Geron Corporation (GERN) posted a net loss of 19 cents per share in the third quarter of 2010, a penny below the Zacks Consensus Estimate but a couple of cents above the year-ago loss of 17 cents. Third quarter revenues of $0.5 million were well below the Zacks Consensus Estimate of $1 million and flat from the year-ago period.
Quarter in Detail
Revenues consisted of $203,000 in revenues from collaborative agreements and $343,000 in the form of royalties and license fees. Geron has several license agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies.
Total operating expenses were $18.7 million, 10.9% above the $16.9 million reported in the year-ago period. Research and development expenses increased 2.5% to $13.7 million mainly due to higher costs associated with studies including toxicology studies.
Higher costs reflected costs associated with the phase II development of imetelstat for non-small cell lung cancer, the phase I study of GRNOPC1 for spinal cord injury and investigational new drug (IND) enabling studies with GRNCM1. The higher costs were partially offset by lower manufacturing costs for GRNVAC1.
Research and development expenses should continue increasing with imetelstat scheduled to enter into three more phase II studies by year end. These trials will evaluate imetelstat for the treatment of breast cancer, multiple myeloma and essential thrombocythemia.
Meanwhile, general and administrative expenses increased 43.5% to $5.0 million mainly due to higher consulting costs and stock-based compensation expense.
The company’s current cash burn rate is in the $48 million range, above the $43 million cash burn rate in 2009. Cash burn will be driven by the cost of the oncology trials and the spinal cord injury trial.
We note that Geron became eligible to receive a milestone payment from GE Healthcare UK Ltd. in October 2010 related to the launch of a human cellular assay product for use in drug discovery and toxicity screening.
Neutral on Geron
We currently have a Neutral recommendation on Geron. We consider the company to be a front-runner in the development of anti-telomerase inhibitors. Geron’s telomerase technology platform represents significant commercial opportunity. The successful development of products that target telomeres could very well change the treatment paradigm for several diseases including oncology and chronic degenerative diseases.
Positive catalysts could come in the form of the advancement of Geron’s lead pipeline candidate, imetelstat, into additional phase II studies in 2010. Moreover, Geron could strike a lucrative partnership deal for the development of imetelstat. We also expect investor focus to remain on the presentation of phase II data on GRNVAC1 for acute myelogenous leukemia at the annual meeting of the American Society of Hematology in Dec 2010.
GERON CORP (GERN): Free Stock Analysis Report
Zacks Investment Research
