Geron Corporation — FY2018 Form 10-K
Reporting period: Fiscal year ended December 31, 2018; filed March 7, 2019. This is an annual report, not a standalone fourth-quarter filing. Geron is a clinical-stage biopharmaceutical company whose sole product candidate is imetelstat, a telomerase inhibitor for hematologic malignancies.
Financial performance and liquidity
| Metric | 2018 | 2017 |
|---|---|---|
| Revenue | $1.1 million | $1.1 million |
| Research and development expense | $13.4 million | $11.0 million |
| General and administrative expense | $18.7 million | $19.3 million |
| Operating loss | $31.1 million | $29.3 million |
| Net loss | $27.0 million ($0.15 per share) | $27.9 million ($0.18 per share) |
| Cash, restricted cash, cash equivalents and marketable securities | $182.1 million | $109.2 million |
| Net cash used in operating activities | $21.0 million | $20.6 million |
- Revenue remained minimal and came from licensing fees and royalties; Geron has no product revenue. It expects hTERT-related licensing revenue to decline and end by late 2019 as underlying patents expire. Comparability is affected by adoption of the new revenue standard in 2018, though the company said its ongoing impact was not material.
- The operating loss widened as R&D costs rose, including higher clinical, consulting and personnel costs. The smaller net loss reflected higher interest income and a $1.46 million settlement gain, partly offset by a $541,000 decline in the fair value of an equity investment.
- 2018 financing activities provided $93.0 million, including $86.0 million net proceeds from at-the-market stock sales. Shares outstanding increased to 186.4 million at year-end from 159.9 million.
- Total assets were $185.3 million and stockholders’ equity was $177.7 million at year-end; current liabilities were $7.6 million. No material borrowings or long-term debt are reported. Contractual obligations totaled approximately $964,000, mainly lease commitments.
- Management said existing resources and expected interest income should fund the current level of operations for at least 12 months, but substantial additional capital will be needed for continued development. The filing does not provide a definitive runway estimate for the planned development program.
Programs, changes and outlook
- IMerge, lower-risk MDS: In the Phase 2 portion, 14 of 38 patients (37%) achieved at least eight weeks of red-blood-cell transfusion independence; 10 (26%) achieved at least 24 weeks. Among durable responders, all had a hemoglobin rise of at least 3.0 g/dL during the transfusion-free interval. These were Phase 2 results, not proof of benefit in a pivotal trial. Geron planned to begin a randomized, placebo-controlled Phase 3 trial of approximately 170 patients by mid-2019.
- IMbark, relapsed/refractory myelofibrosis: In the 9.4 mg/kg arm, median overall survival was 29.9 months, with spleen and symptom response rates of 10% and 32%; median survival in the 4.7 mg/kg arm was 19.9 months. The trial was not described as a controlled comparison against the cited 14–16-month historical survival. Geron planned discussions with experts and regulators and expected to decide by the end of Q3 2019 whether to pursue late-stage MF development.
- Janssen transition: Janssen terminated the collaboration effective September 28, 2018, returning global imetelstat rights to Geron. Janssen was to support the transition through September 2019 and supply clinical drug for up to 24 months at cost plus a premium. Geron assumed 100% of development and patent costs after termination and will receive no further imetelstat milestones or royalties from Janssen.
- Geron engaged Parexel to support clinical development. Its first work order for IMerge carries estimated service fees and pass-through costs of approximately $33 million.
- Management intends to commercialize imetelstat in the United States itself, if approved, and seek partners elsewhere. The company has no approved products, expects operating losses to increase as it takes on development costs, and says imetelstat may not be commercially available for many years, if at all.
Risks, contingencies and unusual items
- Imetelstat is Geron’s only product candidate. Clinical efficacy and safety remain unproven; reported and historical risks include severe cytopenias, bleeding, liver-test abnormalities, infections and a prior patient death assessed by an investigator as possibly related to treatment.
- Execution depends on completing the Janssen transition, transferring trial sponsorship and regulatory files, maintaining drug supply, and building internal capabilities while relying on CROs and other contractors. Manufacturing scale, quality, cost and continuity are significant risks.
- Phase 3 development, any MF program, and potential commercialization require substantial additional financing. Equity funding could dilute shareholders; future collaboration terms may require relinquishing rights. The company reported an accumulated deficit of approximately $1.01 billion.
- Unusual 2018 item: Geron received $1.46 million, its 40% share, from a one-time settlement with Trans Ova; settlement ended any further payment obligations under the agreement.
- There were no legal proceedings reported in Item 3. The auditor issued an unqualified opinion on the financial statements and internal controls; management also reported effective disclosure controls and internal control over financial reporting.
Most important facts for investors to verify
- Whether the Janssen transition, including IND and trial sponsorship transfers, was completed on schedule and without disruption.
- Whether IMerge Phase 3 enrollment began as planned, its final protocol and cost, and whether larger controlled-trial results support the Phase 2 signal and safety profile.
- How mature IMerge follow-up affects transfusion-independence durability and adverse-event findings.
- Whether additional IMbark follow-up or regulatory feedback supports a feasible MF development path; interpret the survival result in light of the trial’s lack of a stated control arm.
- Cash use relative to the planned clinical program, financing needs and potential dilution, including remaining capacity under the at-the-market sales agreement.
- Clinical drug supply, third-party manufacturing readiness, and the estimated $33 million Parexel commitment relative to available resources.