Geron Corporation — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019. Geron is a clinical-stage biopharmaceutical company focused on imetelstat, its sole product candidate, for hematologic myeloid malignancies. The filing was signed March 12, 2020; certain developments below occurred after year-end.
Financial performance and liquidity
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $0.46 million | $1.07 million |
| Research and development expense | $52.1 million | $13.4 million |
| General and administrative expense | $20.9 million | $18.7 million |
| Operating loss | $72.5 million | $31.1 million |
| Net loss | $68.5 million; $0.36 per share | $27.0 million; $0.15 per share |
| Net cash used in operations | $43.8 million | $21.0 million |
| Cash, cash equivalents, restricted cash and marketable securities | $159.2 million | $182.1 million |
Revenue was primarily legacy license fees and royalties; Geron had no product revenue. Gross margin is not meaningful for this development-stage business. The increase in R&D costs reflected Geron’s assumption of all imetelstat development costs after Janssen’s termination, transition work, IMerge Phase 3 start-up, increased staffing and purchase of drug materials. The 2018 net loss included a $1.46 million gain on settlement; there was no comparable gain in 2019.
At year-end, current assets were $141.6 million and current liabilities were $28.2 million. Current liabilities included $14.3 million due to Janssen, largely for drug supply and program support, and $7.5 million of accrued liabilities. The balance sheet reports operating lease liabilities but no interest-bearing debt balance. The company’s accumulated deficit was $1.08 billion. Financing cash flow was $19.5 million in 2019, mainly from common-stock sales; shares outstanding rose to 199.8 million from 186.4 million.
Fourth-quarter 2019 revenue was $171,000, operating expenses were $30.2 million, and net loss was $29.1 million ($0.15 per share), compared with revenue of $375,000 and net loss of $7.3 million ($0.04 per share) in fourth-quarter 2018.
Business progress, outlook and material changes
- IMerge, lower-risk MDS: Phase 3 opened to enrollment in August 2019; the first patient was dosed in October. Management planned to complete enrollment by year-end 2020 and anticipated top-line results by mid-2022. In the Phase 2 data reported in June 2019, 42% of 38 patients achieved at least eight weeks of red-blood-cell transfusion independence; 29% achieved at least 24 weeks. These are interim clinical results, not Phase 3 findings.
- IMbark, relapsed/refractory MF: In the fourth quarter of 2019, Geron held an FDA End-of-Phase-2 meeting. The company planned to submit Phase 3 design proposals, discuss a potential regulatory path in Q2 2020 and decide by mid-2020 whether to pursue late-stage MF development. IMbark was closed in February 2020. A company-reported comparison with matched real-world data suggested longer overall survival with imetelstat, but Geron cautioned that the non-randomized analysis had limitations and was not predictive of future trial results.
- Other indications: Geron planned to begin a potential proof-of-concept study in higher-risk MDS and AML by the end of Q4 2020.
- Funding and runway: Management said year-end resources were expected to fund current operations for at least 12 months, support IMerge through 2020 and allow commencement of an additional proof-of-concept study. The company also stated it would require substantial additional capital for further development and potential commercialization. It may pursue equity financing or partnerships; equity issuance could dilute shareholders.
- Janssen transition: Janssen terminated the imetelstat collaboration effective September 2018, and the program transition to Geron was completed by September 2019. Geron now bears development costs and will receive no imetelstat milestones or royalties from Janssen. Under a separate supply agreement, approximately $14.2 million for drug product, drug substance, raw materials and support was payable to Janssen in early 2020.
Risks, contingencies and unusual items
- Imetelstat is Geron’s only product candidate, remains unapproved, and may fail to demonstrate sufficient safety or efficacy. Reported risks include severe cytopenias, bleeding and liver-function abnormalities.
- The company depends on additional financing and third-party manufacturers, CROs and suppliers. Manufacturing capacity, regulatory acceptance, cost reductions and supply continuity are uncertain.
- Three putative securities class actions filed in 2020 concern alleged statements about IMbark. Geron disputed the claims; it could not estimate potential costs and had established no reserve.
- Geron identified the emerging COVID-19 outbreak as a possible source of clinical-trial, site, staffing and supply-chain disruption; the impact was uncertain at filing.
- Market acceptance, reimbursement, competition, patent protection, regulatory approval and the ability to establish commercialization capabilities remain material uncertainties.
Most important facts for investors to verify
- IMerge enrollment pace, trial conduct and whether Phase 3 results support the efficacy and safety suggested by the smaller Phase 2 dataset.
- FDA feedback and Geron’s decision on late-stage MF development, including the limitations of the IMbark real-world comparison.
- Cash burn, remaining financing capacity, future capital needs and dilution from stock sales.
- Successful processing and supply of clinical-grade imetelstat, and the company’s ability to fund and execute planned studies.
- Developments in the IMbark-related litigation and any effects on costs or operations.