Geron Corp., the first company to conduct human embryonic stem cell trials, announced late Monday that it is halting development of its stem cell programs and laying off much of its staff as it shifts its focus towards developing cancer drugs.
The move carries bleak implications for a promising field that offers hope of future medicines for a variety of conditions that currently lack adequate treatments.
“This is a shock to the (stem cell research industry) system … because the unequivocal leader in the embryonic stem cell space is now getting out of the stem cell space,” said WBB Securities analyst Steve Brozak in an interview with Reuters.
The company said it would cut 66 full-time positions, or 38 percent of its workforce, and is actively seeking partners or buyers to takeover its stem cell programs.
The news sent shares of Geron´s stock down more than 17 percent during after-hours trading on Monday. Shares continued plummeting on Tuesday, declining as much as 28 percent to a five-year low.
During a conference call on Tuesday, Geron executives said that getting out of the stem cell field was purely a business decision, and that investments in oncology pay off much faster than those in stem cells.
“We’re making these changes because in the current environment of economic scarcity and uncertain economic conditions, we need to focus our resources on advancing our Phase 2 trials … Both of these (cancer) drug candidates target major medical needs and have important clinical milestones that are occurring over the next 20 months,” said Geron Chief Executive Officer John Scarlett during a conference call with analysts.
The Menlo Park, California-based company said it saw potential in its two cancer programs — imetelstat and GRN1005.
Imetelstat is currently in mid-stage trials for breast cancer and non-small cell lung cancer, while GRN1005 is being tested in a mid-stage trial as a brain cancer treatment.
By focusing on oncology, Geron expects to have sufficient funds to complete its work without having to raise additional capital, said Scarlett, who took the helm a couple of months ago.
“These were business decisions we took on behalf of our shareholders … We still think the (stem cell) field has tremendous promise,” he said.
Geron officials said the decision was difficult since the company is widely seen as a leader in the field, but that it was in “a number of conversations” with potential partners to takeover its stem cell programs.
Brozak said investors’ focus will now be on which company will assume the stem cell leadership position, and how Geron shareholders might benefit from the transaction.
BioTime Inc., for instance, could be a potential partner since it is the closest in terms of its understanding the science and has sufficient resources, Brozak said.
Companies such as Athersys Inc., Pluristem Therapeutics Inc. and Australia’s Mesoblast Ltd are also working on stem cell therapies.
Geron was the first company to begin a government-approved clinical trial using human embryonic stem cells in patients with spinal cord injuries. The company reported data in October from an early-stage trial that showed its therapy was safe in all four patients who received the treatment.
However, Geron said on Monday it would close further enrollment of patients for its GRNOPC1 trial for spinal cord injury, although any new partner would have the option to continue the trial.
Researchers see great potential in stem cells, which have the ability to differentiate into different type of cells and act as a repair system for the human body. Experts believe these cells may one day be used to treat currently incurable diseases conditions such as Parkinson’s and Alzheimer’s.
With the restructuring, Geron Chief Financial officer David Greenwood said he expects the company to end 2011 with cash in excess of $150 million.
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