Geron Corp. (GERN) posted a net loss of $16.6 million, or 18 cents per share in the first quarter of 2010, lower than the Zacks Consensus Estimate and the year-ago loss of 20 cents. 

Revenues for the first quarter increased to $918,000. Revenues consisted of $225,000 in revenues from collaborative agreements and $693,000 in the form of royalties and license fees. Geron has several license agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies. The company expects annual revenues in the range of $3 million. 

Total operating expenses were $17.4 million, slightly above $17.1 million reported in the year-ago period. Research and development expenses declined 1.6% to $13.5 million mainly due to lower manufacturing costs for GRNVAC1. This was offset by increased costs associated with preclinical studies of GRNOPC1. 

Meanwhile, general and administrative expenses increased 14% to $3.9 million mainly due to higher patent legal costs. 

Going forward, we expect research and development expenses to increase as the company progresses with the development of imetelstat. The candidate will be in four phase II studies during the year. 

The company expects cash burn in the range of approximately $50 million in 2010, up from the $43 million cash burn rate in 2009. Cash burn will be driven by the cost of the oncology trials and preparation for re-initiation of the spinal cord injury trial.
Geron provided an update on its pipeline candidate, GRNOPC1, a human embryonic stem cell (hESC)-based product, which is being developed for the treatment of spinal cord injury. Geron stated that it expects to re-initiate studies with the candidate which is currently under clinical hold while the US Food and Drug Administration (FDA) reviews data on the candidate. The trail is scheduled to start in the third quarter of 2010.
While Geron intends to develop GRNOPC1 initially for spinal cord injury, the company has plans to study the candidate for other neurological diseases, including multiple sclerosis, stroke and Alzheimer’s disease.
Besides GRNOPC1, Geron has other pipeline candidates that are being developed for the treatment of cancer and chronic degenerative diseases. Imetelsat, the company’s lead anti-cancer drug, will enter a randomized phase II study in non-small cell lung cancer – patient enrolment will commence in June 2010. 

Phase II studies with imetelstat in multiple myeloma, breast cancer and essential thrombocythemia should commence later this year. Imetelstat is also being tested in patients with chronic lymphoproliferative diseases and solid tumor malignancies. 

The company also has a cancer vaccine, GRNVAC1 that is being tested in patients with acute myelogenous leukemia. Follow up data from an ongoing phase II study will be available later this year, following which Geron will announce its plans for further development. 

We currently have a Neutral recommendation on Geron. Although we are impressed with Geron’s technology platforms, we note that the company remains several years from achieving profitability given the lack of any marketed product in its portfolio and the early stage nature of its pipeline.
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