Geron's Drug Alliance with Janssen Terminated, Shares Plummet 68%

A researcher in a lab

A researcher in a lab

Geron announced ahead of the market open that Johnson & Johnson (NYSE: JNJ)'s Janssen unit has made a decision to terminate a collaboration and licensing agreement it had with Geron since 2014 for its myelofibrosis treatment candidate Imetelstat, effective September 28. In a press release issued early this morning, the company said that Jannsen Biotech, Inc. has terminated a CLA entered into with the company in 2014. As a result, Geron has regained the global rights to develop and commercialize imetelstat.

The transition will take place over approximately 12 months with operational assistance from Janssen. Janssen will supply imetelstat to Geron for up to two years.

Imetelstat is being studied in two separate Phase 2 trials dubbed IMbark and IMerge, with the former testing the candidate for myelofibrosis and the latter for myelodysplastic syndromes.

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Patients now enrolled in the ongoing imetelstat clinical trials in myelofibrosis (IMbark) and myelodysplastic syndromes (IMerge) will continue to be supported through the respective trial protocols, including treatment and follow-up. "We also believe the combined data of 38 patients from the initial and expansion cohorts for the target patient population from the Phase II portion of IMerge support further development of imetelstat, and we are therefore prioritizing the initiation of the Phase III portion of IMerge". The primary endpoint is the rate of red blood cell transfusion independent (RBC-TI rate) lasting at least eight weeks.

The Company has revised its financial projections and now anticipates 2018 operating expenses to be ~$37M (previously $30M). The higher costs are projected for the hiring of additional personnel and external service providers to develop Imetelstat. As of August 31, 2018, the company had roughly $183 million in cash and marketable securities, which is expected to be sufficient to support its plans to initiate the Phase 3 portion of IMerge in 2019. In particular, we're interested in following the story surrounding the company's continued work to bring imetelstat.

Geron's stock was down 68% in premarket trading, a reversal of its 40% spike when the companies inked the deal four years ago.

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