Geron (GERN), the biopharmaceutical company behind the approved telomerase inhibitor for specific lower-risk myelodysplastic syndromes, has experienced significant success with its product RYTELO. This success has helped deliver expectation-beating revenue in Q3 2024 and promising clinical trial results for myeloid hematologic malignancies. The stock has surged up over 58% year-to-date, and the company anticipates further upside as it awaits possible approval for RYTELO in the European Union. It is an intriguing option for investors interested in biopharma.
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Successfully Bringing a Treatment to the Market
Geron is a biopharmaceutical company with the only FDA-approved first-in-class telomerase inhibitor for treating specific lower-risk myelodysplastic syndromes (LR-MDS). This medication reduces the proliferation of malignant cells by targeting their increased telomerase activity. Geron is further investigating the potential of this drug in treating multiple hematologic malignancies, conducting a vital Phase 3 clinical trial for myelofibrosis patients who have not responded to JAK-inhibitor treatment.
The company has experienced recent success with the FDA approval and commercial launch of RYTELO, which has generated revenue above expectations. RYTELO has also been positively recommended for approval by the Committee for Medicinal Products for Human Use (CHMP) for the European Medicines Agency (EMA) in treating adult patients suffering from transfusion-dependent anemia due to LR-MDS. This follows the successful results of the IMerge Phase 3 trial, where RYTELO was shown to reduce the need for red blood cell transfusions. Should it be approved, RYTELO will be made available in Europe as an intravenous infusion for LR-MDS patients.
To further bolster its financial standing, Geron has undertaken synthetic royalty financing, providing $125 million of capital in exchange for tiered royalty payments. It can borrow another $125 million before the end of 2025.
Significant Revenue Growth
The company noted a significant increase in revenue for the third quarter. Total net revenue was $28.3 million, compared to $164,000 in Q3 2023, primarily due to U.S. sales of the company’s new product, RYTELO.
The company’s operating expenses were $56.5 million in Q3 and $183.1 million for the year-to-date, up from $47.8 million and $139.9 million for the same periods in 2023. The increase in operating expenses is mainly due to higher commercial launch expenses and increased headcounts related to the U.S. launch of RYTELO. Meanwhile, research and development costs decreased due to manufacturing costs being capitalized following the FDA approval of RYTELO. Despite the jump in revenue, the company reported a net loss of $26.4 million in Q3 and $149.2 million for the first nine months of 2024.
As of the quarter’s end, the company reported an impressive increase in cash and marketable securities, reaching approximately $542.4 million after debt repayments and including proceeds from the Royalty Pharma Agreement and the first tranche of the Pharmakon loan.
Based on the current operating plans and predictions, management is confident its existing financial resources and anticipated revenues from U.S. sales of RYTELO will suffice to cover projected operating requirements for at least the next 12 months, including supporting the commercial launch of RYTELO in the U.S. and potentially in the EU, complete the Phase 3 IMpactMF trial in relapsed/refractory MF, invest in supply chain redundancy for RYTELO, and meet general working capital requirements.
Analysts Remain Bullish
The stock has been on an extended upswing, climbing 155% over the past three years. It trades near the middle of its 52-week price range of $1.64 – $5.34 and shows negative price momentum as it trades below the major moving averages.
Analysts following the company have been bullish on GERN stock. For instance, H.C. Wainwright’s Emily Bodnar recently raised the price target on the shares to $9 (from $8) and kept a Buy rating. She noted that RYTELO sales impressed, and she expects solid revenue growth into 2025.
Based on eight analysts’ recent recommendations, Geron is rated a Strong Buy overall. Their average price target for GERN stock is $7.63, representing a potential upside of 127.76% from current levels.
Bottom Line on GERN
Geron has seen its stock surge significantly and anticipates further success pending RYTELO’s approval in Europe. The company is in a robust financial position, showing a substantial increase in net revenue. Although the company’s operating expenses have increased, its financial resources and projected income from ongoing U.S. sales of RYTELO are expected to cover operating necessities for at least a year. With analysts maintaining a positive outlook, the company remains an attractive prospect for investors interested in biopharma.
