Geron abandons stem cell work and shifts to oncology focus
MENLO PARK, Calif.—Human embryonic stem cell (hESC) research will go on in various government, academic, non-profit and corporate circles, but many were surprised by the recent news that a notable corporate stem cell player—Geron Corp., which was the first on the hESC scene clinically, in fact—is turning its back on that line of research.
In announcing that it will discontinue further development of its stem cell programs, Geron adds that it will seek partners for those assets so that it can focus on its new goal of advancing it oncology programs.
While praising the company's employees for their pioneering 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 make stem cell research a viable path for the company when it has promising cancer therapies that are more likely to turn profits in the foreseeable future. That means that nearly 40 percent of Geron's workforce is getting walking papers—66 full-time positions total. As a result, the company expects one-time cash expenditures of approximately $5 million in the fourth quarter of 2011 and approximately $3 million in the first half of 2012. Geron expects to end 2011 with cash and investments in excess of $150 million.
"In the current environment of capital scarcity and uncertain economic conditions, we intend to focus our resources on advancing our Phase II clinical trials of imetelstat and GRN1005. These two novel and promising oncology drug candidates target major unmet medical needs and have important clinical development milestones occurring over the next 20 months," says Scarlett, who was brought on as CEO in late September to replace longtime CEO Tom Okarma. "By narrowing our focus to the oncology therapeutic area, we anticipate having sufficient financial resources to reach these important near-term value inflection points for shareholders without the necessity of raising additional capital. This would not be possible if we continue to fund the stem cell programs at the current levels."
The decision had a direct impact on another huge player in the hESC scene—and stem cell research more generally—because Geron was conducting a trial related to an embryonic stem cell product for spinal cord injury, which was strongly supported by the California Institute for Regenerative Medicine (CIRM). In May 2011 CIRM announced a $25 million loan to Geron to support their spinal cord injury trial. Geron had received $6.42 million of their loan before making the announcement that it was shifting to a cancer focus, but upon doing so, Geron repaid that money in full with accrued interest.
As the first group to receive U.S. Food and Drug Administration approval to test human embryonic-derived stem cells in humans, Geron pioneered the regulatory pathway that other groups can learn from, CIRM noted in an official statement, looking on the bright side of the situation.
"We are optimistic about many exciting stem cell programs in California and internationally that have the potential to treat chronic diseases and conditions and that will benefit from the regulatory path first forged by Geron," said Ellen Feigal, CIRM's senior vice president for research and development. "Taking research through all the steps needed to get into clinical trials, then through the trials and into the clinic is a highly complicated process with many stops and starts along the way. CIRM plays a critical role in ensuring funding for these early-stage trials, which often have difficulty obtaining funding from other sources."
In the initial stages of Geron's trial, the goal had been to discover whether the cells were safe before increasing the dose and assessing whether the cells were effective in treating people with spinal cord injury. Geron had reported that the people who enrolled in the trial tolerated the 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 stem cells at Geron has nothing to do with a lack of therapeutic potential and also nothing to do with any controversy around hESC research; instead, it was simply a matter of logic and economics, given that the oncology programs are much farther along.
Geron's hESC programs, for which the company is seeking partners or buyers, include oligodendrocyte progenitor cells (GRNOPC1) for central nervous system disorders, cardiomyocytes (GRNCM1) for heart disease, pancreatic islet cells (GRNIC1) for diabetes, dendritic cells (GRNVAC2) as an immunotherapy vehicle and chondrocytes (GRNCHND1) for cartilage repair.
The news of divesting the stem cell business followed closely on the Nov. 3 financial report for Geron's third quarter of 2011. In Q3, 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 $2.5 million for the comparable 2010 period.
With Geron out of the picture, Advanced Cell Technology is now the only company carrying out clinical trial work involving human embryonic stem cells, and Dr. Robert Lanza, the chief scientific officer of Advanced Cell Technology has noted to the media that Geron leaving the market puts significant pressure on his company.
"Stem cells continue to hold great medical promise," Scarlett says as his company shifts away from them. "We believe that our leadership role in the field and the quality of our stem cell assets—which are widely recognized as being among the most innovative, comprehensive and advanced cell therapy programs in the world—will be an important point of differentiation in our discussions to partner these assets."
To find a company or other entity to carry forth the stem cell work, Geron will retain a core group of employees from its stem cell operations through the end of the second quarter of 2012. As for ongoing trial work in stem cells, Geron plans to close the GRNOPC1 trial for spinal cord injury to further enrollment, although it will continue to follow all enrolled patients, accruing data and updating the U.S. Food and Drug Administration and the wider medical community on those patients' progress. So far, GRNOPC1 has been well-tolerated with no serious adverse events.
Zacks Investment Research wrote in an analyst note that "Geron's announcement regarding its decision to exit stem cell therapy came as a surprise as the company was a leader in the field," adding that the company's shares declined more than 20 percent on the news. "While the company's decision to focus on oncology should deliver in the long term, we expect the stock to remain range-bound in the near term given the lack of catalysts. Results on the oncology candidates should start coming out in late 2012. We prefer to remain on the sidelines until we see data on these candidates. We remain Neutral on the stock, which carries a Zacks #3 Rank (short-term Hold rating)."
At SeekingAlpha.com, contributor Henry McCusker says that Geron's move will probably be widely seen as a setback for embryonic stem cell research versus adult stem cell research, because of the company's "central and early role."
As for Geron moving forward, imetelstat is currently being evaluated in four Phase II clinical oncology studies for the following indications: non-small cell lung cancer, breast cancer, essential thrombocythemia and multiple myeloma. Geron expects top-line data from these trials to be available before the end of the fourth quarter of 2012. GRN1005 is entering two Phase II clinical trials this year, one for brain metastases arising from non-small cell lung cancer and the other for brain metastases from breast cancer. Geron expects top-line data from these trials to be available before the end of the second quarter of 2013.
The oncology program basically breaks down into two areas: telomerase inhibition and LRP-directed peptide-drug conjugates.
For the telomerase inhibitor program, Geron's proprietary nucleic acid chemistry platform is being used to generate potent and specific inhibitors of telomerase, an enzyme necessary for the indefinite replicative capacity of many cancers and cancer stem cells. Imetelstat is the company's lead drug candidate in this program. With regard to the LRP-directed peptide-drug conjugate program, the therapies are based on molecules that deliver anti-cancer drugs to tumors in the brain, including metastases—there are currently no approved drug therapies for treating brain metastases, Scarlett notes. In the conjugates, the anti-cancer drugs are linked to a peptide designed to be actively transported across the blood-brain barrier via lipoprotein receptor-related protein (LRP) pathways, predominantly LRP1. LRP1 is also upregulated in many tumors. GRN1005 is the company's lead drug candidate in this program, and it has three paclitaxel molecules linked to a proprietary 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 with brain metastases arising from breast cancer. The trial is designed to include 100 patients with HER2-positive or HER2-negative metastatic breast cancer (MBC) disease, who will be assessed in two separate cohorts of 50 patients each. Approximately half of the patients in each cohort will have received prior whole-brain radiation therapy. GRN1005 will be evaluated as a single agent in patients with HER2-negative metastatic 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-cranial MBC disease, Geron notes.