FOSTER CITY, Calif. - Geron (NASDAQ:GERN) Corporation (NASDAQ:GERN), a biopharmaceutical company focused on blood cancer treatments, has announced a financing package of up to $375 million with Royalty Pharma and investment funds managed by Pharmakon Advisors, LP. The deal provides Geron with $250 million in gross proceeds at closing and the option to access an additional $125 million in debt.
The funding arrangement includes a $125 million synthetic royalty agreement with Royalty Pharma and a $250 million senior secured debt facility with Pharmakon Advisors-managed funds. Geron has drawn $125 million from the debt facility at closing, using a portion to repay existing loans with Hercules Capital (NYSE:HTGC), Inc. and Silicon Valley Bank.
According to Geron’s Executive Vice President and Chief Financial Officer, Michelle Robertson, the financial commitment from Royalty Pharma and Pharmakon Advisors reinforces the company's balance sheet and provides the flexibility to invest in the future. The proceeds are anticipated to support the U.S. commercial launch of RYTELO™, a potential launch in the EU, the completion of the Phase 3 IMpactMF trial for relapsed/refractory myelofibrosis, investment in supply chain redundancy, and general working capital needs.
Royalty Pharma will receive tiered royalty payments on U.S. net sales of RYTELO™, with the agreement set to expire in 2031, unless certain investment multiples are reached earlier. RYTELO™ is an internally developed telomerase inhibitor owned exclusively by Geron and is approved in the U.S. for certain adult patients with lower-risk myelodysplastic syndromes (LR-MDS) with transfusion-dependent anemia.
The Pharmakon Advisors-managed funds' loan has a five-year term, with no scheduled amortization payments and all principal due at maturity in 2029. The interest rate is variable, based on the three-month Secured Overnight Financing Rate (SOFR) plus 5.75%, with a SOFR floor of 3.00%.
Pedro Gonzalez de Cosio, CEO of Pharmakon Advisors, expressed support for Geron's commercial efforts in the U.S. and the continued development of RYTELO™ in other hematologic malignancies. Pablo Legorreta, CEO of Royalty Pharma, also highlighted the importance of RYTELO™ for the MDS patient population and the partnership's role in supporting Geron's commercial and development opportunities.
This financial update is based on a press release statement from Geron Corporation.
In other recent news, Geron Corporation has seen significant developments, particularly in the successful launch of its lead asset, Rytelo. The drug, aimed at treating certain blood malignancies, has shown promising early performance with 160 patients starting treatment within its first month of release. Analysts from H.C. Wainwright, B.Riley, Goldman Sachs, and Leerink Partners maintain positive ratings on Geron, with third-quarter sales estimates for Rytelo ranging around $19 million to $22.5 million.
Geron's strategic changes include the appointment of Jim Ziegler as Executive Vice President and Chief Commercial Officer, expected to enhance the company's commercial strategy, especially for Rytelo. The company is also engaged in a Phase 3 clinical trial for imetelstat in relapsed/refractory myelofibrosis, further emphasizing its focus on blood cancer treatments.
Geron's financial position remains strong, with $430 million in cash and equivalents, and projected operating expenses for 2024 estimated between $270 million and $280 million. These recent developments highlight Geron's commitment to growth and innovation in its field.
InvestingPro Insights
Geron Corporation's recent $375 million financing package aligns with several key financial indicators and trends highlighted by InvestingPro. The company's strong cash position, as noted by the InvestingPro Tip that Geron "holds more cash than debt on its balance sheet," is further bolstered by this new funding arrangement. This financial cushion will be crucial for supporting the U.S. commercial launch of RYTELO™ and potential EU expansion.
InvestingPro Data shows that Geron's revenue growth has been impressive, with a 205.11% increase in the last twelve months as of Q2 2024. This growth trajectory is expected to continue, as another InvestingPro Tip indicates that "analysts anticipate sales growth in the current year." The substantial financing package should help Geron capitalize on this momentum and invest in its commercial and development initiatives.
However, investors should note that Geron is currently trading at a high revenue valuation multiple, according to InvestingPro Tips. This suggests that the market has high expectations for the company's future performance, particularly with the launch of RYTELO™. The company's market capitalization of $2.57 billion reflects these expectations, but also underscores the importance of successful execution in the coming months.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Geron Corporation, providing a more comprehensive view of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.