On Monday, Goldman Sachs (NYSE:GS) increased its price target for Geron (NASDAQ:GERN) Corporation (NASDAQ:GERN) shares to $6.00 from the previous $5.00 while maintaining a Buy rating. The revision follows the U.S. Food and Drug Administration's (FDA) approval of Geron's drug Rytelo (imetelstat) for the treatment of lower-risk myelodysplastic syndrome (LR-MDS), particularly in patients who are refractory, relapsed, or ineligible for erythropoiesis-stimulating agents (ESAs).
Geron's stock surged by 19.7% intraday after the announcement, outperforming the XBI biotech index, which declined by 1.6%. The FDA's approval did not include a black box warning for Rytelo and does not necessitate a Risk Evaluation and Mitigation Strategy (REMS) to manage cytopenias, which is considered a favorable outcome for the drug's market entry.
The positive FDA decision has led Goldman Sachs to increase the probability of success (PoS) for the Rytelo program to 100%, up from the prior 95%. Consequently, the firm has raised its global risk-adjusted peak sales estimates for the drug to approximately $1.2 billion, an increase from the earlier $1.1 billion projection.
Geron also disclosed the pricing for Rytelo, which is set at $9,884 for a 188mg dosage and $2,472 for a 47mg dosage. These prices are in line with Goldman Sachs' monthly estimates of $25,000 when adjusted for patient weight and expected dosing patterns. Despite the anticipation of a gradual uptake due to the concentration of LR-MDS treatment practices in the community setting, high physician awareness and support for Rytelo are expected to contribute positively to its adoption.
Goldman Sachs reiterated its Buy rating on Geron, with the new price target set for a 12-month period, reflecting the firm's confidence in the drug's market potential following the recent regulatory approval.
In other recent news, Geron Corporation has seen significant developments. Following the U.S. Food and Drug Administration's approval of Geron's drug Rytelo, Stifel has increased the price target for Geron's shares to $7.00, up from the previous $6.00, while maintaining a Buy rating.
The approval of Rytelo, a treatment for lower risk myelodysplastic syndromes, is expected to play a crucial role in Geron's future financial performance. Furthermore, the drug's monthly pricing is approximately 15% higher than the prior estimate, a factor considered in Stifel's revised financial model.
TD Cowen also reaffirmed its confidence in Geron, maintaining a Buy rating and a $10.00 price target for the company's stock. This endorsement follows the approval of Rytelo, which did not include a black box warning for cytopenias, indicating a favorable risk-benefit profile for the drug.
In addition to Rytelo, Geron is also preparing for the U.S. launch of another novel drug, Imetelstat, as revealed in its Q1 2024 earnings call. The company holds $465 million in resources and plans for sustained operations through projected sales until Q2 2026.
InvestingPro Insights
Following the FDA's nod to Geron Corporation's Rytelo, the company's financial metrics reflect a company in a transformative phase. With a market capitalization of $2.96 billion and a significant return over the last week of 19.84%, Geron's performance is catching the eyes of investors. The stock has soared, trading near its 52-week high, at 96.8% of this threshold. Investors should note that while analysts have revised their earnings upwards for the upcoming period, Geron is not expected to be profitable this year, which aligns with a current P/E ratio of -14.45.
Two InvestingPro Tips that might be particularly relevant for investors considering Geron are: 1) Geron holds more cash than debt on its balance sheet, which could provide financial flexibility in its operations post-approval of Rytelo, and 2) despite weak gross profit margins over the last twelve months, analysts anticipate sales growth in the current year, likely spurred by the recent FDA approval.
For those seeking a deeper dive into Geron's prospects, InvestingPro offers additional tips and insights to navigate the investment landscape with greater confidence. To access these insights, visit https://www.investing.com/pro/GERN and remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 16 more InvestingPro Tips available for Geron, which could provide valuable guidance as the company embarks on commercializing Rytelo.
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