EU Approval And US Initiatives Will Expand Future Markets

Key Takeaways

• European expansion with RYTELO's approval and launch could significantly boost revenue through international growth and increased market reach.
  
• Strategic improvements in operations, leadership, and medical engagement aim to capture U.S. market opportunities and increase RYTELO adoption, enhancing revenue growth.
  
• Operational and strategic challenges, coupled with expenses and slower growth, may pressure Geron's revenue and limit market diversification opportunities.

Catalysts

A commercial-stage biopharmaceutical company, focuses on the development of therapeutics products for oncology.

• The anticipated European Commission approval of RYTELO in the first half of 2025 for lower-risk MDS patients, and the potential launch in select EU markets by 2026, could significantly increase revenue through international expansion.
  
• The possible positive outcome of the Phase III IMpactMF trial in JAKi relapsed/refractory myelofibrosis by 2028, if successful, may transform the treatment landscape and potentially double RYTELO's commercial opportunity, impacting future revenue growth.
  
• Operational improvements, including scaling up analytics, refining segmentation, and improving sales force effectiveness, aim to capture the significant U.S. commercial opportunity for RYTELO, potentially increasing revenues over time.
  
• Enhanced medical affairs initiatives, including market development and KOL engagement, are expected to raise HCP awareness and potentially increase RYTELO adoption in earlier lines of treatment, contributing to revenue growth.
  
• Appointment of seasoned commercial and sales leadership to drive market share across both third-line and earlier lines of therapy, which should positively impact future revenues and potentially improve net margins.

Geron Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Geron's revenue will grow by 86.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -226.7% today to 21.0% in 3 years time.
• Analysts expect earnings to reach $104.8 million (and earnings per share of $0.15) by about May 2028, up from $-174.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $306.6 million in earnings, and the most bearish expecting $42.1 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 37.2x on those 2028 earnings, up from -5.0x today. This future PE is greater than the current PE for the US Biotechs industry at 20.4x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.64%, as per the Simply Wall St company report.

Geron Future Earnings Per Share Growth

Risks

• Geron has observed flat revenue trends over recent months, particularly due to less-than-expected new patient starts in the earlier lines of treatment, which could impact its revenue growth trajectory.
  
• There are challenges in optimizing engagement with healthcare providers (HCPs), especially in community settings, leading to slower than anticipated uptake in using RYTELO, impacting potential market share and revenue.
  
• The need for strategic changes in commercial and medical affairs leadership following the initial launch period indicates operational challenges that could impede aggressive revenue growth plans.
  
• Anticipated significant financial expenditures, including necessary investments in medical affairs outreach and KOL engagement, might increase operating costs and pressure net margins if revenue growth does not meet expectations.
  
• Potential delays in international expansion, particularly in Europe, due to the current focus on U.S. market challenges, could limit future revenue streams and market diversification.

Valuation

• The analysts have a consensus price target of $4.125 for Geron based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $2.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $499.4 million, earnings will come to $104.8 million, and it would be trading on a PE ratio of 37.2x, assuming you use a discount rate of 6.6%.
• Given the current share price of $1.38, the analyst price target of $4.12 is 66.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.