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What You'll Want to Know About Geron's Q2 Results

Keith Speights, The Motley Fool

Investors weren't too happy the last time Geron (NASDAQ: GERN) announced quarterly results in May. Revenue dropped 82%, and the small biotech's net loss widened. Later in the month, Geron disappointed investors even more with its announcement of a delay in the decision regarding imetelstat's potential development as a treatment for patients with myelofibrosis who are at "intermediate-2" or high risk.

Anyone hoping for great news from Geron when the company reported its Q2 earnings release on Thursday after the market closed were let down yet again. Here's what you need to know from the biotech's Q2 update. 

Scientist in lab holding up a test tube

Image source: Getty Images.

By the numbers

Geron announced Q2 revenue of $101,000. This marked a steep decline from the $208,000 reported in the same quarter of 2018. The total, however, was slightly above the average analysts' revenue estimate of $100,000.

The company reported a net loss on a generally accepted accounting principles (GAAP) basis of $14.2 million, or $0.08 per share. In the prior-year period, Geron posted a net loss of $6.9 million, or $0.04 per share. The consensus analysts' estimate called for a Q2 net loss of $0.09 per share.

Geron ended the second quarter with cash and marketable securities totaling $162.3 million. The company has raised net cash of around $2.6 million since May through issuing nearly 1.9 million shares of common stock. 

Behind the numbers

Geron's revenue plunged because of a reduction in the number of active research license agreements in place. Patent expiration on the underlying technology of the company's human telomerase reverse transcriptase (hTERT) technology is the main culprit behind the drop in research license agreements.

The biotech's net loss worsened in the second quarter, in part because of the decline in revenue. Geron's operating expenses also more than doubled from the prior-year period to $15.3 million. This increase stemmed from higher research and development costs from resuming sponsorship of the ongoing imetelstat clinical trials and higher general and administrative spending primarily related to increased corporate, legal, and staffing costs.

Did anything move in the right direction for Geron in Q2 from a financial perspective? Yes, but it wasn't a big item. The company announced that its interest and other income rose from $717,000 in the prior-year period to $1.1 million in the second quarter of 2019. Higher yields on its marketable securities fueled this increase.

Looking ahead

Geron anticipates total operating expenses for the full-year will be between $80 million and $85 million. This includes a $20 million to $25 million one-time cost with imetelstat program transition activities from Johnson & Johnson's Janssen subsidiary. Geron expects the transition of the imetelstat program from Janssen will wrap up in the third quarter of 2019.

The company also has a lot going on related to advancing its imetelstat program. The two-part IMerge clinical study is getting cranked up to evaluate the drug in treating transfusion-dependent patients with lower-risk myelodysplastic syndromes (MDS).

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com