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Investing.com - Goldman Sachs has resumed coverage of Geron Corporation (NASDAQ:GERN) with a Sell rating and a $1.00 price target, citing disappointing sales of the company’s first commercial drug, Rytelo. The stock, currently trading at $1.44, has fallen nearly 70% over the past year and sits 72% below its 52-week high of $5.06. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 7.87, though it’s currently unprofitable.
The investment bank noted that Rytelo’s first-quarter 2025 revenue declined quarter-over-quarter compared to the fourth quarter of 2024, reflecting flat demand in the third quarter following approval. The Q1 revenue also fell 17% below consensus estimates at the time. InvestingPro data reveals the company’s weak gross profit margins of 8.06%, though analysts still project significant revenue growth for fiscal year 2025.
Goldman Sachs conducted a proprietary survey that found physicians expect only 38% of patients will receive Rytelo during their disease course, significantly lower than the 60% indicated in prior key opinion leader checks. The survey also revealed doctors are primarily using Rytelo in the third-line setting, where treatment duration is substantially shorter than in earlier treatment lines.
The research showed physicians anticipate limited changes in their Rytelo prescribing practices over the next year, supporting Goldman Sachs’ view that near-term sales growth will remain challenged. The firm expects only modest growth for Rytelo moving forward.
Goldman Sachs’ estimates for Geron are 12% lower than consensus expectations for both 2025 and 2026, with the firm concluding that Rytelo will not reach current consensus expectations for peak sales, likely resulting in "sustained pressure on stock performance over the intermediate-term."
In other recent news, Geron Corporation reported its first-quarter 2025 earnings, meeting analysts’ expectations with an earnings per share (EPS) of -0.03. However, the company’s revenue fell short of projections, coming in at $39.6 million compared to the anticipated $50.46 million. The company’s stockholders approved amendments to its equity incentive and employee stock purchase plans, increasing the share reserve, which reflects Geron’s strategy to incentivize and retain employees. Additionally, Geron presented new data on its drug RYTELO® at major oncology conferences, highlighting its efficacy in treating lower-risk myelodysplastic syndromes (LR-MDS) and progress in myelofibrosis trials.
Geron is also focusing on the commercialization of RYTELO, which saw a 10% demand increase in April, and is expanding its commercial field team to enhance market penetration. The company is preparing for potential launches in selected European countries by 2026. Furthermore, Geron’s ongoing trials, including IMpactMF, are exploring the potential of imetelstat, RYTELO’s active ingredient, for treating myelofibrosis, with preliminary data indicating promising results. Despite the revenue miss, the company maintains a strong cash position with $457.5 million in cash and equivalents as of the end of the first quarter. These developments underscore Geron’s strategic efforts to address market challenges and explore new growth opportunities.
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