By Mary Welch
Just days after completing a $9 million private placement, Geron Corp. registered to sell 3 million shares of common stock, which at Monday¿s opening price of $58.50 would gross about $175.5 million.
Geron¿s stock (NASDAQ:GERN) closed Monday at $50.125, down $8.375.
In addition, the Menlo Park, Calif.-based company will offer the underwriters an option to purchase another 450,00 shares to cover overallotments. J.P. Morgan & Co., of New York, is the lead manager. Robertson Stephens and Solomon Smith Barney, both of New York, are co-managers.
The money from the offering will be used for general corporate purposes. The funding from the private placement will be directed to the development of products for human therapeutic and cosmeceutical applications for treating skin disorders, including burns, wounds, ulcers, sun damage and other age-related conditions. This skin program incorporates Geron¿s three core technology platforms of telomerase, human pluripotent stem cells and nuclear transfer.
Last week, Geron sold a total of 380,855 shares of common stock and 300,000 warrants to purchase stock to a single investor for $9 million. The deal was structured in two parts. The first $6.4 million of common stock was priced at $50.32 per share, and 200,000 warrants are exercisable at $67.09 per share. The remaining $2.6 million of common stock was priced at $10.25 per share, and the remaining 100,000 warrants are exercisable at $12.50 per share. The common stock and the stock underlying the warrants are subject to a two-year prohibition on sale.
The common stock in the first tranche was priced at market value; the warrants were at a premium to market. In the second tranche, approximately 30 percent of the stock and warrants were priced at a discount to market.
As of Thursday, the company had 21.2 million shares outstanding. It had about $80 million in cash, which had been boosted by an investment of about $25.8 million from the exercise of warrants.
The company reported year-end 1999 revenues of $5.5 million with a net loss of $46.4 million. The loss was largely attributed to the company¿s purchase of Roslin Bio-Med, of Midlothian, Scotland, for 2.1 million shares of stock. Geron has promised research funding of $21 million over the next six years to Roslin Bio-Med, which is now a wholly owned subsidiary of Geron. (See BioWorld Today, May 5, 1999, p. 1.)
The first of Geron¿s technologies is telomerase expression.
Telomeres are structures at the ends of chromosomes that act as a molecular clock of cellular aging ¿ when telomeres reach a critical short length, the cell stops dividing and becomes old. Telomerase is an enzyme that restores telomere length and rewinds the molecular clock, thereby extending a cell¿s ability to multiply or replicate.
By activating telomerase, the lifespan of normal cells that have prematurely aged in the body may be expanded. Conversely, by inhibiting telomerase using small molecules, cancer cells in which telomerase is abnormally turned on can be killed. Cancer cells almost uniformly have inappropriate telomerase activity.
So far, Geron has identified compounds that demonstrate potential for inhibiting telomerase in humans; however, a lead compound for preclinical development has not yet been selected.
Last month, the company said that independent research provided evidence of the efficacy of telomerase therapy in a mouse model of cirrhosis, a chronic liver disease.
Geron has collaborations on telomerase inhibitors for cancer indications with Pharmacia and Upjohn, of Bridgewater, N.J., and Kyowa Hakko Kogyo Co., of Tokyo, in deals worth up to $58 million and $30 million, respectively.
Human pluripotent stem cells, also known as hPSCs, can develop or differentiate into all cells and tissues in the body. hPSCs are a potential source for the manufacture of replacement cells and tissues for applications in regenerative medicine such as chronic liver, heart and nervous system diseases, the company said.
In 1998, Geron and collaborators at the University of Wisconsin in Madison and at John Hopkins University successfully derived and maintained in culture human embryonic stem cells, which are the source of every cell in the body. (See BioWorld Today, Nov. 6, 1998, p. 1.)
The company¿s third technology platform is its nuclear transfer, which was obtained from the acquisition of the Roslin Institute. Nuclear transfer is a method for generating human cells or whole animals from genetic material derived solely from the nucleus of a single cell obtained from a single individual.
The institute¿s researchers produced Dolly, the cloned sheep. Using somatic cell nuclear transfer, the scientists were able to reprogram the nucleus from an adult cell to drive the development of an entirely new animal.
By combining somatic cell nuclear transfer into pluripotent stem cells with the ability to keep those cells viable with telomerase expression, Geron intends to produce genetically matched cells for use in repairing organs damaged by chronic degenerative disease that would not be rejected by the patient¿s immune system.
By integrating its three technology platforms, Geron is trying to generate transplantable cells or tissues that would form a durable transplant, potentially lasting the lifetime of the patient, without the need for immunosuppressive drugs, it said in its registration statement.