Associate

A wave of positive news, its lead product approaching the clinic and, now, two years of cash in the bank led Geron Corp. President and CEO Thomas Okarma to label the current period in Geron's history its "coming-out party."

Two investors each agreed to buy 2 million Geron shares at $4.60 apiece, for proceeds of $18.4 million. They each received warrants to purchase another 300,000 shares at $6.34 per share, and Menlo Park, Calif.-based Geron has an option to sell another 400,000 shares at the $4.60 price, which would raise the proceeds from the funding to more than $24 million.

As of Dec. 31, Geron had $47.5 million in cash, restricted cash, cash equivalents and marketable securities. The company now has about 29 million shares outstanding. With the funding, Okarma said Geron has more than $55 million in the bank. And plenty need for it.

"This company is exploding in terms of actual drugs that are in development," Okarma told BioWorld Today. "This company has segued from a discovery research mode, which is efficient, to development, which is not. Whenever we have a chance to put money in the bank, we do it."

Geron is basically split into the dual focuses of regenerative medicine and cancer. Its lead product is the drug and vaccine GRN163, a short thiophosphoramidate oligonucleotide that inhibits telomerase. The drug product is awaiting Phase I trials, as Geron is in investigational new drug talks with the FDA. Depending on progress there, Geron hopes to have clinical trials initiated by year's end, but "that is a soft estimate," Okarma said.

Monday, Geron presented Phase I data on GRN163, a vaccine, in metastatic prostate cancer via a conference call, as the American Association of Cancer Research annual meeting scheduled to be held in Toronto was canceled due to the outbreak in the city of severe acute respiratory syndrome, or SARS. The data suggested the vaccine was well tolerated and produced no attributable adverse effects. Also, vaccination resulted in the generation of an anti-telomerase immune response in almost all patients, Geron said.

"That is exactly how we intend to use this vaccine," Okarma said. "As a way to prevent metastatic disease. This is exactly what we want to see for approval."

The high-dose aspect of the trial needs to be completed, but assuming positive data, Okarma said the company will "start thinking of Phase II, in which we'll look at multiple tumor types."

The company also is developing an oncolytic virus with GTI, a subsidiary of Basel, Switzerland-based Novartis AG, which "kicked the tires very hard" by evaluating it for nine months before licensing it. On the regenerative medicine side, Geron has been able to differentiate its embryonic stem cell platform into seven cell types: neural cells, oligo dendrocytes, hematopoietic cells, cardiomyocytes, insulin-producing islet cells, chondrocytes and hepatocytes. The cells are in research or preclinical stage.

Geron certainly isn't alone, but the economic environment has made it necessary for the company to streamline. In January, it dropped 29 researchers from its staff as well as 11 support positions, which followed the release of about 40 employees in June. The thinner Geron was therefore able to slice its burn rate, but Okarma said making cuts always hurts. (See BioWorld Today, June 26, 2002, and Jan. 23, 2003.)

We've had to do two reductions in the work force to conserve cash - that's a painful thing to do," he said, although necessary. "We've managed to stay on track with fewer people."

Whatever the reason, investors seem to have noticed Geron as of late. The company's stock closed March 11 at $1.41, after beginning the year at $3.61. On March 18, it jumped from $1.73 to $4.20 on about 18 million shares traded, following publication of research conducted by Geron scientists in the March 2003 issue of Cancer Gene Therapy that showed different types of cancer cells, including cancer cells without any known tumor-associated antigens, could be killed by telomerase-based immunotherapy.

Geron's stock (NASDAQ:GERN) fell 49 cents Tuesday to close at $5.02. When asked about the two undisclosed investors and how Geron attracted them, Okarma himself looked to the company's stock.

"The news attracted them," he said. "Our stock has been on the move since the end of February when I kicked off the season at the BIO CEO Conference in New York. We've had half a dozen press releases since then, and that has been reflected in the stock charts."

There have been better times for biotechnology companies and their investors - one look at Nasdaq reveals that. But Okarma believes there has been a cautious re-entry into the sector, as buyers look for "horses to ride."

"And we'd like to think we are one of them," he said.