A small company with a checkered past presents early data on an experimental drug for myelofibrosis which appears to have never-before-seen benefits for patients. The surprisingly positive data come from a small study conducted by an outspoken and controversial myelofibrosis expert at the Mayo Clinic. A bull-bear debate ensues on Wall Street, with some investors believing the small company's drug candidate has the potential to be a game-changing, blockbuster in myelofibrois, while others remain skeptical.

The company I'm referring to is YM BioSciences, of course. In 2011, the company's experimental drug CYT387 caused quite a stir with data showing it could reverse anemia in myelofibrosis patients -- something the already approved competitor, Jakafi from Incyte (INCY - Get Report), could not do.

Investors debated the pros and cons of CYT387 for months with no resolution. YM BioSciences stock price remained stagnant. Finally, in December 2012, Gilead Sciences  (GILD - Get Report) acquired YM Bio for $510 million in cash, or an 81% premium on a per-share basis.

This situation is playing out almost exactly the same way today with Geron  (GERN - Get Report) and its experimental myelofibrosis drug imetelstat. The similarities to YM Bio and CYT387 are uncanny.

What's not known yet is how the Geron story plays out in the end, but you certainly can't dismiss the possibility the company and its very interesting myelofibrosis drug are acquired just like YM Bio was one year ago.

The buzz around imetelstat centers on early phase I study data showing the drug reverses bone marrow fibrosis in myelofibrosis patients. Myelofibrosisis is a cancer-like disease in which abnormal bone marrow stem cells produce scar tissue. This scar tissue, or fibrosis, crowds out and replaces healthy marrow.

No myelofibrosis drug has ever before demonstrated an ability to clear bone marrow fibrosis i.e. reverse the underlying cause of myelofibrosis.

Imetelstat might be the first.

On Monday night, Geron and Dr. Ayalew Tefferi of the Mayo Clinic presented data at the American Society of Hematology annual meeting showing 5 of 22 patients had a complete or partial remission following imetelstat treatment.

This means the patients had a response in their bone marrow and resolution of clinical symptoms like reductions in the size of their spleens. [Jakafi was approved based on significant spleen-size reduction.]

The five complete and partial remissions were disclosed in November but what was new Monday were more details and confirmation of the patients' overall response, including most importantly, the clinical (symptomatic) benefits.

[You can download Geron's slide deck on the imetelstat data from last night's investor event.]

If imetelstat has the ability to slow or stop the underlying cause of myelofibrosis -- something Jakafi or Gilead's CYT387 (now known as momelotinib) cannot do -- why isn't Geron's stock price soaring Tuesday? As I write this story, Geron shares are down 4% to $5.30.

Investors are cautious on Geron, just like they were with YM Bio. Here's why:

1. The imetelstat data generated by the Mayo Clinic's Tefferi come from a small study with relatively short follow up. Investors want to see these complete and partial remissions replicated in a larger, longer and more independent study.

2. Geron plans to conduct a larger study of imetelstat in myelofibrosis but needs to raise money to do so. An equity offering is anticipated.

3. Imtelestat's benefit does not come risk free. The drug causes relatively high rates of thrombocytopenia, or low platelet counts, and neutropenia, or low white blood cell counts. One patient in the Mayo Clinic study died from complications related to imetelstat.

4. Geron has a checkered past. The company has never developed a drug successfully. In fact, Geron has one of the longest streaks of drug-development futility in the biotech sector. While the imetelstat data in myelofibrosis are certainly interesting, the drug has already flopped in some solid tumor studies.

4. The mechanism of action of imtelestat -- telomerase inhibition -- is unproven and controversial. 

So, Geron today stands where YM Bio stood three years ago. There's no denying that imetelstat is an interesting and potentially game-changing myelofibrosis drug, but the verdict won't be decided without more clinical data.

The YM Bio story ended well for shareholders but it took a walk in the biotech wilderness to get there.

Geron's walk just started.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.