Geron Corporation (GERN) Rallies, Claws Back Some of Lost Ground from FDA Hold

Joel Anderson  |

The Geron Corp. (GERN) started the day slowly, opening the day at $1.80, just $0.02 a share above Monday’s closing price. However, shares in the small-cap pharmaceutical company took off in the late morning. Volume spiked significantly just before 11:30 am, and the price followed soon after. Shares were already up close to 8.5 percent at just under $1.95 apiece when volume started to spike, prompting a run that carried share prices to a peak of $2.53 apiece just before 12:40 p.m ET.

The stock retreated from its peak and then started climbing again in the afternoon, forming what appeared to be a double-top pattern for the day when shares started to retreat again after hitting $2.49 for a second time just after 3 p.m. However, volume remained heavy. Nearly 30 million shares changed hands throughout the day despite the stock sporting an average daily volume of just 5.5 million, and the stock appeared to hold gains well over 30 percent for the day.

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That volume has been especially heavy as of late, though, as Geron dropped off sharply last Wednesday on news that the FDA was placing a clinical hold on imetelstat, a treatment for myleofibrosis, a chronic myeloid cancer that affects bone marrow. Geron had previously risen to new heights in November after positive results were released from a Mayo Clinic study, and experienced severe volatility in December.

However, news that the FDA was placing a clinical hold on imetelstat due to consistent tests showing abnormalities in liver function among patients taking imetelstat. The results were swift, with the stock shedding more than 60 percent of its value in a single day and crashing well past its support level at about $3.10 a share. The stock also sharply crossed its 200-day SMA from above.

Tuesday’s gains lack a clear news item to spark the action, but it could have simply been in reaction to the massive sell-off last week. The FDA hold is a temporary one, and could be reversed after if Geron can demonstrate the ability to reduce the abnormalities in liver function back to baseline levels post-trial. What’s more, given that myleofibrosis is incurable, and imetelstat is the only treatment that’s demonstrated any effectiveness in altering the disease activity, it seems more than possible that the FDA will ultimately allow the trials to resume.

As such, today’s buying could indicate many investors buying in at what could be viewed as a discounted price.

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