Geron finalizes stem cell asset divestment

MENLO PARK, Calif.—Geron Corp. announced today the closingof the transaction divesting its stem cell assets. This concludes an agreementestablished back in January in which Geron inked an asset contributionagreement with BioTime, Inc. and Asterias Biotherapeutics, Inc.

Per the terms of the agreement, on the transaction's close,Geron presented Asterias with intellectual property and tangible assetsassociated with its discontinued human embryonic stem cell programs, includingcell lines and a Phase I clinical trial in patients with acute spinal cordinjury; intellectual property related to its autologous cellular immunotherapyprogram and a related Phase I/II clinical trial in patients with acutemyelogenous leukemia; and non-therapeutic applications of pluripotent stemcells. In return, Geron received roughly 6.5 million shares of Asterias SeriesA common stock and will be eligible for royalties if any products arecommercialized that are based on the patents acquired from Geron. Geron willdistribute the Series A common stock received from Asterias to its shareholderson a pro-rata­ basis.

Asterias received from BioTime approximately 8.9 millionshares of BioTime common stock, five-year warrants for the purchase of eightmillion additional shares of BioTime common stock at an exercise price of $5per share, rights to use select human embryonic stem cell lines and minoritystakes in two of BioTime's subsidiaries. Additionally, the principal amount ofa $5 million loan to Asterias from BioTime was cancelled. In return, BioTimehas received roughly 21.8 million shares of Asterias Series B common stock andthree-year warrants to purchase 3.15 million additional shares at an exerciseprice of $5 per share.

This transaction concludes a decision made back in 2011,when Geron announced that it would be discontinuing development of its stemcell programs and seeking partners for its assets in order to focus instead onits first-in-class oncology programs. The decision came after a strategicreview of the company's research and clinical-stage assets, and resulted in thefiring of 66 employees, roughly 38 percent of Geron's workforce.

John Scarlett, M.D., CEO of Geron, attributed the decisionto "the current environment of capital scarcity and uncertain economic conditions,"noting that "By narrowing our focus to the oncology therapeutic area, weanticipate having sufficient financial resources to reach these importantnear-term value inflection points for shareholders without the necessity ofraising additional capital. This would not be possible if we continue to fundthe stem cell programs at the current levels." Scarlett also noted that thedecision had nothing to do with a lack of promise in the field.

The decision ended a long run in the field of stem cell researchfor the company, as it was one of the first companies on the clinical scene,beginning the first clinical trial of an embryonic stem cell-derived therapy in2010.