Geron Corporation (GERN) — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. Geron is a clinical-stage biopharmaceutical company focused on imetelstat, its sole product candidate; it had no product sales. The filing was delayed because COVID-19 restrictions disrupted access to facilities and slowed quarterly review and preparation.
Financial results
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Revenue | $0.052 million | $0.057 million |
| Research and development expense | $10.802 million | $5.906 million |
| General and administrative expense | $6.120 million | $5.452 million |
| Operating loss | $16.870 million | $11.301 million |
| Net loss | $16.355 million | $10.059 million |
| Basic and diluted loss per share | $0.08 | $0.05 |
| Net cash used in operating activities | $26.194 million | $12.738 million |
- R&D expense rose 83%, principally from clinical development for lower-risk MDS and Phase 3 IMerge, plus increased development headcount. G&A increased about 12%.
- Interest and other income was $0.754 million, down from $1.162 million. Revenue was almost entirely royalty income from legacy licensing arrangements.
- Cash, cash equivalents, restricted cash and current and noncurrent marketable securities totaled $133.4 million at March 31, versus $159.2 million at December 31, 2019. Cash and marketable securities are not equivalent to unrestricted cash alone.
- Total assets were $142.9 million; current liabilities were $16.9 million and total operating lease liabilities were approximately $6.0 million. The filing reports no borrowings or other financial debt.
- Accumulated deficit was $1.096 billion. No gross margin is meaningful because Geron had no product revenue.
Programs, outlook and management commentary
- IMerge, lower-risk MDS: Phase 3 enrollment was delayed by COVID-19; Geron expected to complete enrollment by the end of Q1 2021 and report top-line results in the second half of 2022, subject to further disruption. At the end of April, about 68% of originally planned sites were open.
- Reported Phase 2 IMerge data, based on 38 patients, included an 8-week transfusion-independence rate of 42% (16/38), a 24-week rate of 32% (12/38), and transfusion-free status exceeding one year for 29% (11/38). Median duration of transfusion independence was 88 weeks. These are Phase 2 results, not confirmation of Phase 3 success.
- Refractory myelofibrosis: Geron planned a Phase 3 trial of approximately 320 patients, with overall survival as the primary endpoint and best available therapy, excluding JAK inhibitors, as the control. The FDA accepted the proposed design but encouraged consideration of a third dose arm; Geron chose a single 9.4 mg/kg dose every three weeks. Trial start was targeted for Q1 2021, with enrollment completion projected for the second half of 2022 and event-driven interim and final analyses projected for the first half of 2023 and 2024. Timing depends on regulatory clearance, pandemic conditions and funding.
- IMbark Phase 2 follow-up reported median overall survival of 28.1 months in the 9.4 mg/kg arm (February 2020 cutoff). Geron characterized analyses as supportive of further study; these data do not establish Phase 3 efficacy.
- Geron postponed a planned proof-of-concept study in high-risk MDS and AML. It expected R&D costs to increase substantially as it pursued two Phase 3 programs, while acknowledging it could not reliably estimate development costs or timing.
- Management stated existing capital resources and expected interest income were sufficient for at least the next 12 months, but substantial additional capital would be needed to conduct the planned myelofibrosis Phase 3 trial and advance development. The company had no product revenue and did not expect imetelstat to be commercially available for many years, if at all.
- On May 27, 2020, after quarter-end, Geron completed an offering of common shares and warrants, reporting estimated net proceeds of approximately $140.2 million, assuming no warrant exercise. The offering and its potential dilution are not reflected in March 31 cash or shares outstanding.
Risks, contingencies and unusual items
- COVID-19 disrupted site initiation, patient screening and enrollment, monitoring and other trial activities; further delays, supply-chain problems, remote-work productivity issues and cybersecurity risks were possible.
- Geron relied on third parties for clinical trials and manufacturing. Imetelstat safety risks include serious cytopenias, bleeding and hepatotoxicity; clinical efficacy and safety remain uncertain.
- Two securities class actions alleging misleading statements about IMbark and a related shareholder derivative lawsuit were pending. Geron said it could not estimate potential costs, had recorded no reserve, and intended to defend the matters.
- Janssen’s collaboration had ended in 2018. Geron bears imetelstat development costs and is not entitled to future Janssen milestones or royalties. It paid the remaining $14.269 million due under a drug-supply agreement by March 31, 2020.
- Marketable securities had $0.229 million of unrealized losses at quarter-end, which management considered temporary and attributable to interest-rate movements rather than credit risk.
- Management reported disclosure controls were effective at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter.
Investor verification priorities
- Track actual IMerge site activation, enrollment, protocol deviations and the timing and completeness of Phase 3 results.
- Verify regulatory clearance, funding, site readiness and enrollment plans for the refractory-MF Phase 3 trial, including the implications of proceeding without a third dose arm.
- Assess cash burn and remaining runway using post-offering cash, trial costs and potential warrant exercises; distinguish reported proceeds from available cash.
- Review mature, full clinical data and safety findings against the company’s reported Phase 2 results, rather than treating interim or exploratory analyses as predictive.
- Monitor the securities and derivative litigation, manufacturing and clinical-supply readiness, and further COVID-19 impacts.