Geron Corporation — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Geron is a clinical-stage biopharmaceutical company focused on developing imetelstat, its sole product candidate; it has no product sales.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0.3m | $0.1m | $0.5m | $0.4m |
| Research and development | $24.6m | $18.5m | $67.3m | $61.6m |
| General and administrative | $15.6m | $7.3m | $29.8m | $21.8m |
| Operating loss | $39.9m | $25.7m | $96.6m | $83.0m |
| Net loss | $41.1m | $26.7m | $99.3m | $84.1m |
| Basic and diluted loss per share | $0.10 | $0.08 | $0.26 | $0.26 |
Revenue was primarily royalties from products using divested stem-cell assets. No active license agreements remained as of June 30, 2021. Product margins are not meaningful because Geron had no product revenue.
At September 30, 2022, cash, cash equivalents, restricted cash and marketable securities totaled $195.2m, down from $212.7m at year-end 2021. Current assets were $222.1m and current liabilities $82.8m. The accumulated deficit was $1.371bn.
Operating cash use was $92.2m for the first nine months, versus $73.4m in 2021. Investing activities provided $43.1m, primarily reflecting net maturities of marketable securities; financing provided $75.3m, including $69.9m net proceeds from an April public offering and $3.6m from warrant exercises.
Debt principal outstanding was $50.0m; the reported carrying amount was $50.8m, including accrued end-of-term charges and net debt costs. The loan facility was expanded to $125m, with $75m of additional tranches subject to milestones, other conditions and, for the final tranche, lender investment committee approval. Geron reported covenant compliance; the pre-approval minimum cash covenant is the greater of $30m or 50% of outstanding principal.
Changes versus prior comparable periods
- Q3 net loss increased to $41.1m from $26.7m; nine-month net loss rose to $99.3m from $84.1m.
- R&D increased, reflecting additional personnel and consulting related to the lower-risk MDS readout and regulatory preparation, partly offset by lower manufacturing costs due to timing.
- Q3 G&A increased by $8.4m, including $7.0m recorded for Geron’s portion of a proposed securities class-action settlement, as well as increased personnel and commercialization preparation costs.
- Interest expense rose to $4.9m for nine months from $2.6m, attributed to higher rates and increased debt. Interest income increased with the larger investment portfolio and higher yields.
Outlook, risks and unusual items
- Management expected IMerge Phase 3 top-line results in early January 2023; assuming supportive results, it planned a U.S. NDA submission in the first half of 2023 and an EU application in the second half. Potential U.S. launch was described as possible as early as the first half of 2024, subject to approval.
- IMpactMF enrollment was expected to complete in 2024, with interim overall-survival analysis potentially in 2024 and final analysis in 2025; timing depends on enrollment and event rates. IMproveMF began enrolling in May 2022, with preliminary data expected by the end of 2023. Investigator-led AML and higher-risk MDS trials were planned.
- Management estimated existing resources could fund projected operations through the end of 2023 without potential warrant proceeds or conditional debt draws, and through mid-2024 if specified warrant proceeds and up to $50m in eligible debt draws were available. These are planning estimates, not guaranteed financing; substantial additional funding is required for the broader development and potential commercialization program.
- The proposed $24m class-action settlement was accrued at quarter-end, with $17m recorded as an insurance receivable and $7m as Q3 G&A expense. The settlement remained subject to final court approval; the filing stated a final approval hearing was scheduled for March 30, 2023. Related shareholder derivative cases remained pending or stayed.
- Key risks include clinical efficacy and safety uncertainty, funding needs and potential dilution, trial delays from COVID-19 and the Ukraine-Russia conflict, reliance on contract research and manufacturing organizations, and manufacturing capacity and compliance. A recent FDA inspection identified deficiencies at a third-party manufacturer that could affect its ability to supply products, including imetelstat, if not remediated. Geron also disclosed a patient death in IMpactMF that the investigator related to study drug/disease.
- In November 2022, after the quarter, Geron reported longer-term Phase 2 IMerge data: 11 of 38 patients achieved transfusion independence lasting over one year. These findings are not Phase 3 results and may not predict them.
Important facts for investors to verify
- IMerge Phase 3 top-line results, including the effect of the shortened 12-month follow-up period on the primary analysis.
- Actual cash burn and runway, and whether warrant exercises or conditional loan tranches become available on the stated terms.
- Final approval and payment mechanics for the $24m settlement, including receipt of the recorded insurance amount.
- IMpactMF enrollment and analysis timing, emerging safety data, and remediation of the contract manufacturer’s inspection findings.
- Potential dilution from outstanding warrants, options and future financing, alongside debt service and cash covenant requirements.