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On Wednesday, H.C. Wainwright adjusted its stance on Geron Corporation (NASDAQ:GERN), shifting from a Buy to a Neutral rating. The research firm’s decision comes in the wake of Geron’s recent announcement regarding a plateau in sales and a strategic pivot to boost product awareness and education among healthcare professionals (HCPs). The downgrade follows a challenging period for the stock, which has declined 48% over the past six months and is currently trading near its 52-week low of $1.64.InvestingPro analysis indicates the stock may be undervalued, with 13 key insights available to subscribers, including metrics on financial health and growth potential. The company’s comprehensive Pro Research Report offers detailed analysis of its market position and future prospects.
Despite Geron’s fourth-quarter revenue for Rytelo hitting $47.5 million, surpassing H.C. Wainwright’s $45 million prediction, the company has observed an 8-week and 4-week trend of stagnant revenues post-holiday season. This has prompted Geron to reassess its launch strategy for Rytelo, particularly focusing on increasing HCP knowledge of the drug and its benefits. Financial data from InvestingPro shows the company maintains a healthy current ratio of 2.89, indicating strong short-term liquidity, though it faces challenges with negative gross profit margins and rapid cash burn.
The majority of new Rytelo prescriptions have been for third-line (3L) low-risk myelodysplastic syndrome (LR-MDS) patients, but Geron’s marketing efforts are geared toward first-line (1L) ESA-ineligible and second-line (2L) ESA-refractory patients, as indicated on the drug’s label. These patient groups are less pre-treated and tend to have longer therapy durations, which could lead to sustained usage.
Geron plans to conduct more investigator-sponsored trials in 2025 to explore Rytelo’s application in different treatment lines. Currently, the drug is largely prescribed by academic centers, with 65% of prescriptions coming from these settings as reported in the third-quarter earnings call. The company anticipates that over time, the breadth and depth of prescriptions will expand beyond academic settings.
The approval of luspatercept for 1L patients in 2023 may have influenced treatment patterns, with some HCPs continuing to use ESAs for 1L treatment and then luspatercept for 2L, followed by Rytelo for 3L. Geron is also aiming to position Rytelo as a treatment for 2L ring sideroblast (RS-) negative patients, which represents a significant unmet medical need.
Due to these factors, H.C. Wainwright has revised its revenue projections for Geron, lowering the 2025 estimate to $212 million from $297 million and reducing the peak sales forecast to $1.5 billion from $2 billion. The firm cites reduced confidence in near-term revenue growth and a downward revision in peak sales estimates as the rationale behind the downgrade to a Neutral rating. While analysts project substantial revenue growth of 312% for FY2024, InvestingPro data reveals the company faces profitability challenges, with a negative EBITDA of $207.45 million in the last twelve months. For deeper insights into Geron’s financial health and growth prospects, investors can access the detailed Pro Research Report, which includes comprehensive analysis of key performance indicators and future potential.
In other recent news, Geron Corporation reported its fourth-quarter earnings, revealing an earnings per share (EPS) of -$0.04, which missed the consensus estimate of -$0.03. The company’s revenue for the quarter was $47.54 million, significantly below the anticipated $61.93 million. Despite the shortfall, Geron highlighted the potential of its newly approved drug, Rytelo, which generated $47.5 million in sales for the quarter. TD Cowen adjusted its price target for Geron, reducing it from $10.00 to $5.00, while maintaining a Buy rating, reflecting concerns over Rytelo’s sales trajectory. The company attributed the flattening sales to the drug’s relegation to third-line therapy, emphasizing the need for increased adoption in earlier treatment stages. Geron plans to focus on physician engagement to boost Rytelo’s market penetration and anticipates reaching profitability without additional financing if internal sales and expense expectations are met. The company ended 2024 with a strong cash position of $502.9 million, which it believes will support its operations moving forward. Geron expects operating expenses for 2025 to be between $270 million and $285 million, as it aims to leverage its resources for sustained growth.
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