2-Star Stocks Poised to Plunge: Geron?
Oct 3rd 2012 10:20AM
Updated Oct 3rd 2012 10:28AM
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Geron (Nasdaq: GERN ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Geron and see what CAPS investors are saying about the stock right now.
|Headquarters (founded)||Menlo Park, Calif. (1990)|
|Market Cap||$217.9 million|
|Trailing-12-Month Revenue||$1.9 million|
|Management||CEO Dr. John Scarlett (since September 2011)
CFO Graham Cooper (since January 2012)
|Return on Equity (average, past 3 years)||(55.1%)|
|Cash/Debt||$118.2 million / $0|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 17% of the 107 All-Star members who have rated Geron believe the stock will underperform the S&P 500 going forward.
Can't say I'm feeling the Geron rebound after the crushing failure of imetelstat in breast cancer and lung cancer. After all, this is the drug that Geron gave up stem cell research to focus on. A buck seventy share price may seem low, but that translates into a market cap of 225M due to years of unchecked dilution. The company only has a year and a half of cash at the current burn rate and the next catalyst will be topline phase II data for, you guessed it, imetelstat in hematologic malignancies before the end of 2012. Geron's only other compound in clinical trials is GRN1005, a relatively inexpensive acquisition in phase II for brain tumors. Another very tough indication and not a lot of reason to expect success.
Geron could certainly provide upside surprises but there's no reason for a run-up going into any of this data given the already-generous market cap. Given what's happened recently to Geron and now ArQule, I really have to question the wisdom of long positions in developmental oncology companies with unpredictable interim data catalysts.
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