By Frances Bishopp
Geron Corp. and Pharmacia & Upjohn have finalized an agreement worth up to $58 million to collaborate on the discovery, development and commercialization of a new class of anticancer drugs that inhibit telomerase, an enzyme responsible for making cancer cells immortal.
Completion of this collaboration follows the signing of a heads of agreement in December, in which the two companies confirmed their intent to collaborate and Pharmacia & Upjohn, of Kalamazoo, Mich., made an initial $2 million equity investment in Geron. (See BioWorld Today, Jan. 2, 1997, p. 2.)
The agreement provides for an equity investment of $10 million in Geron, research funding and milestone payments which are partly recoverable against future royalties. Geron, of Menlo Park, Calif., will receive royalties on sales and limited U.S. co-promotion rights.
Further financial details were not disclosed.
The collaboration calls for research funding of $15 million over the next three years, said David Greenwood, chief financial officer at Geron, and Pharmacia & Upjohn has an option for a fourth year with additional funding.
The partnership with Pharmacia & Upjohn follows Geron's 1995 $30 million alliance with Japanese oncology firm Kyowa Hakko Kogyo Co., of Tokyo, which gives Kyowa Hakko Asian rights to the anticancer drugs. As part of this agreement, Kyowa Hakko agreed to fund all trials in Asia.
The new agreement creates a three-way global collaboration. "Kyowa Hakko will share the Asian rights with Pharmacia and in return they are picking up certain rights outside Asia," Greenwood said.
The total of both partnerships, Greenwood said, is valued at $88 million.
Telomerase is a germline enzyme that adds repeat DNA sequences to the ends of growing fetal chromosomes, to cap and protect them from genetic damage during the cell divisions of prenatal development. Once born, telomerase shuts down, its job is done and chromosomes steadily shed the tip-end of their telomeres, a few nucleotides at a time, for life.
In humans telomere shortening occurs with age and is associated with an increased risk of cancer and other age-related diseases. Telomerase activity is absent in most somatic cells, but virtually all tumor cells have telomerase activity. Maintenance of telomere length is associated with immortalization of cells.
Geron has a number of diagnostic licenses for telomerase with companies such as Oncor Inc., of Gaithersburg, Md., Boehringer Mannheim GmbH, of Mannheim, Germany, Dako Diagnostic Ltd., of Cambridgeshire, U.K., and Kyowa Medex Co. Ltd., a diagnostic subsidiary of Kyowa Hakko.
Geron also is working with Cold Spring Laboratory, of Cold Spring Harbor, N.Y., and Sloan Kettering, of New York.
In August 1996, Geron raised $18.5 million in an initial public offering (IPO) of 2 million shares at $8 each and a Kyowa Hakko investment of $2.5 million through the purchase of 312,500 shares at the IPO price.
Geron, as of Dec. 31, 1996, had approximately $25 million in cash on hand. The projected burn rate for 1997 is $500,000 per month.
Geron's stock (NASDAQ:GERN) closed Monday at $11.875, up $0.75 *