Goldman Sachs (NYSE:GS) has upgraded its rating for late-stage biotech company Geron (NASDAQ:GERN) Corporation (NASDAQ:GERN) from neutral to buy, maintaining a price target of $4, which suggests a potential upside of 70.1% from Monday's closing price. The upgrade came on Tuesday, following the U.S. Food and Drug Administration's acceptance of Geron's new drug application for imetelstat, a treatment for individuals with transfusion-dependent anemia in lower-risk myelodysplastic syndromes (MDS).
Analyst Corinne Jenkins at Goldman Sachs highlighted that despite the recent pullback in Geron's shares, which saw a 27% drop this quarter and year-to-date losses of 3.3%, the current situation presents a buying opportunity. This downturn was driven partly by investor disappointment following the FDA's decision to review Geron's MDS drug through its standard review process rather than granting it priority review.
The FDA has set a Prescription Drug User Fee Act (PDUFA) action date of June 16, 2024, for Geron's New Drug Application (NDA) for imetelstat. In addition, the agency plans to hold an advisory committee meeting as part of their review process. Despite the standard review and upcoming meeting, which added to negative sentiment, Jenkins reassured that these steps are not inherently negative signals for approval.
Jenkins noted that imetelstat has followed an extensive development journey marked by numerous clinical setbacks across various cancer types. However, more recent data from Geron regarding imetelstat's use in LR-MDS presents a different safety profile compared to previous challenges. This divergence may be attributed to several factors, including Geron's adjustment of the dosing regimen for LR-MDS and extended dosing intervals.
"In our view, the clinical risk/benefit is sufficient to support approval given the i) efficacy, ii) manageable (though not benign) safety, and iii) degree of unmet need in this population," Jenkins said. She maintained that imetelstat is likely to be approved in this setting, estimating $1.5 billion in unadjusted peak sales.
The recent approval of Bristol-Myers Squibb & Co's (NYSE:NYSE:BMY) Reblozyl (luspatercept) in frontline LR-MDS across a broad population does not negate the blockbuster opportunity for imetelstat in the second-line setting, according to Goldman Sachs analysts.
As of Tuesday, Geron shares were down 1.71% at $2.30.
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