In announcing that it will discontinue furtherdevelopment of its stem cell programs, Geron adds that it will seek partnersfor those assets so that it can focus on its new goal of advancing it oncologyprograms.
While praising the company's employees for theirpioneering role in moving stem cells closer to clinical utility, Geron CEO Dr.John A. Scarlett says that the economic landscape right now just doesn't makestem cell research a viable path for the company when it has promising cancertherapies that are more likely to turn profits in the foreseeable future. Thatmeans that nearly 40 percent of Geron's workforce is getting walking papers—66full-time positions total. As a result, the company expects one-time cashexpenditures of approximately $5 million in the fourth quarter of 2011 andapproximately $3 million in the first half of 2012. Geron expects to end 2011with cash and investments in excess of $150 million.
"In the current environment of capital scarcityand uncertain economic conditions, we intend to focus our resources onadvancing our Phase II clinical trials of imetelstat and GRN1005. These twonovel and promising oncology drug candidates target major unmet medical needsand have important clinical development milestones occurring over the next 20months," says Scarlett, who was brought on as CEO in late September to replacelongtime CEO Tom Okarma. "By narrowing our focus to the oncology therapeuticarea, we anticipate having sufficient financial resources to reach theseimportant near-term value inflection points for shareholders without thenecessity of raising additional capital. This would not be possible if wecontinue to fund the stem cell programs at the current levels."
The decision had a direct impact on another hugeplayer in the hESC scene—and stem cell research more generally—because Geronwas conducting a trial related to an embryonic stem cell product for spinalcord injury, which was strongly supported by the California Institute forRegenerative Medicine (CIRM). In May 2011 CIRM announced a $25 million loan toGeron to support their spinal cord injury trial. Geron had received $6.42million of their loan before making the announcement that it was shifting to acancer focus, but upon doing so, Geron repaid that money in full with accruedinterest.
As the first group to receive U.S. Food and DrugAdministration approval to test human embryonic-derived stem cells in humans,Geron pioneered the regulatory pathway that other groups can learn from, CIRMnoted in an official statement, looking on the bright side of the situation.
"We are optimistic about many exciting stem cellprograms in California and internationally that have the potential to treatchronic diseases and conditions and that will benefit from the regulatory pathfirst forged by Geron," said Ellen Feigal, CIRM's senior vice president forresearch and development. "Taking research through all the steps needed to getinto clinical trials, then through the trials and into the clinic is a highlycomplicated process with many stops and starts along the way. CIRM plays acritical role in ensuring funding for these early-stage trials, which oftenhave difficulty obtaining funding from other sources."
In the initial stages of Geron's trial, the goal hadbeen to discover whether the cells were safe before increasing the dose andassessing whether the cells were effective in treating people with spinal cordinjury. Geron had reported that the people who enrolled in the trial toleratedthe therapy well and had no serious adverse effects after receiving the cells,and the company says it will continue to closely monitor those patients.
Scarlett insists that the decision to abandon stemcells at Geron has nothing to do with a lack of therapeutic potential and alsonothing to do with any controversy around hESC research; instead, it was simplya matter of logic and economics, given that the oncology programs are muchfarther along.
Geron's hESC programs, for which the company isseeking partners or buyers, include oligodendrocyte progenitor cells (GRNOPC1)for central nervous system disorders, cardiomyocytes (GRNCM1) for heartdisease, pancreatic islet cells (GRNIC1) for diabetes, dendritic cells(GRNVAC2) as an immunotherapy vehicle and chondrocytes (GRNCHND1) for cartilagerepair.
The news of divesting the stem cell business followedclosely on the Nov. 3 financial report for Geron's third quarter of 2011. InQ3, the company reported a net loss of $19.5 million, or $0.16 per share,compared to $18.3 million, or $0.19 per share, for the comparable 2010 period.Net loss for the first nine months of 2011 was $65 million, or $0.52 per share,compared to $52 million, or $0.54 per share, for the comparable 2010 period.
Revenues for the third quarter of 2011 were$220,000, well under half of the $546,000 seen in the comparable 2010 period.Revenues for the first nine months of 2011 were $2.2 million, compared to $2.5million for the comparable 2010 period.
With Geron out of the picture, Advanced CellTechnology is now the only company carrying out clinical trial work involving human embryonic stem cells, and Dr. RobertLanza, the chief scientific officer of Advanced Cell Technology has noted tothe media that Geron leaving the market puts significant pressure on hiscompany.
"Stem cells continue to hold great medicalpromise," Scarlett says as his company shifts away from them. "We believe thatour leadership role in the field and the quality of our stem cell assets—whichare widely recognized as being among the most innovative, comprehensive andadvanced cell therapy programs in the world—will be an important point ofdifferentiation in our discussions to partner these assets."
To find a company or other entity to carry forththe stem cell work, Geron will retain a core group of employees from its stemcell operations through the end of the second quarter of 2012. As for ongoingtrial work in stem cells, Geron plans to close the GRNOPC1 trial for spinalcord injury to further enrollment, although it will continue to follow allenrolled patients, accruing data and updating the U.S. Food and DrugAdministration and the wider medical community on those patients' progress. Sofar, GRNOPC1 has been well-tolerated with no serious adverse events.
Zacks Investment Research wrote in an analyst notethat "Geron's announcement regarding its decision to exit stem cell therapycame as a surprise as the company was a leader in the field," adding that thecompany's shares declined more than 20 percent on the news. "While thecompany's decision to focus on oncology should deliver in the long term, weexpect the stock to remain range-bound in the near term given the lack ofcatalysts. Results on the oncology candidates should start coming out in late2012. We prefer to remain on the sidelines until we see data on thesecandidates. We remain Neutral on the stock, which carries a Zacks #3 Rank(short-term Hold rating)."
At SeekingAlpha.com, contributor Henry McCuskersays that Geron's move will probably be widely seen as a setback for embryonicstem cell research versus adult stem cell research, because of the company's "centraland early role."
As for Geron moving forward, imetelstat iscurrently being evaluated in four Phase II clinical oncology studies for thefollowing indications: non-small cell lung cancer, breast cancer, essentialthrombocythemia and multiple myeloma. Geron expects top-line data from thesetrials to be available before the end of the fourth quarter of 2012. GRN1005 isentering two Phase II clinical trials this year, one for brain metastasesarising from non-small cell lung cancer and the other for brain metastases frombreast cancer. Geron expects top-line data from these trials to be availablebefore the end of the second quarter of 2013.
The oncology program basically breaks down intotwo areas: telomerase inhibition and LRP-directed peptide-drug conjugates.
For the telomerase inhibitor program, Geron'sproprietary nucleic acid chemistry platform is being used to generate potentand specific inhibitors of telomerase, an enzyme necessary for the indefinitereplicative capacity of many cancers and cancer stem cells. Imetelstat is thecompany's lead drug candidate in this program. With regard to the LRP-directedpeptide-drug conjugate program, the therapies are based on molecules thatdeliver anti-cancer drugs to tumors in the brain, including metastases—thereare currently no approved drug therapies for treating brain metastases,Scarlett notes. In the conjugates, the anti-cancer drugs are linked to apeptide designed to be actively transported across the blood-brain barrier vialipoprotein receptor-related protein (LRP) pathways, predominantly LRP1. LRP1is also upregulated in many tumors. GRN1005 is the company's lead drugcandidate in this program, and it has three paclitaxel molecules linked to aproprietary 19 amino acid peptide, Angiopep-2.
On Dec. 12, Geron announced the initiation of GRABM-B, its Phase II clinical trial to evaluate GRN1005 in patients withbrain metastases arising from breast cancer. The trial is designedto include 100 patients with HER2-positive or HER2-negative metastaticbreast cancer (MBC) disease, who will be assessed in two separatecohorts of 50 patients each. Approximately half of the patients in eachcohort will have received prior whole-brain radiation therapy. GRN1005will be evaluated as a single agent in patients with HER2-negativemetastatic breast cancer. For patients with HER2-positive disease,GRN1005 will be assessed in combination with trastuzumab (Herceptin),which is the standard-of-care therapy for HER2-positive extra-cranialMBC disease, Geron notes.