Geron Corporation — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021; filed November 9, 2021. Geron is a clinical-stage biopharmaceutical company focused on imetelstat, its sole product candidate. It had no product revenue and reported no active license agreements as of quarter-end.
Financial performance
Amounts in millions, except per-share data.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0.109 | $0.108 | $0.353 | $0.203 |
| Research and development | $18.527 | $13.613 | $61.577 | $35.260 |
| General and administrative | $7.256 | $6.510 | $21.793 | $18.590 |
| Operating loss | $(25.674) | $(20.015) | $(83.017) | $(53.647) |
| Net loss | $(26.697) | $(19.651) | $(84.095) | $(51.830) |
| Net loss per share | $(0.08) | $(0.06) | $(0.26) | $(0.20) |
| Operating cash used | — | $(73.388) | $(54.038) |
Revenue remained immaterial relative to research and development spending; conventional operating margins are not meaningful for this pre-revenue development-stage business. Q3 and nine-month losses widened year over year, principally as clinical-trial and manufacturing costs increased. Nine-month interest expense rose to $2.605 million from $0.006 million, reflecting the debt facility; lower portfolio yields reduced interest income to $0.421 million from $1.551 million. A $1.233 million gain from selling the company’s BARD1 equity investment contributed to nine-month other income.
Financial position and liquidity
- At September 30, 2021, cash, cash equivalents, restricted cash and current and noncurrent marketable securities totaled approximately $215.8 million, down from $260.0 million at December 31, 2020. Cash, cash equivalents and restricted cash alone were $29.4 million.
- Total current assets were $179.4 million and current liabilities were $38.5 million. Stockholders’ equity was $151.6 million, versus $210.9 million at year-end 2020.
- Debt principal outstanding was $35.0 million; its reported net carrying value was $34.7 million. The term facility can provide up to $75 million in total, subject to conditions. The company drew the final $10 million of Tranche A in June 2021.
- Net cash from financing was $28.9 million for the first nine months, including $16.2 million net from at-the-market stock sales and $10 million of debt proceeds. Net cash from investing was $63.6 million, mainly reflecting marketable-security maturities exceeding purchases.
Material changes and business developments
- R&D expense rose 36% in Q3 and 75% year to date, primarily due to the two Phase 3 trials, clinical and manufacturing vendors, validation batches, and increased development and manufacturing headcount. G&A increased 11% in Q3 and 17% year to date, reflecting pre-commercial infrastructure work and higher legal costs.
- In October 2021, after quarter-end, Geron completed enrollment in IMerge Phase 3 for lower-risk MDS. It expects top-line results in early January 2023, based on current assumptions, after shortening post-enrollment follow-up from 15 to 12 months.
- IMpactMF, a Phase 3 trial in refractory myelofibrosis, had 81 sites open as of November 1, 2021. The company expected full enrollment in 2024, an interim analysis potentially in 2024, and final analysis in 2025; results are event-driven and timing may vary.
- The August 2021 loan amendment increased the minimum cash covenant beginning June 1, 2022, from $25 million to $30 million, and to $35 million upon specified licensing transactions. Geron reported compliance at September 30, 2021.
- In October and November 2021, Geron sold 2.6 million shares under its ATM agreement for approximately $4.1 million net proceeds.
Outlook, risks and contingencies
- Management estimated existing resources, future interest income and the available $15 million Tranche B draw could fund the current operating plan through the end of Q1 2023. That estimate depends on planning assumptions and access to the loan draw. If IMerge results are delayed beyond Q1 2023, or the tranche is unavailable or not drawn, additional capital would be needed to reach those results. Substantial additional funding is expected to advance both Phase 3 programs and potential commercialization.
- COVID-19 and competing trials have constrained trial-site capacity and delayed enrollment and operations. The company also cited possible further trial, regulatory, manufacturing and supply-chain disruptions.
- Imetelstat is investigational; clinical success and regulatory approval are uncertain. Disclosed risks include serious cytopenias, bleeding and liver toxicity, potential manufacturing constraints, competition, patent-life limitations and the need for future financing, which may dilute shareholders or be unavailable on acceptable terms.
- Two consolidated securities class actions and seven shareholder derivative actions relate to allegations concerning prior IMbark disclosures. The class action was ongoing, with class-certification proceedings and a trial schedule disclosed. Geron said it could not estimate potential costs and had recorded no reserve. A California derivative action was dismissed and stayed pending a case-management conference.
- Management reported disclosure controls were effective at a reasonable-assurance level, with no material change in internal control over financial reporting during the quarter.
Key facts for investors to verify
- Whether IMerge top-line results arrive on the stated schedule and support the company’s anticipated regulatory submissions.
- IMpactMF enrollment progress, event-driven analysis timing, and whether COVID-19 or site constraints alter the outlook.
- Actual cash burn versus the stated runway estimate, availability and conditions of Tranche B, and the impact of future financing or equity issuance.
- Clinical efficacy and safety findings, including the implications of the shortened IMerge follow-up period and imetelstat’s known safety risks.
- Developments in the securities and derivative litigation, including any potential financial exposure; the filing provides no clear estimate of that exposure.