Geron Corporation (Nasdaq: GERN) — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a quarterly filing. Geron is a clinical-stage biopharmaceutical company focused on imetelstat, its sole product candidate; it had no product sales.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $0.25 million | $0.46 million |
| Research and development expense | $51.5 million | $52.1 million |
| General and administrative expense | $25.7 million | $20.9 million |
| Operating loss | $76.9 million | $72.5 million |
| Net loss | $75.6 million | $68.5 million |
| Basic and diluted loss per share | $0.28 | $0.36 |
| Cash used in operating activities | $66.7 million | $43.8 million |
- Revenue was immaterial and primarily consisted of license fees and royalties. The company expected revenue to be lower in 2021 as legacy licenses expired and COVID-19 weighed on royalty-generating research product sales.
- Operating and net losses widened despite slightly lower R&D spending, mainly as G&A expense increased and interest income declined. As a pre-revenue development company, conventional profit margins are not meaningful.
- At year-end, cash, cash equivalents, restricted cash and current and noncurrent marketable securities totaled approximately $260.0 million, versus $159.2 million a year earlier. Current assets were $199.9 million and current liabilities $30.9 million.
- Debt principal was $25.0 million; its carrying value was $24.0 million. The loan bears 9% interest, has an interest-only period through November 2022, and matures October 2024. Substantially all assets other than intellectual property secure the loan. A minimum cash covenant begins June 2022.
- Management estimated existing resources would fund operations through at least the next 12 months and potentially through year-end 2022. The company said it would need substantial additional funding for continued development and commercialization activities.
Material changes versus prior year
- Net loss increased by $7.1 million and operating cash use rose by $22.8 million year over year.
- G&A expense rose $4.8 million, while R&D expense fell $0.6 million. The R&D decrease reflected completion of the Janssen program transition, closure of the IMbark trial and lower inventory purchases, partly offset by IMerge Phase 3 and IMpactMF startup costs.
- Geron raised approximately $140.2 million net in a May 2020 public offering and received approximately $23.9 million net from a $25.0 million term-loan draw. Common shares outstanding increased from 199.8 million to 310.6 million during 2020. The May offering also included warrants to purchase additional shares.
- Cash and marketable securities increased despite higher operating cash burn, primarily due to financing proceeds. The company reported no product revenue and no ongoing collaboration agreement for imetelstat.
Business outlook, risks and contingencies
- IMerge Phase 3, lower-risk MDS: Approximately 170 patients; management expected full enrollment in the second half of 2021 and top-line results from year-end 2022 through the first half of 2023, subject to enrollment timing and pandemic-related disruption. In March 2021, enrollment stood at 65%.
- IMpactMF Phase 3, refractory myelofibrosis: Approximately 320 patients; management expected full enrollment in 2024, interim analysis in 2024 and final analysis in 2025. Analyses are event-driven and timing may change. The primary endpoint is overall survival.
- Subject to supportive IMerge results and timely enrollment, the company planned to submit U.S. and European applications in 2023 and anticipated possible lower-risk MDS launches in 2024. These are conditional expectations, not approvals or guaranteed timelines.
- Phase 2 results cited by management included 8-week transfusion independence in 42% of 38 IMerge patients and median overall survival of 28.1 months in the high-dose IMbark arm. These findings are not confirmatory Phase 3 results. IMerge Phase 2 also reported Grade 3/4 thrombocytopenia in 61% and neutropenia in 55% of patients.
- COVID-19 and competing trials delayed site initiation and enrollment; the company also reported manufacturing schedule delays at a contractor due to vaccine production priorities. Clinical efficacy, safety, regulatory approval, supply, and financing remain uncertain.
- Geron is dependent on imetelstat and third-party clinical and manufacturing providers. Further capital may be needed sooner if IMerge results arrive after 2022; equity financing could dilute shareholders, while debt carries covenants and repayment obligations.
- Two putative securities class actions and four derivative lawsuits relating to statements about IMbark were pending. The company could not estimate potential losses and had not established a reserve.
- Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls were effective.
Important facts for investors to verify
- Progress, enrollment, endpoint results and safety findings in both Phase 3 trials, including whether timelines have changed.
- Cash burn, remaining runway, financing needs, subsequent equity issuance and potential dilution from outstanding warrants and equity awards.
- Debt availability and terms, including milestone conditions, cash covenants, collateral and repayment obligations.
- Contract manufacturer capacity, supply continuity and ability to meet clinical and potential commercial requirements at acceptable cost.
- Status and potential financial impact of the securities and derivative lawsuits.
- Whether patent protections, regulatory exclusivity, reimbursement prospects and competitive developments support the company’s commercialization assumptions.