A 300-page S-1 filing with the SEC on Wednesday revealed that Geron Corp.'s human embryonic stem cell (ESC) assets, left dangling when the company abandoned the field in late 2011, will be reborn at Asterias Biotherapeutics Inc., a newly formed subsidiary of regenerative medicine specialist BioTime Inc.

The complex asset contribution agreement involves multiple transfers of common stock and warrants, along with patents, regulatory filings and investigational new drug (IND) applications filed with the FDA for Geron's Phase I safety study of oligodendrocyte progenitor (GRNOPC-1) cells in patients with neurologically complete, subacute spinal cord injury – the first FDA-approved ESC clinical trial. (See BioWorld Today, Jan. 26, 2009, and Jan. 27, 2009.)

The S-1 represented the first step to register Asterias' equity so the company can be listed on a major exchange when the deal closes, expected midyear. CEO Thomas Okarma, who ran Geron for more than a decade, is shooting for the New York Stock Exchange, where the company's shares would be listed under the symbol "AST."

Although Asterias will take control of Geron's ESC assets, Okarma promised the new company will not be a Geron re-do.

"It was a long haul, and a difficult one for a lot of us," Okarma told BioWorld Today, noting that Geron's withdrawal from the ESC field, viewed as a major blow to the biotech world, "was a traumatic ending that none of us had anticipated." (See BioWorld Today, Nov. 16, 2011.)

But that was then. Now, Asterias offers the opportunity to breathe new life – and then some – into the technology.

"We're going to be a different animal," Okarma predicted. "The prioritization of the cell types that we now own may be different from what we had before. The indications for some of these cells may be different. And some of the acquisitions that we hope to make later in the year could become higher priority products."

The deal has many moving parts. Geron, of Menlo Park, Calif., is contributing the intellectual property, contracts, licenses, cell lines, master cell banks, equipment, reagents, biological – "everything that's left from our embryonic stem cell program," Okarma said, including the INDs for the spinal cord injury program and for GRNVAC1, an autologous dendritic cell vaccine targeting telomerase that completed Phase I/II studies in acute myelogenous leukemia.

"It's pretty much a reconstitution of the potential product candidates we were working on at Geron when the board pulled the plug," he added.

In return, Asterias granted Geron a 4 percent royalty on sales of products covered by active patents that came from Geron. Asterias also will issue 6.5 million shares of its common stock to Geron, which, in turn, will be distributed to Geron shareholders. The deal contains no up-front cash or milestones.

"We were trying to have the Geron shareholders benefit in some way from our ability to reconstitute the Geron program," Okarma said.

Assets Assembled by BioTime Key to Agreement

BioTime, of Alameda, Calif., is contributing assets from two other subsidiaries: 6 percent of the outstanding shares of CellCure Neurosciences Ltd., an Israeli biotech that specializes in therapeutic cells for the treatment of retinal and neural degenerative diseases, and 10 percent of the shares in OrthoCyte Corp., a California firm that is developing cellular therapies for orthopedic diseases and injuries.

BioTime also will provide 8.9 million shares of stock, valued at approximately $30 million, which will be placed on Asterias' balance sheet.

In addition, Asterias expects to receive $5 million in cash from BioTime and $5 million from Romulus Films Ltd., a UK-based investment firm, according to the S-1 .

Equally important, BioTime is contributing two significant nonfinancial assets.

The first is a hydrogel technology acquired from the University of Utah that can be used as a standalone product or combined with cells.

"One of the problems that everybody has in the cell therapy space is stable engraftment and delivery of cells to the affected organ – at least those of us who don't inject cells systemically," Okarma explained. The BioTime technology – a liquid that is mixed with cells and co-injected with a cross-linker – creates a gel in the organ that anchors the cells in the damaged tissue.

"This has huge implications for our osteoarthritis program, our degenerative disc disease program and our cardiomyocyte program, where our early results in animals were all compromised by delivery and retention issues," Okarma said.

Another major piece of the puzzle is BioTime's 2010 acquisition of ES Cell International Pte Ltd., of Singapore, which developed the world's first human ESC lines derived according to current good manufacturing process. Having access to that technology on a nonexclusive, royalty-free basis will allow Asterias to navigate regulatory challenges associated with "the providence" of ESC lines, Okarma explained, since ES Cell's lines were manufactured with full health dossiers on every donor.

Beginning in the Bush White House, the characterization of ES lines used to manufacture differentiated cell therapy products was "a moving target," with varying levels of guidance for National Institutes of Health funding requirements and FDA submissions, he added. Going forward, the ES Cell bank offers "probably the most attractive lines for starting material to produce therapeutic product," Okarma said.

Asterias also will receive 8 million warrants for the BioTime shares, which will be passed along to the same Geron shareholders that receive equity in Asterias.

"When the deal closes, the Geron shareholders wind up holding 20 percent of Asterias and having warrants to purchase shares in BioTime," Okarma explained.

Asterias Already Re-assembling Geron ESC Team

BioTime Acquisition Corp., formed in September 2012 to recapture Geron's ESC assets, laid the groundwork for the deal until it was renamed Asterias – Latin for starfish – last month. At closing, Asterias will distribute 21.8 million of its shares to BioTime in exchange for its stem cell assets, becoming a majority-owned subsidiary of BioTime, which will hold approximately 71 percent of the stock.

If all goes as planned, Asterias will have a balance sheet valued at $40 million to $50 million, depending on the value of BioTime's stock when the agreement is consummated.

Not coincidentally, BioTime's CEO, Michael West, who founded Geron and hired Okarma as the company's first CEO, also played a role in the deal.

"Michael and I go all the way back to the beginning of Geron," Okarma said. "He is as committed to and involved in the stem cell regenerative medicine space as I am. This has been fun coming together."

Okarma is on the agenda at the Alliance for Regenerative Medicine's investor day in New York on April 17, where he pledged to provide more details. Although the Geron ESC assets represent the first acquisition for Asterias, "it won't be our last," he said, confirming the company plans to "fish around" for complementary technologies that are near- or medium-term plays.

"We're in conversations with a number of other potential acquisitions," Okarma said.

He's cautiously optimistic that Asterias will be able to re-start much of Geron's ESC work without replicating studies and filings, including the IND for GRNOPC-1, which ran 22,000 pages. To that end, Okarma already has hired 12 members of his former Geron team, including Jane Lebkowski, who was chief scientific officer; Katy Spink, vice president of operations; Ed Wirth, medical director; and Kirk Trisler, senior director of manufacturing sciences. Asterias will even operate in Geron's former Menlo Park, Calif., ESC lab.

"We have not yet gone back to the agency with the follow-up data from the patients who were treated," Okarma said. "We have to collect that data and validate it, but we're hoping we can move that spinal cord trial forward, based on what are certainly encouraging safety results on patients, all of whom are well over their first year of follow-up."

On Thursday, with the Street strangely quiet about the deal, Geron's shares (NASDAQ:GERN) closed even at $1.11, while BioTime's shares (NYSE:BTX) lost 12 cents, closing at $3.63. Trading in both companies was light.