Patricia F. Fitzpatrick Dimond Ph.D. Technical Editor of Clinical OMICs President of BioInsight Communications

Given that the firm with the most money has just quit, questions about how to succeed are rampant.

Geron, a pioneer in stem cell research founded in 1990, announced on November 14 that it was halting its stem cell therapeutics programs to conserve funds. It plans on laying off 38% of its 175-person staff and is seeking partners to take on the programs’ assets.

Geron had been developing cell products from differentiated human embryonic stem cells (hESCs) for multiple indications. The company is viewed as the leader in stem cell therapies because of its patents on technology used to grow, manipulate, and inject stem cells into the human body. It helped finance researchers at the University of Wisconsin who first isolated human embryonic stem cells in 1998, allowing the cells to be grown in the laboratory.

In January 2009, Geron received FDA approval to initiate the first human trial of an hESC therapy. It was testing GRNOPC1, a population of living cells containing precursors to oligodendrocytes, as a treatment for spinal cord injuries. Since then, however, it has had a rocky road to say the least.

On the news of its departure from the field, Geron’s stock price fell 45 cents, or 20%, to close at $1.75 on November 15. The company’s shares have steadily declined since mid-2004 amid regulatory and funding challenges for the stem cells space.

Why Geron Pulled Out

On August 18, 2009, even before the first patient was enrolled, FDA halted the trial. Geron said the agency’s move resulted from the observation of “nonproliferative cysts” in preclinical animal studies.

A year later FDA lifted the ban. Between the trial stop and restart, Geron reported that it had developed new molecular markers and release assays as well as performed additional animal studies that demonstrated lower numbers of cysts.

The firm also continued to raise money to sustain its hESC program. As recently as this May, the California Institute for Regenerative Medicine (CIRM) announced a $25 million loan to Geron to support the spinal cord injury trial. Geron received $6.42 million of the loan, which the company said it had repaid in full with accrued interest.

But also as of May 2011, Geron had still only enrolled two individuals in its clinical trial of GRNOPC1. The study was supposed to enroll 10 individuals. “The study’s first recipient receiving the injection of oligodendrocyte progenitor cells more than six months ago has not experienced any serious adverse events attributed to the stem cell transplant to date,” said lead national investigator Richard Fessler, M.D., Ph.D, professor of neurological surgery at the Feinberg School. “It remains too early in the trial to determine improvement in neuromuscular control or sensation.”

Commenting on the shutdown of its hESC programs, CEO John A. Scarlett, M.D., said, “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.”

Imelstat, an oligonucleotide, acts as a direct enzyme inhibitor of telomerase. It is currently being tested in cancers like non-small-cell lung cancer (NSCLC) and breast cancer. GRN1005 is a new taxane linked to a peptide that targets the lipoprotein receptor-related protein-1 (LRP-1). It has just completed two Phase I trials to test its safety in patients with brain metastases from solid tumors or malignant glioma.

Focusing on oncology, said Dr. Scarlett, the company anticipates “having sufficient financial resources to reach 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.”

Technology Up for Grabs

Instead, Geron is looking to sell its stem cell assets. BioTime, founded by former Geron scientists, is one potential company. The current CEO of BioTime, Michael D. West, Ph.D., founded Geron and was also Advanced Cell Technology’s (ACT’s) president and CSO.

BioTime’s businesses include wholly owned subsidiary Embryome Sciences, which develops stem cell technology and products for use in regenerative medicine. It is currently focused on hESC-based products intended for research use only.

The company has stated that this focus gives it a relatively near-term revenue strategy compared to developing human therapeutics. BioTime has also said, though, that it may initiate therapeutic programs if sufficient capital becomes available or through joint efforts with industry partners.

Players Still in the Game

Until an acquirer comes along, Geron’s departure leaves ACT as the only company left standing with a clinical trial involving hESCs. ACT is testing its hESC-derived retinal pigment epithelial (RPE) cells in patients with Stargardt disease and dry age-related macular degeneration (AMD).

ACT director of business development, Matthew Vincent, Ph.D., told GEN that he doesn’t expect Geron’s departure will impact ACT’s clinical trials. “The area of the eye we are targeting is small, so only small numbers of cells need to be injected.” Geron’s experimental stem cell treatment for spinal cord injury required an injection of about 2 million stem cells.

“Importantly, we have the ability to not only perform functional tests on the patients, such as for changes in visual acuity, but also to noninvasively track the RPE cells we inject and determine if the cells were able to engraft and form a monolayer structure in the correct site in the eye,” Dr. Vincent pointed out.

“The ability to monitor signals of efficacy in Phase I provides for a higher degree of certainty around the likelihood of success in later phases of the trial, and, with that, greater confidence in making the future investment in the technology,” Dr. Vincent.

That earlier certainty would have been hard to get in Geron’s trial, with a waiting period for a positive therapeutic indication of at least six months, according to Dr. Fessler.

The Business of Stem Cells

ACT has ongoing clinical trials, in which it is enrolling patients. On July 14, doctors at University of California, Los Angeles began treatment in two of its clinical trials. “One patient in each clinical trial, the Stargardt trial and the dry AMD trial, has undergone surgical transplantation of a relatively small dose (50,000 cells) of fully-differentiated retinal pigment epithelial cells derived from human embryonic stem cells,” explained Steven Schwartz, M.D., of the David Geffen School of Medicine at UCLA and retina division chief of its Jules Stein Eye Institute and the studies’ principal investigator. “Early indications are that the patients tolerated the surgical procedures well.”

Despite relatively small numbers of cells required to test its hESCs in these trials and its ability to monitor early-on efficacy signs, ACT doesn’t have a lot of cash. The firm ended this year’s third quarter with cash and cash equivalents of $13.9 million, compared to $16.1 million as of June 30, 2011. By contrast, Geron completed the same period with over $180 million on hand.

Geron, in trying to get to the clinic with its hESC therapy for spinal cord injury, faced a clinical hold focused on the FDA’s concern about the carcinogenic potential of hESC cells. The company also repeatedly said it was initiating a clinical trial over several years, a promise it couldn’t deliver on. Technical issues included the sheer mass of cells that had to be introduced into patients and a long wait time to see any indication of therapeutic results.

Waiting for the potential payoff from stem cell research proved too far off for Geron, which does not have any marketed products. It would have spent $25 million per year to continue its stem cell program. Joseph Pantginis, an analyst with Roth Capital Partners, told the Associated Press that it would have taken five to ten years before Geron’s lead hESC product reached the market. “This is still very much a fledgling space, and some people would even consider stem cells to be a science experiment, so there’s still a long way to go.”

There is no doubt that sufficient financing is key for conducting the trials needed to prove this new science and for navigating the regulatory path, which is predictably unpredictable for an emerging field. But the company with the most cash in the stem cell field—Geron—has left the arena.

Investors seem to be sitting the space out. Given that uncertainty over funding and patenting is rife in the U.S. and Europe, this is not surprising. If the revolving door for hESC therapeutic development lands Geron’s technology at a different company, that firm must have not just the money but also the will to further hESC-based therapeutic programs.

Patricia F. Dimond, Ph.D. ([email protected]), is a principal at BioInsight Consulting.

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