Perspective..
by mrgern
On September 1, 1998, over 146 months ago, Geron was selling for the same price it is selling for today ~ $4.70 - a very small percentage was cash. I believe the float was ~ 30 million shares ergo the market cap minus cash was ~ 120 million. That was before the discovery of embryonic stem cells, the development of the cancer vaccine GRNVAC1, the cancer drug Imetelstat, the spinal cord hESC treatment GRNOPC1, the differentiation of cardiomyocites and the development of GRNCM1, the differentiation of islet cells and the development of GRNIC1, the differentiation of chondocytes and the development of GRNCHND1.
Along with the preceding developments Geron was awarded patents which essentially guaranteed that they would receive significant royalties with any commercialization based on their core technologies (which over the last ten years, scientific research has validated as the core technologies for the coming Regenerative Medicine era).
On top of their own development Geron also purchased GRN1005 and with it the ability to deliver drugs across the Blood Brain Barrier.
Significant licensing deals have also occurred including the cancer vaccine deal with Merck, the cardiomyocyte deal with GE, the 50% ownership of Viagen, the licensing deals for TA65, Siena, Corning etc.etc.
Since September 1998 Geron has spent ~ 40 million per year advancing its programs for a total of ~ 500-600 million.
Today Geron’s market cap is 490 million of which 225 million is in cash. Add the 1998 market cap of 120 million to today’s cash and we get to 345 million.
The nut is that Wall Street currently has assigned a value of ~145 million dollars to the 500-600 million invested by Geron in product development. Essentially investing in Geron in 1998 would have resulted in an 80% loss.
Today Dendreon has a market cap of 5.4 billion – 18 months ago it was worth half as much as Geron is worth today – a gain of ~2000%. Dendreon has one viable product with very limited marketing capabilities. The success of Provenge will have a minor impact on cancer treatments in general.
Given Geron’s extraordinary pipeline of potential products and licensing opportunities it is very hard to argue with Geron’s risk/reward profile. Why then the disconnect – two reasons, first, the nature of biotech investing requires the certainty of FDA approval and imminent commercialization before value can be recognized in the market place and second, the use of hESC in therapies would alter the American political equation, i.e. the use of abortion as a wedge issue would be seriously compromised thereby diminishing the power of the religious right.
So that brings us to the conundrum – why buy the stock now? Well because it is very likely a very good long term investment and today’s price is very cheap. Try accumulating DNDN now at ~$40 per share. |
