progress on vet's Mustang to be unveiled - Indianapolis Star - February 9th, 2017 [February 9th, 2017]
- Evgeni Malkin making 'progress,' could return Saturday in Arizona - Pittsburgh Post-Gazette - February 9th, 2017 [February 9th, 2017]
- Forecasters See Slow Progress in Labor-Market Measures Favored by Trump Administration - Wall Street Journal - February 9th, 2017 [February 9th, 2017]
- 'Paper boys' were the lifeblood of The Daily Progress - The Daily Progress - February 10th, 2017 [February 10th, 2017]
- Cliffs Natural Resources Is Showing a Lot of Progress on Its Return to Profitability - Motley Fool - February 10th, 2017 [February 10th, 2017]
- ATA says states' telemedicine progress a mixed bag ... - FierceHealthcare - February 10th, 2017 [February 10th, 2017]
- Seltzer's Notebook | Colangelo Encouraged by Sixers' Progress - Sixers.com - February 10th, 2017 [February 10th, 2017]
- The Trump administration can't entirely roll back progress on climate change here's why - Washington Post - February 10th, 2017 [February 10th, 2017]
- Colts position review: OL showed legit progress, but work remains - Indianapolis Star - February 10th, 2017 [February 10th, 2017]
- Egyptian Economy Making Slow, Tentative Progress - Voice of America - February 10th, 2017 [February 10th, 2017]
- ATA: States show mixed progress with telemedicine | Healthcare Dive - Healthcare Dive - February 11th, 2017 [February 11th, 2017]
- Louisville City notes: McCabe making progress - The Courier-Journal - February 11th, 2017 [February 11th, 2017]
- Jeremy Lin: Progress but no timetable - NetsDaily - February 11th, 2017 [February 11th, 2017]
- Marginal progress for Turkish-backed forces in north Syria - LA Daily News - February 11th, 2017 [February 11th, 2017]
- Jimmy Cheek: UT chancellor appreciative of hard work, progress on journey - Knoxville News Sentinel - February 12th, 2017 [February 12th, 2017]
- Syria Regional Crisis 2016 Emergency Appeal - Progress Report - Reliefweb - February 12th, 2017 [February 12th, 2017]
- CWLP officials: Bailout repayment would set back progress - The State Journal-Register - February 12th, 2017 [February 12th, 2017]
- Pistons' Johnson making halting but definite progress - The Detroit News - February 12th, 2017 [February 12th, 2017]
- Clairton works: Real progress is coming to the former steel town - Pittsburgh Post-Gazette - February 12th, 2017 [February 12th, 2017]
- The Democrats' Strategy: Hindering Progress For Partisan Politics - Daily Caller - February 13th, 2017 [February 13th, 2017]
- The surprising progress stoppers on the Dallas Cowboys defensive line - Cowboys Wire - February 13th, 2017 [February 13th, 2017]
- Gender Progress in Ballet - Huffington Post - February 13th, 2017 [February 13th, 2017]
- Foyt pleased with progress, regrets lack of time - Motorsport.com, Edition: Global - February 13th, 2017 [February 13th, 2017]
- Progress Made, but Threat Lingers at California's Oroville Dam - Wall Street Journal - February 13th, 2017 [February 13th, 2017]
- Adele, Beyonc, and the Grammys' Fear of Progress - The Atlantic - February 13th, 2017 [February 13th, 2017]
- North Korea Claims Progress on Long-Range Goal With Missile Test - New York Times - February 13th, 2017 [February 13th, 2017]
- How Travel Bans Can Impede America's Progress - Forbes - Forbes - February 13th, 2017 [February 13th, 2017]
- Jeff Sessions' appointment threatens decades of civil rights progress - The Hill (blog) - February 14th, 2017 [February 14th, 2017]
- Ionis Earns $75M Milestone from Bayer for Progress of Antisense Drug Program - Genetic Engineering & Biotechnology News (press release) - February 14th, 2017 [February 14th, 2017]
- Guilford Schools annual report shows mixed results on progress - Greensboro News & Record (blog) - February 14th, 2017 [February 14th, 2017]
- Sniper Elite 4 review in progress - PC Gamer - February 14th, 2017 [February 14th, 2017]
- For Honor Review In Progress - GameSpot - February 14th, 2017 [February 14th, 2017]
- China's military progress challenges Western dominance, says IISS - Deutsche Welle - February 15th, 2017 [February 15th, 2017]
- PFW in Progress Recap 2/14: Patriots Offseason Outlook | New ... - Patriots.com - February 15th, 2017 [February 15th, 2017]
- Daily Progress, chamber establish regional business Hall of Fame - The Daily Progress - February 15th, 2017 [February 15th, 2017]
- Huntsville-based Progress Bank to acquire Birmingham's First Partners Bank - Birmingham Business Journal - February 15th, 2017 [February 15th, 2017]
- City, UF sign partnership for progress - Gainesville Sun - February 15th, 2017 [February 15th, 2017]
- California officials lift evacuation order for 200000 threatened by damaged dam - CBS News - February 15th, 2017 [February 15th, 2017]
- 5G progress at Ericsson could help enterprises work worldwide - Computerworld - February 16th, 2017 [February 16th, 2017]
- Officials making 'great progress' on California dam repairs, remind residents to stay vigilant - Fox News - February 16th, 2017 [February 16th, 2017]
- Halo Wars 2 Review in Progress - IGN - February 16th, 2017 [February 16th, 2017]
- CUGNON: Forward progress - Yale Daily News (blog) - February 16th, 2017 [February 16th, 2017]
- F-35 Program Makes Significant, Solid Progress, Official Says - Department of Defense - February 16th, 2017 [February 16th, 2017]
- Lenovo's data center ambitions remain work in progress following Q3 results - ZDNet - February 16th, 2017 [February 16th, 2017]
- PFW in Progress Recap 2/16: Free Agency and Potential Patriots - Patriots.com - February 16th, 2017 [February 16th, 2017]
- S&P 500: 'Blow-off' Phase in Progress - DailyFX - February 16th, 2017 [February 16th, 2017]
- Combine invites are another sign of progress at Michigan - Big Ten ... - ESPN (blog) - February 16th, 2017 [February 16th, 2017]
- Halo Wars 2 review in progress - PC Gamer - February 17th, 2017 [February 17th, 2017]
- 'Hero' film produced just for Charlottesville featured the mayor, The Daily Progress - The Daily Progress - February 17th, 2017 [February 17th, 2017]
- Republicans' health care overhaul still a work in progress - Press Herald - February 17th, 2017 [February 17th, 2017]
- Trump Boasts Of 'Incredible Progress' In 4 Weeks Of Presidency - NPR - February 17th, 2017 [February 17th, 2017]
- Donald Trump touts promise progress at press conference - PolitiFact - February 17th, 2017 [February 17th, 2017]
- Mild winter helping crews make significant progress on East End Connector - WRAL.com - February 18th, 2017 [February 18th, 2017]
- Committee updates Legislature on precinct consolidation progress - Chicago Tribune - February 18th, 2017 [February 18th, 2017]