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Biotech / Medical : Geron Corp.
GERN 1.960-0.5%Feb 23 4:00 PM EST

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From: tktrimbath12/31/2011 1:34:43 PM
   of 3554
My semi-annual review of Geron

INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.

GERN (market cap $0.195B)
Geron is one of the most leading edge biotech companies that aims to treat critical diseases and ailments through nuclear transfer (cloning), telomerase management, and stem cell administration. They are an old startup without any active products, except for what is involved in clinical trials. I had hopes for their stem cell nerve regeneration clinical trial and was disappointed when they cancelled the study. The stock suffered appreciably. Their technologies and patent portfolios (particularly the cloning patents) are impressive. Management seems to be mature in the handling of potentially socially sensitive treatments. If they succeed, their products and services will revolutionize may types of severe afflictions, including cancer. Unfortunately, they are only in phase II at best, and therefore probably have years before an FDA approval and revenues. As Dendreon (DNDN) proved, innovative medical practices meet significantly higher regulatory and financial hurdles.

I think the most appropriate stock valuation is based on the present value of future revenues discount for risk. Currently in general the market is valuing future revenues as nearly zero or risk as nearly 100%. Even a battered biotech like Dendreon has a market cap of over $1B, which suggests that an FDA approval for a Geron treatment could produce a Geron market cap that is five times above today's valuation. Apply your own discounts as you see appropriate. I think the discount is balanced by the fact that any single treatment would most likely legitimize the other treatments in the pipeline.

DISCLOSURE LTBH since 1999 and continuing to hold because I may have enough stock if they succeed, and may have time to buy more at these low prices as they make progress and if I have discretionary cash (which I don't - let me check my lottery tickets) or if I have to rebalance my portfolio (like if DNDN was bought out for $120, ok how about $60).
(I've also collected links to the other discussion boards and my other stocks over on my blog
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