Geron Corporation — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Geron is a clinical-stage biopharmaceutical company focused on imetelstat, its sole product candidate, for hematologic malignancies. It had no product sales and no active license agreements as of June 30, 2021.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $107,000 | $43,000 | $244,000 | $95,000 |
| Research and development expense | $21.9 million | $10.8 million | $43.1 million | $21.6 million |
| General and administrative expense | $7.1 million | $6.0 million | $14.5 million | $12.1 million |
| Net loss | $29.6 million | $15.8 million | $57.4 million | $32.2 million |
| Basic and diluted loss per share | $0.09 | $0.06 | $0.18 | $0.14 |
| Cash used in operating activities | Not presented for quarter | Not presented for quarter | $50.5 million | $38.6 million |
At June 30, 2021, cash, cash equivalents, restricted cash and current and noncurrent marketable securities totaled $239.1 million, versus $260.0 million at December 31, 2020. Current assets were $201.8 million and current liabilities $37.0 million. Debt principal was $35.0 million; its net carrying value was $34.4 million. The company reported a $1.2 billion accumulated deficit. Product gross margin is not applicable because there were no product sales.
Changes versus prior periods
- Q2 net loss increased to $29.6 million from $15.8 million; six-month net loss rose to $57.4 million from $32.2 million.
- R&D expense approximately doubled year over year, reflecting Phase 3 trial activity, manufacturing validation batches, and additional development and manufacturing personnel.
- Six-month operating cash use increased by $12.0 million year over year, mainly due to higher clinical and manufacturing spending.
- Interest expense was $0.8 million for Q2 and $1.5 million for the first half, following the 2020 loan agreement; no comparable expense was recorded in 2020.
- First-half financing included $16.2 million net proceeds from at-the-market stock sales and a $10.0 million Tranche A loan draw. Shares outstanding were 320.6 million at June 30, 2021, up from 310.6 million at year-end 2020.
Outlook, management commentary and risks
- IMerge Phase 3, lower-risk MDS: Enrollment was 91% complete as of August 12, 2021; Geron expected full enrollment in Q4 2021 and top-line results in Q1 2023. The company shortened planned follow-up after the last patient from 15 to 12 months, which it said should provide sufficiently mature data but could exclude later clinical responses from the primary analysis.
- IMpactMF, refractory myelofibrosis: The first patient was dosed in April 2021; 55 sites were open as of August 12, 2021. Management expected full enrollment and a potential interim analysis in 2024, with final analysis in 2025. These event-driven timelines may change.
- COVID-19 disruptions and competing trials have slowed site activation and enrollment. Geron also reported manufacturing schedule delays at one contractor linked to government-prioritized COVID-19 vaccine production; it anticipated delays or consumable-supply constraints could continue through 2021.
- Management believed existing resources, future interest income and a potential $15.0 million Tranche B draw—subject to clinical milestones—would fund current operations through the end of Q1 2023. Additional capital would be needed to reach IMerge results if delayed beyond that point or if the tranche is unavailable. Substantial additional funding is required to advance both trials and potential commercialization.
- In August 2021, the loan agreement was amended: the minimum cash covenant beginning June 1, 2022 increased from $25 million to $30 million, and the covenant linked to certain licensing transactions increased from $30 million to $35 million. Tranche B remained conditional on clinical milestones; Tranche C is subject to lender investment committee approval.
- Two securities class actions and seven shareholder derivative actions remained pending. The class-action court had granted in part and denied in part Geron’s motion to dismiss; discovery had begun. The company could not estimate potential costs and had established no reserve.
- Other key risks include dependence on the single candidate imetelstat, uncertain Phase 3 efficacy and safety, reliance on contract manufacturers and trial vendors, financing and dilution risk, debt covenants, competition, and potential clinical delays. Management expects operating expenses and losses to increase as development advances.
Key facts for investors to verify
- Whether IMerge enrollment and Q1 2023 results timing remain achievable, and how the shortened follow-up affects the primary analysis.
- Progress, enrollment pace and event timing for IMpactMF, including whether the potential Tranche B clinical milestones are met.
- Cash burn, remaining liquidity, additional financing needs and compliance with amended loan covenants.
- Clinical safety and efficacy updates, manufacturing supply and validation progress, and any further COVID-related disruption.
- Developments in the securities and derivative lawsuits, and any material change in expected exposure or legal costs.