Geron Corporation (Nasdaq: GERN) — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Geron is a late-stage biotechnology company whose lead and sole product candidate is imetelstat, an investigational treatment for hematologic malignancies. The company had no approved products and no material product revenue. Financial statements are unaudited.
Key financial metrics
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Revenue (royalties) | $21,000 | $123,000 |
| Research and development expense | $27.2 million | $22.1 million |
| General and administrative expense | $12.9 million | $6.7 million |
| Operating loss | $40.1 million | $28.7 million |
| Interest income | $3.9 million | $0.1 million |
| Interest expense | $1.9 million | $1.5 million |
| Net loss | $38.1 million | $30.1 million |
| Basic and diluted loss per share | $0.07 | $0.09 |
| Net cash used in operating activities | $46.4 million | $34.0 million |
| Cash, cash equivalents, restricted cash and marketable securities | $409.2 million | $173.1 million at Dec. 31, 2022 |
| Debt principal outstanding | $50.0 million | $50.0 million |
At March 31, 2023, total current assets were $387.0 million and current liabilities were $43.9 million. The debt’s reported carrying value was $51.4 million, including accrued end-of-term charges and net of unamortized discounts and issuance costs. The filing does not provide a meaningful product gross margin; royalties were the only reported revenue.
Material changes and financing
- Net loss increased by $8.0 million year over year, as operating expenses grew faster than royalty revenue. R&D costs rose primarily with additional personnel and clinical-trial activity; G&A increased with headcount and approximately $1.7 million of commercial preparation costs.
- Operating cash use increased $12.4 million year over year, reflecting higher clinical-trial payments, commercial preparation and staffing. Cash flow from investing was a $178.7 million use, largely because the company invested offering and warrant proceeds in marketable securities.
- Geron raised $213.3 million net in its January 2023 public offering and received approximately $59.8 million from warrant exercises. The offering included 68.0 million common shares and a pre-funded warrant for 25.0 million shares; the pre-funded warrant remained unexercised at quarter-end. The company also reported 45.0 million shares issued through exercises of previously outstanding warrants.
- Marketable securities increased substantially; most were short-dated government-sponsored enterprise securities, commercial paper and corporate notes. Geron reported no credit-loss allowance for these securities and attributed unrealized losses to interest-rate changes.
Outlook, clinical program and risks
- Geron reported positive January 2023 top-line results from the Phase 3 IMerge trial in lower-risk MDS: the trial met its primary 8-week transfusion-independence endpoint and a key 24-week endpoint, both with reported P<0.001. Longer-term follow-up continues. Top-line results are preliminary and may change as additional data are assessed.
- Management planned to submit a U.S. NDA in mid-2023 and a European MAA in the second half of 2023. Subject to regulatory review and approval, it anticipated a possible U.S. launch in the first half of 2024 and European launch by the end of 2024. These are expectations, not assured outcomes.
- IMpactMF, a Phase 3 trial in relapsed/refractory myelofibrosis, was enrolling. Based on planning assumptions, management expected an interim overall-survival analysis in 2024 and a final analysis in 2025; timing is event-driven and uncertain. IMproveMF was enrolling, and the initial IMpress site was planned to open in 2023.
- Management estimated existing cash, cash equivalents, restricted cash and marketable securities could fund projected operating requirements through the end of Q3 2025, including a potential U.S. launch. The estimate depends on operating plans and anticipated regulatory and commercial timing. The company stated that additional funding would be needed to advance other trial and indication work, absent potential warrant proceeds and loan drawdowns.
- Up to $55 million remained available under the Hercules/SVB loan facility, subject to milestones, capitalization conditions and, for the final $25 million tranche, investment-committee approval. The interest-only period was extended to April 2024 after positive IMerge results. Geron reported compliance with loan covenants at quarter-end.
- Key risks include dependence on imetelstat as the sole product candidate; clinical and regulatory uncertainty; potential serious adverse effects, including cytopenias, bleeding and hepatotoxicity; trial enrollment or site delays; reliance on third-party manufacturers and CROs; and future financing needs and potential dilution. Geron also disclosed that an FDA inspection identified deficiencies at a third-party manufacturer that could affect its ability to produce and deliver products if not remediated.
- The securities class-action settlement remained subject to final court approval. The proposed $24 million settlement comprises $17 million paid into escrow under insurance coverage and a $7 million company portion accrued at quarter-end, payable in shares and/or cash after final approval. A separate $1.35 million derivative-action settlement was also subject to approval; the company accrued the amount and recorded $525,000 in insurance receivables.
- Disclosure controls were concluded effective at the reasonable-assurance level, with no material change in internal control over financial reporting reported during the quarter.
Important facts for investors to verify
- Regulatory progress and timing for the planned NDA and MAA, including whether regulators require additional analyses, trials or data.
- Final and longer-term IMerge data, particularly durability, safety and survival, and whether those results support the proposed benefit-risk assessment.
- IMpactMF enrollment, event rates and analysis timing, as well as progress in IMproveMF and IMpress.
- Actual cash burn and runway relative to management’s Q3 2025 estimate, including commercialization spending and any new financing needs.
- Availability and conditions for remaining loan tranches, future cash proceeds from outstanding warrants, and dilution from equity issuance or warrant exercises.
- Resolution of the manufacturer inspection deficiencies and the court approval and final costs of the securities and derivative settlements.