Zacks_Analysts' Blog : Narrower Loss at Geron - Analyst Blog

Geron Corporation (GERN) posted a net loss of 16 cents per share in the third quarter of 2011, narrower than the Zacks Consensus loss Estimate of 18 cents and the year-ago loss of 19 cents. Third quarter revenues of $220,000 were below the Zacks Consensus Estimate of $1 million and the year-ago revenues of $546,000.

Quarter in Detail

Revenues consisted entirely of royalties and license fees. Geron has several license agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies. The company did not recognize any revenues from collaborative agreements in the reported quarter.

Total operating expenses were $20.2 million, 8% above the year-ago period. Research and development expenses increased 19.0% to $16.3 million due to higher clinical drug product purchases, higher expenses related to imetelstat and GRNOPC1 and start-up activities related to GRN1005.

Imetelstat is currently in four phase II studies. While two large randomized phase II studies are evaluating imetelstat for the treatment of non-small cell lung cancer and metastatic breast cancer, two other studies are evaluating the candidate for multiple myeloma and essential thrombocythemia.

Research and development expenses should continue increasing with imetelstat being evaluated in four phase II studies. Moreover, Geron is looking to move GRN1005, which is being developed in collaboration with Angiochem Inc., into a phase II study in the fourth quarter of 2011. The study will be conducted in patients with brain metastases.

Meanwhile, general and administrative expenses declined 24% to $3.8 million.

Neutral on Geron

We believe Geron’s telomerase technology platform represents significant commercial opportunity. While 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. We remain Neutral on the stock, which carries a Zacks #3 Rank (short-term “Hold” rating).