Geron Reports In-Line Q1 Loss - Analyst Blog
May 05 2014 - 9:50AM
Zacks
Shares of Geron Corporation (GERN) were down
6.09% after the company reported first quarter 2014 results. Geron
posted a net loss of 6 cents per share in the first quarter of
2014, in line with the Zacks Consensus Estimate but narrower than
the year-ago loss of 9 cents. First quarter revenues of $474,000
were below the year-ago revenues of $765,000 and the Zacks
Consensus Estimate of $1 million. A significant decline in expenses
led to the narrower loss.
Quarter in Detail
Revenues consisted entirely of royalties and license fees.
Total operating expenses declined 27.8% to $9.2 million.
Research and development expenses declined 34.9% to $5.2 million
due to reduced personnel-related costs as well as lower costs
resulting from the winding-down of the imetelstat (metastatic
breast cancer and advanced non-small cell lung cancer) and GRN1005
(brain metastases) studies. This was partially offset by higher
costs related to the manufacturing of imetelstat.
Meanwhile, general and administrative expenses declined 15.9% to
$4 million mainly due to lower patent costs and transaction
expenses associated with the Oct 2013 closing of the stem cell
divestiture.
R&D expenses will remain consistent through the rest of the
year unless the full clinical hold on imetelstat is lifted by the
FDA or the agency allows Geron to study imetelstat for other
indications, potentially under a partial clinical hold. Meanwhile,
general and administrative expenses are expected to increase
through the rest of the year due to the purported class action
lawsuits and derivative lawsuit filed against the company.
Geron expects cash operating expenses of $35 million–$40 million
this year. The company expects that new clinical trials of
imetelstat in hematologic myeloid malignancies (like a phase II
study in patients with myelofibrosis) will commence in the first
quarter of 2015 which means study startup costs will be incurred in
the fourth quarter of 2014. The guidance also assumes continued
manufacturing of imetelstat and support of the myelofibrosis IST at
Mayo Clinic.
In Mar 2014, the FDA had placed a full clinical hold on the
company’s only pipeline candidate, imetelstat. Subsequently, a
partial clinical hold was placed on an investigator-sponsored study
on imetelstat. This means that new patients cannot be enrolled in
the study which is being conducted by Mayo Clinic.
The FDA is concerned about the occurrence of persistent
low-grade liver function test (LFT) abnormalities in the phase II
study for essential thrombocythemia/polycythemia vera as well as
the potential risk of chronic liver injury following long-term
exposure to imetelstat. The agency is concerned about the
possibility of reversing these LFT abnormalities.
Mayo Clinic is working on compiling and analyzing the LFT data
which will be submitted to the FDA to address the partial clinical
hold. Geron is also working on gathering data required by the
FDA.
Geron is a Zacks Rank #2 (Buy) stock. We expect investor focus
to remain on Geron’s efforts to get the clinical hold removed. Some
better-ranked stocks in the health care sector include
Alexion Pharmaceuticals, Inc. (ALXN),
Gilead Sciences Inc. (GILD) and Myriad
Genetics Inc. (MYGN). All three are Zacks Rank #1 (Strong
Buy) stocks.
ALEXION PHARMA (ALXN): Free Stock Analysis Report
GERON CORP (GERN): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis Report
MYRIAD GENETICS (MYGN): Free Stock Analysis Report
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