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Geron Is Ripe For A Short Squeeze
Jun. 29, 2015 10:02 AM ET | 2 comments | About: Geron Corporation (GERN), Includes: JNJ
Disclosure: I am/we are long GERN. (More...)
Summary

Short interest in Geron has risen in the last two months.
At the same time, short ratio is also very high, making Geron ripe for a short squeeze.
A short squeeze could be triggered by an update on Geron’s plans to acquire oncology products.
Short interest in Geron Corporation (NASDAQ:GERN) has risen sharply since the company reported its Q1 results and provided an update on April 30th. Short interest has risen almost 8% between April 30th and June 15th. But so has the days to cover or short ratio. With two upcoming catalysts, this makes Geron ripe for a short squeeze.

According to data from NASDAQ, a total of 25,479,050 shares of Geron were shorted on April 30th, 2015, with short ratio at 8.72. Average daily share volume at the time was 2,919,707. On April 30th, Geron reported its Q1 results and provided an update on its collaboration with Janssen (NYSE:JNJ). The company also announced that it will reduce its workforce in the wake of the Janssen agreement. On May 15th, the number of shorted shares rose to Average daily volume has also come down sharply from almost 3 million at the end of April to 2.14 million. The decline in volume is a bit surprising as the company has held a conference call in this period and also imetelstat has been granted an Orphan Drug Designation by the FDA in MF. The conference call with shareholders was held in May, which I discussed here. Although Geron did address some of the questions that I had raised in a previous article, some questions remain unanswered. I also tried to interview Dr Ayalew Tefferi, who is very relevant to Imet's MF program - but no response from the doctor yet. Geron also did not shed any light on plans to acquire new oncology products. Also, not much was discussed on the '615 patent.

Having said that, the second half could become livelier for Geron and its shareholders. Indeed, there are at least two upcoming catalysts that would be of concern to short sellers. Janssen is on track to start the Phase 2 200-patient MF study. By the end of this year, Janssen is expected to commence the MDF Phase 2 study. But what will possibly trigger a short squeeze in my opinion is an update on Geron's plans to acquire oncology products. I believe that it would make sense for long-term investors to add to their position in Geron and take some quick profit from a short squeeze.

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