What Licensing Imetelstat Will Mean for Geron

By Chris Lange Published Nov 14, 11:35AM EST

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Geron Corp. (NASDAQ: GERN) has announced that it entered into an exclusive worldwide license and collaboration agreement with Janssen Biotech to develop and commercialize imetelstat. What investors need to keep in mind that Janssen Biotech is part of the Janssen Pharmaceutical companies of Johnson & Johnson (NYSE: JNJ).

Geron will receive an initial payment of $35 million, after the applicable waiting periods under the Hart-Scott Rodino Act. It can potentially receive up to an additional $900 million for reaching developmental, regulatory and commercial milestones, along with royalties from worldwide net sales.

Imetelstat is a telomerase inhibitor product candidate, for oncology, including hematologic malignancies, and other therapeutics uses. It is a modified oligonucleotide that is in early phase clinical development for myelofibrosis (MF) and has potential activity in other hematologic myeloid malignancies such as myelodysplastic syndrome (MDS) and acute myelogenous leukemia (AML).

It should be noted that the two studies will have a cost split that is 50-50 in shared expenses between Geron and Janssen. Also, all sales will be booked by Janssen. This may be one of the issues that has tempered some of the initial excitement in this stock.

24/7 Wall St. covered the FDA’s removal of a clinical hold on the imetelstat at the beginning of November that made this deal possible. Our question at that time was whether this brought Geron back from the dead.

Dr. John Scarlett, Geron president and CEO, said:

By leveraging Janssen’s ability to fully integrate and strategically align global oncology development and commercialization, we expect this collaboration to expand the development of imetelstat across a range of hematologic malignancies and potentially increase the speed with which imetelstat can be made available to patients with these serious, life-threatening diseases.

Imetelstat will be developed under a mutually agreed clinical development plan, which should include Phase 2 studies in MF and MDS as initial studies. Geron expects that the initial Phase 2 study for MF will begin in mid-2015, followed by a Phase 2 MDS study later on.

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Shares of Geron were up about 23% to $2.84 after the first two hours of trading on Friday, with more than 20 million shares trading hands in that time. The average daily volume is only about 2.5 million shares. That being said, note that the stock opened up at $3.20 and the high was only 13 cents higher at $3.33.

The consensus analyst price target is $4.13, and the 52-week trading range is $1.31 to $6.54.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.