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Has Geron Corporation's Stock Been De-Risked?
Motley Fool George Budwell, The Motley Fool,Motley Fool 55 minutes ago
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Geron Corporation (NASDAQ: GERN), an upstart blood cancer specialist collaborating with Johnson & Johnson (NYSE: JNJ) for its first-in-class telomerase inhibitor imetelstat, saw its shares gain a whopping 28.7% last Friday on roughly 10 times the average daily volume. The biotech's September call options also went absolutely bonkers, indicating that the market clearly expects Geron's stock to take flight within the next four weeks of trading.
What kicked off this pronounced rally? Geron's shares shot up in response to a job posting by J&J's biotech wing Janssen for a Europe, Middle East, and Africa strategic pricing manager that specifically named imetelstat six times in the description of the position's duties. Although J&J later downplayed the ad by stating that the "job posting does not have anything to do with its licensing deal with Geron," according to a report by Bloomberg, investors apparently weren't buying this denial based on the stock's strong finish last Friday.
The words
Image source: Getty Images.
Should investors take this job posting as a definitive sign that Geron's stock is now de-risked, or is this ad a nonevent, as J&J stated? Let's take a look to find out.
What's known and unknown
The skeptics were quick to point out that a job posting is a far cry from a positive continuation decision. That's certainly fair. For what it's worth, the ad does mention both Imbruvica and imetelstat. Therefore, J&J's follow-up statement that the position is simply "consistent" with the company's blood cancer portfolio is certainly plausible. In that case, this job posting is essentially a nonevent.
Then again, the posting is rather detailed in terms of the job's key responsibilities. If we take the ad at face value, for instance, J&J seems to already have a plan to launch imetelstat as a treatment for low-risk myelodysplastic syndromes (MDS) and induction-ineligible acute myeloid leukemia (AML) in Europe far sooner than anyone predicted. That scenario would be a major win for Geron's shareholders, thereby justifying last Friday's double-digit rally.
Unfortunately, there is no way to know whether J&J is being forthright about the purpose of this job posting or if someone let the cat out of the bag. However, it is quite odd that this ad even saw the light of day at this crucial juncture. After all, J&J is only weeks away from announcing its continuation decision regarding imetelstat, and the drug's midstage trial data underscoring this decision has likely been vetted by now. J&J, therefore, had to at least suspect that this job posting would turn out to be a market-moving event for Geron's stock.
Even so, the only solid takeaway here seems to be that imetelstat remains in J&J's plans with the clock winding down. That doesn't mean that a positive continuation decision is a slam dunk, but the chances do appear to be climbing.
Has Geron's stock been de-risked?
The blunt answer to this question is no. Geron is still a high-risk speculative biotech play, and investors certainly shouldn't shrug off this fact based on a simple job posting. That being said, short-sellers should also probably think twice before taking a position at this stage. After all, Geron's stock could double or triple in value in the next few weeks if this curious job posting turns out to be a harbinger of things to come.
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The stock is showing some life today with a little rally. But the pros who want to hold the stock down are showing themselves at the bid and ask section with large blocks of stock at the ask, old trading trick used by pros to stifle trading. This stock should be in the 8 to 12 dollar range right now just on trail results.IMHO this stock is being held down by people who want to buy it out on the cheap. Guess who?
4PM in Calif is 7 pm Est.
What I read is ... More tests before commitment.
This constant drumbeat of selling, is disheartening to this long. We are hearing that we are at the beginning of a new era of great things for this company, yet the selling goes on. Our meeting is coming tomorrow. Let us hope that something is said that will give us some indication of where we are going from here.
Stock closed at 3.63. AH its 3.43??? down after announcement.NUTS.
SO it was GERN that was doing the heavy selling. If they were selling shares, they were not going short..Why the 44 million short? Who cares . I am LONG. LET THEM COVER!!!!
What I am trying to say is,people here say buy out in the $100 area . I do not think so. But they will have to offer money way higher than what it is selling for down here. J&J will offer low, but someone else will top them. If what we hear the tests say they are!
Great thesis, except for one thing. The ones that are shorting are the ones that will buy out at one price. No short squezze. and at the lowest price possible.
Its getting dreary. Whom ever they are, are keeping on selling. Keeping the price under $4 at all costs.IMHO. Stock holders meeting May 15.
Testing testing
Does IMBark study mean anything to anybody?
I am reading some sort of report That says there is an arm 1 and a arm 2. Arm 1 started in 2015 and the findings were estimated to be completed by May 4 2018. Arm 2 to be completed june 12, next year. I am lousy at research Is May 4, 2018, important to our calendar? What is the IMBark study?
Thats the who... But what is the WHY?
I read what you wrote and I got a wonderful feeling. Then I looked at the price and came back to reality. Please tell me who is selling and WHY???
I am with you. Why more testing? We are getting great results. The FDA has ok'd drugs that had less
potential than ours! J&J,& GERN should get this drug up for approval in front of the FDA now! Each day that passes without an ok, means that some one dies.
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Geron Corporation: The Clock Is Ticking
Motley Fool George Budwell, The Motley Fool,Motley Fool Mon, Apr 23 10:00 AM EDT
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Geron Corporation (NASDAQ: GERN) reached an unfortunate milestone last month. Namely, the company's short interest hit an all-time high at the end of March, with over 44 million shares now being sold short.
Why is Wall Street so deeply pessimistic about this small-cap biotech stock? I think, if the truth is told, that Wall Street isn't actually betting against Geron's long-term prospects, but rather, short-sellers realize that they still have a few more months to profit on this name in a fairly safe manner. While this trend may annoy longs, I believe patience will ultimately pay off for shareholders. Here's why.
Image of an hourglass sitting on top of a calendar.
Image source: Getty Images.
The writing is on the wall
As a reminder, Geron is developing the telomerase inhibitor imetelstat through a licensing deal with Johnson & Johnson's (NYSE: JNJ) pharmaceutical wing known as Janssen. The drug is currently in mid-stage trials dubbed IMbark and Imerge for the bone marrow disorders myelofibrosis (MF) and myelodyspastic syndromes (MDS), respectively. Per the latest update, J&J is expected to make a call on the fate of this collaboration by the end of Q3 of this year.
Now, turning to the point of this article, I think J&J has essentially green-lit imetelstat's further development, and the market is quietly becoming aware of this fact. During J&J's Q1 conference call, for example, as Executive Vice President and Chief Financial Officer Dominic Caruso noted, "The pipeline is very strong with -- we're now eight more products we intend to file between now and 2020, each having a billion-dollar potential."
The key takeaway here is that is Caruso is including imetelstat in this elite group of experimental drugs. Imetelstat, after all, was recently listed as J&J's top New Molecular Entity (NME) in oncology on April 17 and there are exactly eight NME candidates highlighted across J&J's oncology and neuroscience pipeline progress report.
However, Caruso's affirmation and J&J's pipeline update arguably went unnoticed by the market last week. Geron's stock barely reacted to the news. But savvy investors may want to take note.
Imetelstat's risk is overstated
Why is this list of selected NME pipeline highlights so telling in regards to J&J and Janssen's plans for imetelstat? Two reasons.
First off, imetelstat's ongoing trials have been continually vetted by the Joint Steering Committee, as well as the Food and Drug Administration (FDA). And as I mentioned before, these are not double-blinded trials, and patients with MDS and MF do not spontaneously reverse course in terms of disease progression. Therefore, J&J definitely knows where these data are headed in the broad sense. If imetelstat was missing the mark, after all, J&J simply wouldn't be wasting time and money by continuing these studies.
Secondly, investors need to understand another key point about Janssen's pipeline: It's absolutely massive. At present, J&J's pharma subsidiary has 170 ongoing clinical trials, according to clinicaltrials.gov -- only two of which pertain to imetelstat. The point is that J&J decided to earmark imetelstat as a top prospect -- even though it literally has dozens upon dozens of other promising drug candidates. That's a sure sign of confidence, in my book.
Yet, Geron's stock was treated to another round of short-selling last month, pushing the company's valuation into some rather questionable territory.
A questionable valuation
I've argued elsewhere that Geron should already be valued at close to $1.5 billion, on a risk-adjusted basis, based on the drug's prospects for just myelofibrosis. J&J, for its part, has basically affirmed this valuation by repeatedly stating that imetelstat is a potential blockbuster, even as a later-line treatment for MF. The market has nonetheless seen fit to value Geron at less than half this estimate, and this figure doesn't even take the sizable commercial opportunity offered by MDS into account.
But here's where the story takes a truly odd turn. Right now, the market is head over heels for unproven gene-editing companies like Crispr Therapeutics (NASDAQ: CRSP). These stately valuations among gene-editing companies are indeed mystifying, given that this technology has yet to enter a company sponsored clinical trial at this point. Crispr, for instance, currently sports a market cap of $2.55 billion, despite the fact that there is no tangible evidence that this platform works in humans.
Geron, by contrast, has shown that imetelstat produces unprecedented responses at the bone marrow level in MF patients, and these data were published in the prestigious New England Journal of Medicine. The drug also produced exceptional results in a subset of MDS patients that led to the FDA granting a Fast Track designation for this second indication. Last but certainly not least, imetelstat's development is being handled by one of the most successful companies (Janssen) in the business.
Although it might seem like I'm picking on Crispr-based gene-editing companies, the truth is that there are several other clinical-stage biotechs that also garner far higher valuations than Geron. I'm simply using Crispr Therapeutics as one example among many to drive home the point that Geron's $608 million market cap doesn't make a whole lot of sense when viewed in this broader, industrywide context.
What's next?
Coming full circle, I think short-sellers are clearly taking advantage of the fact that Geron is unlikely get an answer on the Continuation Decision from J&J until the back end of Q3. There's never been any reason to think that J&J would give a formal answer until these ongoing trials have read out, and that timeline, unfortunately, gives shorts a clear line of sight in terms of when to hit the exits.
Keeping with this theme, the options market is predicting a monstrous move in this stock by Sept. 21 of this year. The open interest in the number of call and put option contracts for September, for example, has been surging since the start of March, and the absolute numbers of contracts presently open for September far exceed that of all other available dates. So, the clock for shorts -- and longs -- is indeed ticking down.
What should investors expect going forward? My view is that shorts will start to lower their exposure to a possible positive Continuation Decision by the end of summer, which should result in a steadily, albeit slowly, rising share price over the next few months. That said, shorts will probably continue to play the enormous volatility in Geron's shares all the way to the finish line.
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George Budwell owns shares of Geron. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has the following options: short May 2018 $140 calls on Johnson & Johnson. The Motley Fool has a disclosure policy.
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ScottM 23 hr ago
I’m surprised some long investor(s) with deep pockets hasn’t taken advantage of this situation to squeeze the shorts and play the huge upside potential with limited downside risk. Seems like a big long investor could make an easy 25-50% profit with the additional momentum of shorts exiting their positions.
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David 1 day ago
GERN = Great opportunity. Very undervalued.
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Dogmaistotalbollox 22 hr ago
This will be a windfall. My friend has this disease and needs this treatment. Go GERN!
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Tom 21 hr ago
Geron will not receive all the income from this drug when it goes commercial because of the contract with Janssen. In fact Geron will receive less than 25%. So this estimate of Geron's value is a little off but I do think it is worth more than its present price.
This mornings attack on our stock made me sick to my stomach. A million shares in a half hour,all down ticks. Naked shorting they claim, is to help MMs keep an orderly and fair market.,Its not happening here. SA claims that in the last couple of months , shorts here, went from 22 mill to 44 mill and that was until the end of march. So far this month it looks like 10 mill more.
There are a lot of rules and regulations on the NASDAQ to try and protect shareholders. But what is happening here is not orderly and fair.
J&J has already paid GERN 35 million dollars toward approval of the drug. Next week, if they pick up option to continue, they will have to pay another 65 mill.This is all in the SA article. All in all, from here to full approval of the drug from the FDA to market, between milestones and royalties J&J will have a billion bucks involved. Then when the drug is being sold, Gern will get 20% of world wide sales.A hell of a package.
So, some one or entity, is banging this stock down,so as the buy out offer comes it will be AS CHEAP AS HE CAN GET IT.In the mean time we stockholders have no recourse but sit here and watch it unfold,and take it on the chin. and me keep getting margin calls.
IMHO
JNJ wants the whole enchilada. NO more support. They are naked shorting this stock between $3.50 &4.00.This is a billion dollar in sales for them.They will offer an $8 BO offer. That will be 100% higher than the last sale. Not what the stock is really worth . This morning some good buying came in ran it up a little, over a million share in half an hour, then the big guy came in and put out the fire. This has been going on for weeks.We are really being manipulated . No moon landing for us , we are just hostages. Our hope is somebody comes along and out bids them. I am not a know it all, but manipulation is as plain as the nose on your face,
Just thinking out loud
What are the shorts thinking? When we win this battle We stand to go 10 x plus in price. Here they are banging away, when if they win, they are looking at making $3.00. Am I nuts or what?
In he mean time I have a good amount of stock here and every time it goes lower a couple of bucks, as they say down here in SW Fl. ITS A HUGEA. Why?
Here we go
ke-Or-Break Catalyst This Week
Apr. 17, 2018 9:50 AM ET | About: Geron Corporation (GERN), Includes: JNJ
John Engle
John Engle
Value, special situations, Deep Value, Growth
LinkedIn
(2,750 followers)
Summary
Geron's lead drug candidate imetelstat, developed in collaboration with Johnson & Johnson subsidiary Janssen Biotech, is facing a key catalyst ahead.
If Janssen elects to continue backing the development of imetelstat into Phase 3 trials, Geron will receive a guaranteed payout; if not, the small biotech could fold.
Johnson & Johnson is expected to signal its intentions when it announces earnings on April 17.
Promising comments from Geron's management suggest that Johnson & Johnson's decision will be a positive one for the company.
Geron represents a serious case of high risk, high reward trading.
This article was co-authored by Stepan Lavrouk. Stepan is an investment analyst with Almington Capital.
There are few companies that exemplify the ups and downs of investing in the small-cap biotech space as well as Geron Corporation (GERN). Having languished in the $2-3 range for almost two years, the stock appreciated 140% over the course of March, peaking at $5.98 and then selling back down to $3.30.
Why the sudden movement?
The company's lead (and only) drug candidate is imetelstat, a telomerase inhibitor developed in collaboration with Janssen Biotech, a subsidiary of Johnson & Johnson (JNJ). The drug is currently being investigated in two active Phase 2 trials, for myelofibrosis (IMbark) and myelodysplastic syndrome (IMerge), scheduled to end in 2019 and 2022, respectively.
In the recent March 16th earnings call, Geron's management highlighted recent results from IMerge, stating that the results were significantly positive:
"These efficacy results represent clinically meaningful outcomes with a profound impact on a patient's quality of life and provide further support of data that imetelstat exhibits potential disease modifying activity by suppressing the malignant progenitor cell clones that drive the underlying disease".
Crucially, Geron relies on Johnson & Johnson's ongoing financial support, which is itself conditional on positive clinical results. Thus, the March comments were unsurprisingly received very positively by the broader market.
A Make-Or-Break Binary Catalyst Ahead
Geron currently has a market capitalization of just over $600 million and has averaged net losses of $30 million for the last two years. Accordingly, it is almost entirely dependent on development and regulatory milestone payments from Janssen Biotech. If the Johnson & Johnson subsidiary elects to continue backing the development of imetelstat into Phase 3 trials, Geron will receive a guaranteed $135 million payout, as well the potential for further milestone payments.
From an investor's point of view, the binary nature of these payouts actually makes it easier to weigh up Geron's prospects than it would be for a more conventional company: Either Janssen Biotech continues to back imetelstat, which will send Geron's share price soaring, or it chooses not to pursue the trial into the next phase, in which case it is highly likely that Geron will fold.
The market for blood cancer treatment is projected to grow to $50 billion by 2020. Imetelstat could see peak revenues of $1 billion off of myelofibrosis and myelodysplastic syndrome treatments alone, so clearly there is clearly enormous potential here.
Major Catalysts Inbound
Johnson & Johnson's first quarter earnings for 2018 are due on Tuesday, April 17th. Along with the usual financial statements, the manufacturing giant is expected to present new clinical data from its pipeline. As Johnson & Johnson has consistently named imetelstat as one of its leading blockbuster-potential drugs and since Geron's management themselves have hinted that promising clinical results are forthcoming, it would be extremely odd for Janssen Biotech to not address the issue soon. Not doing so would be a major red flag.
In fact, the expectation of big news is likely what caused share price to jump by almost 13% towards the end of last week, as more investors with relatively high appetites for risk and willing to play the catalyst took positions ahead of this binary event. Obviously, this announcement will either make or break the company, so we strongly advise readers to seriously consider the downside risk of their investment before committing.
Investor's Eye View
Geron is the perfect poster child for the peaks and troughs of the biotech investing game. As the company is essentially a one-trick pony, any news concerning imetelstat will take on significantly more importance than it would if the company had a more diverse pipeline.
Ultimately, it is impossible to know whether Johnson & Johnson will continue its support for the development of imetelstat. A catastrophe could still be in the works. However, the promising comments from management suggest that Johnson & Johnson's decision will be a positive one for the company. Were this to happen, we see Geron's share price going to at least $7 per share, with great potential for further growth as the drug continues to move through the approval process. Abandonment could take shares down toward zero - or at least fire sale prices.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Brad Thomas
My Oh My, 4 Spec Buys
Brad Thomas • Apr. 17, 2018 7:00 AM ET
Thanks. think it will be a long shot that they mention GERN But I do hope so. SA took another slap at us today. Did not help.
What time tomorrow?
Imho this is what is happening. And I have been around. This stock is in play. Some body is going to make a bid soon on this stock, and it behooves him to keep this stock down so when he does make his bid, it is as cheap as he can get it.
How does he do it? Naked shorting. That is what is happening now. Watch the bids. As soon as a block goes up .its hit. I have seen bids of 100,000 get hit as soon as they go up . Its been happening for weeks.
This market is going nuts,we have good news coming, and we are at an all time low.
We are caught in trap.What do we do? we do not sell . There is a bid coming, its got to be better than what the price is now.
Our hope is when these people put out there bid. Somebody else will outbid them.. Watch the bids keep getting hit You should buy more if you think the buyout will be higher. I do not know it all but this is what I think is going on. Like I said , I have seen it all. I would not be surprised if J&J wants it all, if he could get it cheap.
Something aint right here. This selling is too intense. Its like a miniature bear raid. With all this good news coming, who the heck is selling?Or somebody knows something that we do not know. Is it shorts selling more to get it down so they can cover cheaper?...
I am being forced to sell at these prices because of a margin call.
I am not looking for sympathy, ,All I am saying is that margin selling is adding to this , ( to me,) disaster.
I believe this whole episode is being choreographed by Adam and SA.
They timed his hit piece in SA to be released the day that Genron was to present at the conference. That, being followed up by bogus cases being filed .All this in the same time frame. Every bid that comes up is being hit by this group. This is all set up. This is not happenstance.
This stock has been and still is under an unrelenting selling attack for months.
.Any and all bids are hit.The pros are short selling this stock. I have not seen an uptick in months.
This Co. is supposed to be a leader in its field in China.
Why the under performing in its price, anybody??
Just two more facts
There are 577 Sephora stores within JC stores adding 13% to bottom line.
There are 500 stores selling appliances. Xmas has yet to come.
GLTA
This store has a beauty salon. That is for hair,nails,etc.
sephora does cosmetics. Lipstick, perfume. Some people read this board. The stock has popped a little. I bet a lot of people do not know that these new additions have been added and add to the bottom line.
Imho.
I do not think that Amazon ruled the world on Black Fri. My better half works at a Penny store in a mall . It has added
two new additions to its merchandise. One is a Sephora cosmetic shop and it also just added appliances,stoves,refrigs, etc.. The malls were slammed, this particular JC store had its best sales day ever. It seemed that she worked for 72 hours in a row! She is exhausted
I think the Co. will show strong earnings this qtr.
The Co. should make a little statement to that fact. Internet sales were up also.
Earnings out
Luke warm results... losing customers.. but earnings are up. stock up to 13.50. Go figure. See you next year...
This a real busy board. Happy New Year
Hope Wednesday news turns this stock around.Why the $3 jump on Friday?
Talk about stumbling into something! press release does not address earnings, but it looks like they are talking about sticking around for a while.
That pop the other day ,sucked me right in. What was that all about?
That is 2 months ago. Funds are now getting impatient. results are reflected in pps.
Please go to the archives on this board. Go to Nov.2007 you will find that 10 years ago,almost to the day., that this same drug was being submitted to trails for cancer and epilepsy. Over the years this stock has been placed on numerous exchanges for trading, all with the same story,trails are imminent. The guys behind this stock are gaming the system. Research this stock please, its all there in the archives! A couple of months ago I was in New York I called the phone # listed as headquarters I said could I come up and visit. The man who answered the phone said no. He told me that I would have to get written permission from Dr. M!
I am out Goodby.
Ship of fools. We are sitting in the bleachers watching the parade of DOW Jones pass us by. (Just seeing if you guys print this one.)
as you state in your posts, your charts apply to legally ,borrowed short stock sales. IMO, all the damage is being done on naked short sales. No need to borrow. Its the bane of Wall St. Who knows how many of these shares are covered by buys and the short sales covered?
What can a naked short seller do with the money he receives from the sale?
Can anybody answer that?
In my defense I would like to see a statement from the Co. saying the words, CAN, WILL, Does. Try this for size, " I might be a millionaire, if this stock goes to a $1,000 a share,if it does,it will appear so..
Pure baloney,and so is that PR.
ANOTHER PUFF ball PR.
Take out the words... IF, APPEARS, MIGHT. ETC. What have you got??
A head fake!!
They also give to other Bio"s. You guys are into mass hypnosis. Really in LA LA land.