By Frances Bishopp

Geron Corp. said it is collaborating with Pharmacia & Upjohn Inc. in the discovery, development and commercialization of a new class of drugs that inhibit telomerase, an enzyme highly associated with cancer in humans.

The non-binding agreement provides for Pharmacia & Upjohn, of Kalamazoo, Mich., to make an initial equity investment of $2 million in Geron. The financial details of the deal, which includes additional equity, research support and milestone payments, will not be disclosed until the final agreement is signed, projected sometime before the end of the first quarter of 1997, David Greenwood, CFO at Geron, of Menlo Park, Calif., told BioWorld Today.

The collaboration, however, is larger than a 1995 agreement, under which Japanese oncology firm, Kyowa Hakko Kogyo Co. Ltd., of Tokyo, agreed to pay Geron up to $30 million for rights in Asia to the anticancer drugs, Greenwood said. As part of this agreement, Kyowa Hakko agreed to fund all trials in Asia.

"Pharmacia is an important company in oncology," Greenwood said, "and a perfect partner for Geron."

Telomeres and telomerases are present in all eukaryotic cells with linear DNA. Telomerase are the DNA at the ends of chromosomes, which are composed of multiple, tandem and repeated sequences. Telomere replication during cell division occurs by a specialized reverse transcriptase called telomerase. Without telomeres, a short sequence of the DNA would be lost with each cell division.

In humans, telomere shortening occurs with age and is associated with an increased risk of cancer. 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.

"We believe that telomerase conveys indefinite replicative capacity to cancer cells," Greenwood explained. "It is not detectable in normal cells with one exception. It is in the germline and it is important to find telomerase in the germline because that's what allows the species to convey the entire gene code, generation to generation."

"We have detected telomerase in at least 20 cancers, including the top 10," Greenwood said. "We have not declared a lead drug yet," he added, "but, to our knowledge, we are the only company working on it and we believe we are the leaders in telomerase research at this time."

"We have in vitro proof of principal and our high throughput screening has generated numerous hits," Greenwood said.

Greenwood said that Geron has a number of diagnostic licenses for telomerase with companies such as Oncor Inc., of Gaithersburg, Md. German company, Boehringer Mannheim GmbH, Dako Diagnostic Ltd., of the U.K., and Kyowa Medex Co. Ltd., a diagnostic subsidiary of Kyowa Hakko Kogyo Co. Ltd. Geron also is working with Cold Spring Laboratory, of Cold Spring Harbor, N.Y. and Sloan Kettering, of New York.

"These companies have licensed our telomerase detection technologies for diagnostic purposes in the Research Only Market," Greenwood said, "which is further proof of principal for our product."

"The collaboration with Pharmacia," he pointed out, "is strictly therapeutics."

Geron, formed in 1992, completed a public offering in July 1996 of 2 million shares at $8 each for gross proceeds of $16 million. At that time, Geron collaborator Kyowa Hakko Kogyo, as part of the up-front equity investment in its collaboration with Geron, invested an additional $2.5 million through the purchase of 312,500 shares, bringing the total gross proceeds to $18.5 million.

Greenwood said Geron should finish the year with approximately $23 million in cash.

Geron stock (NASDAQ:GERN) was trading at $13.25 near the end of the day Tuesday, up$0.25. *