Geron shares plunged nearly 70 percent in premarket trading on Sept. 27 following announcement from Johnson & Johnson's Janssen Biotech that it is ending a collaboration involving the development of the cancer drug imetelstat.
Bloomberg noted that Geron stock sunk to $1.99 at 9:44 a.m. in New York. The flip snatched $750 million off of Geron's market value. This was unfortunate as Geron had gained more than three times this year only to be pushed down to its lowest level in four years Bloomberg said.
In its official statement, Janssen Biotech said its decision to discontinue the partnership and license agreement with Geron cane after a strategic portfolio evaluation where the company realized that it needs to prioritize assets within. Janssen will continue to supply imetelstat to Geron in the ongoing clinical trials for up to 24 months as the transition period for clinical manufacturing takes place.
Moving forward, Geron will have sole global rights to develop and commercialize the cancer drug. All regulatory, medical affairs, manufacturing, and preclinical activities will have to be returned to Geron from Janssen.
Geron has also decided to revise its financial projections and now placed its operating expenses to be approximately $37 million for 2018. This amount is expected to increase more as Geron needs to hire additional personnel and seek service providers that were used to be provided by Janssen.
Geron remains confident that its current finances of $183 million in cash as of Aug. 31 will be adequate to support its plan to independently proceed with the Phase 3 trial of the cancer drug in 2019.
John Scarlett, Geron's president and chief executive officer, said its collaboration with Janssen up until the phase 2 trials will be a significant jumpstart for the company to continue with the phase 3. With this, Geron said it remains grateful for its short but fruitful collaboration with Johnson & Johnson's Janssen Biotech.
The discontinued agreement means that all licensed rights to the cancer drug imetelstat, including intellectual property rights, now exclusively belongs to Geron, Scarlett reiterated. This also effectively cuts any continuing economic obligations to Janssen.
The partnership between Geron and Johnson & Johnson's Janssen Biotech began on Nov. 13, 2014. At this time the exclusive partnership involved the commercialization of imetelstat in oncology, including hematologic myeloid malignancies.
George Zavoice, B Riley FBR analyst, told Bloomberg that as much as how the drug has proven to be effective, the main question is how big the market for the cancer drug is. Based on Janssen's decision, the market is not big enough to sustain its interest.
