Geron Corp. is bringing in $72 million for ongoing development of its cancer therapies targeting telomerase, and for early programs involving the use of human embryonic stem cells to target several diseases.
The Menlo Park, Calif.-based company is offering 6 million shares of its common stock, priced at $9 per share, for gross proceeds of $54 million. The remaining $18 million comes from an equity investment by Whitehouse Station, N.J.-based Merck & Co. Inc., relating to a telomerase vaccine collaboration signed in July. Merck will exercise a warrant to purchase 2 million shares, also at $9 apiece.
Geron expects net proceeds to total about $68.3 million, or $75.9 million if underwriters purchase the full 900,000-share overallotment. Following the financing, the company would have about 63.9 million shares outstanding.
Due to SEC-imposed quiet-period rules, the company was unable to comment. In its supplemental prospectus, Geron said it planned to use funds from both the offering and the equity investment for research and development, including clinical trials, and for general corporate purposes.
In July, the company initiated a Phase I/II study of GRN163L, a telomerase inhibitor, in patients with chronic lymphocytic leukemia. Results of preclinical studies demonstrated the product was able to inhibit telomerase, an enzyme expressed on cancer cells, in several cancer types. In addition to CLL, the company is considering clinical trials in hematologic and solid tumors.
The collaboration with Merck involves a cancer vaccine that targets telomerase. Terms of the deal call for the companies to jointly develop a potential vaccine, using Geron's telomerase work with Merck's platform, in exchange for an undisclosed up-front payment, and potential milestones and royalties to Geron. (See BioWorld Today, July 19, 2005.)
Merck also holds an option to negotiate for rights to Geron's clinical-stage cancer vaccine, GRNVAC1, a dendritic cell-based vaccine that recently completed a Phase I/II study in patients with metastatic prostate cancer at Duke University Medical Center. Early results of that trial showed that the vaccine generated a specific T-cell response in 19 of the 20 test subjects, and was well tolerated with no adverse toxicities.
In a separate collaboration, Geron is working with South San Francisco-based Cell Genesys Inc. to develop genetically engineered viruses that infect and kill cancer cells by targeting the telomerase, but are not deadly against normal cells.
While telomerase is overactivated in cancer cells, the enzyme also has shown to be a contributing factor in degenerative diseases. Telomerase regulates cellular aging, as telomeres shorten over time, and appear to play a role in diseases, such as anemia, AIDS, macular degeneration and impaired wound healing. So, along with its telomerase inhibitor program, Geron is developing a class of small-molecule telomerase activators, now in preclinical studies in HIV.
Another part of Geron's research involves the use of human embryonic stem cells (hESCs) to create cell-based therapies for several disease areas. The company is investigating neural cells for spinal cord injury, cardiomyocytes for heart disease, pancreatic islet cells for diabetes, osteoblasts for osteoporosis, chondrocytes for osteoarthritis, and hematopoietic cells for blood diseases. All those products are in preclinical development, though the company expects to begin one or more Phase I trial soon, likely starting with spinal cord injury patients.
Geron posted a net loss of $3.1 million, or 6 cents per share for the second quarter. As of June 30, the company had cash, cash equivalents and marketable securities totaling $127 million.
Its stock (NASDAQ:GERN) closed at $10.05 Friday, up 6 cents.
In other financing news:
Acacia Research Corp., of Newport Beach, Calif., obtained commitments to purchase about $10.5 million of its Acacia Research-CombiMatrix common stock in a registered direct offering. Terms call for Acacia to sell about 6.4 million shares at $1.65 per share to accredited investors, and to grant those investors five-year warrants to purchase an additional 1.6 million shares for $2.40 each. The CombiMatrix Group, an operating group of Acacia, develops platform technology to produce customizable arrays to identify and determine the roles of genes, gene mutations and proteins. New York-based Piper Jaffray & Co. acted as exclusive placement agent for the transaction.
Advanced Cell Technology Inc., of Worcester, Mass., closed a private placement of convertible notes and warrants to raise proceeds of $17.75 million. The notes are convertible into about 9.7 million shares of common stock at a price of $2.30 per share. Investors also received warrants to buy about 4.8 million additional shares at $2.53 per share, exercisable for five years. ACT said proceeds from the financing will be used for general corporate purposes, and to accelerate its research and development of human embryonic stem cell technology and stem cell therapies, with particular focus on retinal, dermal and hemangioblast cell lines. Money also will go toward the production of cells for use in future clinical trials. T.R. Winston & Co., of Bedminster, N.J., acted as placement agent.
GTx Inc., of Memphis, Tenn., plans to offer 5 million shares of common stock pursuant to its shelf registration statement previously filed with the SEC. It also intends to grant the underwriters an overallotment option for 750,000 additional shares. Goldman, Sachs & Co. is acting as the sole book-running manager, while Lazard Capital Markets LLC and SG Cowen & Co. LLC are acting as co-managers. GTx is focused on therapeutics for cancer and serious conditions related to men's health.
Meridian Bioscience Inc., of Cincinnati, priced its public offering of 3.3 million shares of common stock at $17.50 per share to raise a total of $58 million. Of those shares, 1.8 million are being offered by the company, and the net proceeds of about $29.6 million are expected to fund general corporate purposes, including potential future acquisitions. The remaining 1.5 million shares are being sold by The William J. Motto Irrevocable Family Trust, and the company will not receive any of those proceeds. Chicago-based Robert W. Baird & Co. is acting as sole manager of the offering, which is expected to close Sept. 21. Shares of Meridian (NASDAQ:VIVO) gained $1.24 Friday to close at $18.94.
Renovis Inc., of South San Francisco, intends to file a prospectus with the SEC to offer 4 million shares of common stock, and to grant underwriters an overallotment option for an additional 600,000 shares. The company intends to use net proceeds for general corporate purposes, including expenses for research and development, general and administrative, manufacturing and potential acquisitions of companies, products and technologies. Goldman, Sachs & Co. will act as the sole book-running manager, while CIBC World Markets Corp., Piper Jaffray & Co. and SG Cowen & Co. LLC will be co-managers.
York Pharma plc, of Hitchin, UK, raised £5 million (US$9 million) by placing 4.7 million shares with institutional and other investors. Proceeds from the financing will be used to accelerate the process of acquiring additional prescription dermatology products, to establish and build York's UK sales and marketing capability, and to develop new clinical indications for its lead product, Abasol.