Geron Corporation (Nasdaq: GERN) — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a separate fourth-quarter report. Geron is a clinical-stage biopharmaceutical company with no approved products; its business is focused on developing imetelstat, its sole product candidate.
Financial and operating results
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $1.4 million | $0.3 million |
| Research and development expense | $85.7 million | $51.5 million |
| General and administrative expense | $29.7 million | $25.7 million |
| Operating loss | $114.0 million | $76.9 million |
| Net loss | $116.1 million | $75.6 million |
| Net loss per share, basic and diluted | $0.35 | $0.28 |
| Net cash used in operating activities | $95.6 million | $66.7 million |
- Revenue is not product revenue. 2021 royalties were $1.4 million, including approximately $911,000 of retroactive royalties; the company expected 2022 revenue to be lower absent that item. License-fee revenue was $28,000.
- R&D expense rose as the company advanced the IMerge and IMpactMF Phase 3 trials and manufactured validation batches. G&A increased in part due to $2.8 million of pre-commercial infrastructure work and higher legal costs.
- Interest income fell to $0.5 million from $1.8 million, mainly reflecting lower portfolio yields. Interest expense rose to $3.7 million from $0.8 million as debt increased. A $1.2 million gain from selling its equity investment contributed to 2021 other income.
- Margins are not a useful measure of commercial performance because Geron has no product sales and reported an operating loss.
Liquidity, debt, and capital needs
- Cash, cash equivalents, restricted cash, and current and noncurrent marketable securities totaled $212.7 million at year-end, down from $260.0 million in 2020. Cash and cash equivalents alone were $34.9 million.
- Current assets were $187.2 million and current liabilities were $45.5 million. Total assets were $226.0 million; total liabilities were $99.6 million.
- Outstanding debt principal was $50.0 million, with a 9.0% interest rate on drawn tranches and an October 2024 maturity. Debt is secured by substantially all assets other than intellectual property. The company reported compliance with loan covenants at year-end.
- A minimum cash covenant of $30.0 million begins June 1, 2022; specified regulatory milestones could reduce it to $20.0 million. Certain licensing transactions could raise the requirement to $35.0 million.
- Management believed available resources would fund the current operating plan through the end of Q1 2023. It expects to need substantial additional financing to complete development and pursue potential commercialization. If IMerge top-line results are delayed beyond Q1 2023, additional capital would be needed to reach them.
- In 2021, Geron received approximately $20.4 million net from at-the-market share sales and drew $25.0 million of debt. About $79.1 million remained available under its $100 million ATM agreement at year-end.
Material changes and outlook
- Net loss increased by $40.5 million year over year, while operating cash use rose by $28.9 million. R&D expense increased about 67% and G&A about 16%.
- IMerge Phase 3 enrollment was completed in October 2021. Based on then-current assumptions, Geron expected top-line results in early January 2023, a U.S. NDA filing in the first half of 2023 if results supported submission, and a possible U.S. launch as early as the first half of 2024, subject to approval.
- IMpactMF was underway for refractory myelofibrosis; management expected full enrollment in 2024, an interim overall-survival analysis potentially in 2024, and final analysis in 2025. These event-driven estimates could change.
- For 2022, the company planned to begin IMproveMF, a Phase 1 imetelstat/ruxolitinib combination trial, and support investigator-led trials in AML and higher-risk MDS. It also planned preliminary commercial preparations, dependent on clinical progress.
Management commentary, risks, and unusual items
- Geron’s prospects depend on imetelstat, its only product candidate. Phase 2 findings are not proof of Phase 3 success; regulatory approval, efficacy, safety, and commercial viability remain uncertain.
- Management highlighted cytopenias, bleeding, liver toxicity and other potential adverse events. In prior trials, severe thrombocytopenia and neutropenia were reported; safety and benefit-risk continue to be assessed in ongoing trials.
- COVID-19 disruptions and competition for clinical sites and personnel had slowed trial activity. The company also cited potential effects of geopolitical events, including the Russia-Ukraine conflict, on trial sites, supply chains and financing markets.
- Imetelstat manufacturing depends on third parties. Geron reported prior manufacturing schedule delays related to government-prioritized COVID-19 vaccine production and anticipated possible further delays or supply constraints.
- Two putative securities class actions and seven shareholder derivative actions were pending, relating to allegations concerning IMbark disclosures. Geron could not estimate potential losses and had not recorded a reserve. The class-action trial was scheduled for October 2022.
- The 2021 financial statements received an unqualified audit opinion. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an ICFR attestation because Geron qualified as a smaller reporting company.
Important facts for investors to verify
- Whether IMerge Phase 3 results were released on the projected schedule and whether efficacy, durability, and safety support regulatory filings.
- Updated cash runway, operating burn, financing plans, ATM usage, debt availability and compliance with the cash covenant.
- IMpactMF enrollment and event timing, and whether COVID-19, geopolitical conditions or competing trials have affected execution.
- Current status and potential financial exposure of the securities and derivative litigation.
- Manufacturing capacity, supply reliability, potential commercial-scale costs, and the effect of competing therapies on imetelstat’s prospects.