Update on Geron (GERN)

What happened to Geron (GERN)?

Update: Today what happened to GERN was a U-turn. It crashed from $7.23 to $1.75 before bouncing back little bit and closed at $2.31. There were so many evidences of clinical trials going smooth, job postings for the drug, management confidence and almost everything was pointing towards a continued partnership collaboration with Johnson & Johnson's Janssen Biotech. But Janssen said that it will terminate the partnership for cancer treatment drug imetelstat, after doing a strategic review of its portfolio to determine its highest priorities for future growth. As I wrote in my blog, with such negative news it could potentially come to $1. Today it opened around $1.75 and bounced back little bit and closed at $2.31.

On the positive side, Geron said it plan on advancing imetelstat into a late-stage (Phase 3 trial) to evaluate the drug in patients with low or intermediate-1 risk myelodysplastic syndromes. This process is expected to start by mid-2019. It may consume a lot of cash and GERN has only about $180 million in cash. It may have a long road ahead. So, it may need to raise additional capital and that will further dilute the current equity. If the drug is good, there could be other collaborations and that may be a big plus. If that happens, it may again go beyond $5-6. But I think it may stabilize a little bit and again it may come down further before bouncing back higher. I have already trimmed some positions and will trim further then wait for a few months to see whether it bounces back or get toasted.

It reminded me of another stock that I had included a few years ago in my blog portfolio - EXEL. I removed from my blog portfolio when it crashed down to about $1.50 from around $6. After a year or so, it just sky rocketed because of some positive results, today it trades at $17.63, though much less than its 52 weeks high of $32.50. Will Geron take the same path? Nobody knows! With the discontinuation news, I thought the stock could crash to $1-1.50 range. So, it’s little better than my worst-case scenario!

My View: It’s a great lesson to be learned, not to forget to take profit when time is good. One should never get emotionally attached to any stock, no matter how good or great we feel about it! Of course, I too did not take as much profit as I could have wished to.. Biotech stocks are very risky, they may go to the dustbin or sky rocket even 1000% on a single day! So, it’s better to be highly judicious in allocating money. There is a proverb in Hindi language “ban gaya to aamir nahin to phakir”. Let me try to translate “either I can be a millionaire or a bagger”. Such attitude is extremely dangerous and can spell disaster for the investment portfolio. Personally, I try not exceeding 1-3% of my portfolio.

As time passes, I will keep you posted. Stay tuned!