Geron Corporation (GERN - Analyst Report) reported a fourth-quarter 2014 loss of 6 cents per share, a penny narrower than the year-ago loss of 7 cents. The Zacks Consensus Estimate was earnings of 17 cents per share.

Geron Corporation - Earnings Surprise | FindTheCompany

Fourth-quarter revenues of $178,000 declined 20.9% from the year-ago quarter. Revenues consisted entirely of royalties and license fees. The Zacks Consensus Estimate was $35 million.

Geron’s full-year loss of 23 cents per share was narrower than the year-ago loss of 29 cents. 2014 revenues also decreased 10.1% to $1.2 million

The Quarter in Detail

Research and development expenses declined 14.5% to $4.4 million reflecting lower costs related to discontinuation of the imetelstat trials in solid tumors and GRN1005 trials in patients with brain metastases and other reduced personnel-related and research costs.

Meanwhile, general and administrative expenses increased 21.5% to $4.8 million mainly due to higher non-cash stock-based compensation expense, legal costs and transaction costs associated with the collaboration agreement with Johnson & Johnson (JNJ - Analyst Report).

During the fourth quarter, Geron inked a collaboration deal with Johnson & Johnson for imetelstat. As per the deal, Johnson & Johnson gained exclusive global rights to develop and commercialize imetelstat for oncology, including hematologic myeloid malignancies, and other human therapeutics use.

A phase II study on imetelstat is expected to commence for the treatment of myelofibrosis in mid-2015 which will be followed by a phase II study for myelodysplastic syndromes towards year end.

Announces Job Cuts

In addition to presenting fourth-quarter results, Geron announced a restructuring plan which will see the company cutting its workforce from 39 to 21 by the third quarter of this year. The company estimates operational expenses to reduce as a result of its collaboration with Johnson & Johnson. The company expects the resizing to reduce the personnel-related costs by approximately $5 million on an annualized basis.

Geron expects to incur restructuring charges of approximately $1.9 million, the majority of which will be recognized in the first half of 2015.  Moreover, about $1.5 million of these charges are expected to be paid in cash during 2015.

2015 Guidance

For 2015, Geron expects operating expenses of approximately $38 million including imetelstat trials costs (approximately $17 million), personnel related costs (approximately $16 million) and corporate costs (approximately $5 million)

Though disappointed with the company’s fourth-quarter results, we are positive on the company's agreement with Johnson & Johnson which provides it with a strong partner and funds. The company’s growth prospects currently depend entirely on the successful development of imetelstat which is its sole pipeline candidate. We expect investor focus to remain on imetelstat-related updates. Meanwhile, we are encouraged by the company’s intention to diversify its portfolio through business development deals.

We note that the oncology market is highly competitive given the presence of large health care companies including Merck (MRK - Analyst Report) and Bristol-Myers Squibb (BMY - Analyst Report) among others.