aibioGeron completes $250 million Royalty Pharma and Pharmakon financings
Tickers GERN
Geron drew $125 million under a Pharmakon term loan and took $125 million from Royalty Pharma, in a quarter with a $26.4 million net loss. The release gives no royalty rates or loan interest rate.
Key facts
- Company
- Geron Corporation (NASDAQ: GERN)
- News type
- Mergers
- Primary source
- Geron Corporation 8-K (2024-11-07)
The two financings
Geron Corporation (Nasdaq: GERN) reported its third-quarter 2024 results on November 7, 2024, in an earnings release filed as Exhibit 99.1 to an 8-K. The release says the company completed synthetic royalty and debt financings in November 2024 that brought $250 million in gross proceeds.
The Royalty Pharma deal is a synthetic royalty agreement providing $125 million of capital in exchange for tiered royalty payments. The release does not give the royalty rates or any payment cap.
The Pharmakon deal is a 5-year senior term loan of up to $250 million. Geron drew a first tranche of $125 million and may borrow another $125 million before the end of 2025, subject to specified conditions the release does not list. Part of the first tranche repaid in full the $86.5 million owed under the existing loan with Hercules Capital, Inc. and Silicon Valley Bank. That loan has been terminated.
The release names Royalty Pharma and Pharmakon Advisors as the counterparties. It names no bank, placement agent or legal counsel for either deal.
Cash and the quarter
As of September 30, 2024, Geron had approximately $378.9 million in cash, cash equivalents, restricted cash and marketable securities. The company's pro forma figure, which adds the Royalty Pharma upfront and the first Pharmakon tranche and subtracts the repaid debt, is approximately $542.4 million. That is not a reported balance.
Third-quarter net product revenue for RYTELO was $28.2 million, the first full quarter of U.S. sales. Total net revenue was $28.3 million. The net loss was $26.4 million, or $0.04 per share, for the quarter, and $149.2 million, or $0.23 per share, for the nine months. A year earlier the third-quarter net loss was $44.8 million.
Research and development expense for the quarter was $20.2 million, down from $29.4 million. The release says the decrease is mainly because manufacturing and quality costs were capitalized after the FDA approval, instead of being expensed. Selling, general and administrative expense rose to $35.9 million on launch costs and headcount. Interest expense was $3.0 million, which the release attributes to rising interest rates.
For 2024, Geron expects total operating expenses of approximately $260 million to $270 million. It says its existing cash, including the $250 million gross proceeds, together with RYTELO revenue, will fund operations for at least the next 12 months. The release does not say whether it expects to draw the second Pharmakon tranche.
The drug and its trials
RYTELO, also known as imetelstat, received its first FDA approval and launched in June 2024. Product became orderable from specialty distributors as of June 27, 2024. The release calls the need in lower-risk MDS high, a company view that the release does not support with market data.
In Europe, the Committee for Medicinal Products for Human Use review of the marketing authorization application for lower-risk MDS could be completed in late 2024 or early 2025, with possible European Medicines Agency approval in the first half of 2025. Geron says it plans to sell RYTELO in select EU markets from 2026, subject to approval.
The Phase 3 IMpactMF trial in relapsed or refractory myelofibrosis may have an interim analysis in early 2026, when about 35% of planned enrolled patients have died. The final analysis may come in early 2027, when about 50% have died. Both timings depend on death rates in the trial, so they could move. The release reports no efficacy result from IMpactMF.
The release also mentions new data for the American Society of Hematology meeting on imetelstat in myeloid malignancies. It does not present those data.
Critical read
The financings add debt on top of the company's existing position. The term loan carries a 5-year maturity and conditions on the second tranche, and the release gives no interest rate on it. Interest expense is already rising, and the release describes the sufficiency of cash as depending on RYTELO revenue. Its pro forma cash figure adds the new money to the September balance and is not a reported figure.