Clinical-stage biopharmaceutical company Geron ( GERN 25.00% ) saw its shares jump 23.4% on Wednesday. The stock, which had closed at $1.28 a share on Tuesday, opened at $1.24 on Wednesday and rose to $1.60 a share in the mid-afternoon. Geron was last this high on Nov. 15, and it has a 52-week low of $0.99 and a 52-week high of $2.23.
The stock jumped on the type of news that ordinarily might make it fall -- the company announced it was making a public offering of common stock to raise money. In pre-market trading, the stock did trend lower, but ultimately, the reason investors jumped in lies in why Geron said it was raising money: to fund regulatory filings for its lead therapy, imetelstat.
NASDAQ: GERN
The drug is in the midst of its IMerge phase 3 clinical trial as the primary therapy to treat lower-risk myelodysplastic syndromes (MDS), which are rare blood disorders that lead to abnormal development of blood cells in the bone marrow, leaving patients with low blood counts.
The company also has the drug in an IMpactMF phase 3 trial to treat refractory (non-responsive) myelofibrosis, an uncommon type of bone marrow cancer that causes scarring in the bone marrow, leading to severe anemia.
Geron, in its fourth-quarter report, said it sees imetelstat potentially drawing $1.2 billion in revenue, even though it estimates there are only 100,000 patients with MDS in the U.S. and Europe, and 33,000 patients with refractory myelofibrosis in the U.S. and Europe. Geron also has exploratory studies to use the drug in new indications, including acute myeloid leukemia and higher-risk MDS.
Investors are reading the tea leaves and think the move to raise more money to handle regulatory hurdles means the phase 3 trials are going well.
Like any clinical-stage biotech, there are few guarantees. Investors are taking a flyer on the approval of the drug, but the trials for the drug are scheduled to end in October of 2023 for the IMerge trial and May of 2024 for the IMpactMF trial. The jump in the stock may also indicate that institutional investors are getting in on a potential growth stock before it climbs too high.
The company had only $1.4 million in revenue in 2021 and it lost $116.5 million last year overall. It listed $212.7 million in cash, so it apparently is using the stock offering to help it get to the finish line on imetelstat.
https://www.fool.com/investing/2022/03/30/why-gerons-shares-rose-234-on-wednesday/
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