Shares of Geron Corporation (NASDAQ: GERN), a small-cap oncology company partnered with Johnson & Johnson (NYSE: JNJ) for the telomerase inhibitor imetelstat, are heading up this morning on sky-high volume. What's driving this sudden surge?
Presumably, Geron's shares are moving northward in anticipation of J&J's first-quarter earnings release scheduled for next Tuesday. Investors appear to be bidding Geron's stock up on the working assumption that J&J will provide a broad clinical pipeline update next week, and that this update will feature imetelstat as a top product candidate. J&J, after all, has consistently listed imetelstat as one of its top blockbuster candidates over the course of the last two years.
Geron's shares are up by 12.7%, as of 11:06 a.m. EDT.
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Of course, the big-ticket item here is the fact that imetelstat's third internal review for its advanced myelofibrosis trial called IMbark has now been completed. J&J probably has a pretty good idea at this stage of whether it intends to hold on to imetelstat's rights. So it's easy to understand why investors are excited about next week's events.
Last May, J&J discussed its clinical pipeline at length with investors, where imetelstat was listed as a "late-stage blockbuster product" candidate. At the time, the reaction among Geron investors was somewhat subdued because everyone was painfully aware that the drug still had a long way to go in terms of development to achieve this lofty goal.
Fast-forward a year, imetelstat is now on the cusp of two major clinical updates for advanced myelofibrosis and myelodyspastic syndromes. So if imetelstat remains on J&J's list of top experimental medicines next week, this stock should easily push past its 52-week highs. That rosy scenario is far from guaranteed, but next week could turn out to be a watershed moment in the biotech's life cycle. Stay tuned.
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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.