Secondhand stem cell sale

MENLO PARK, Calif.—About a year after announcing its intentto leave the stem-cell therapy market, Geron Corp. also recently stated itsintentions with regard to its discontinued human embryonic stem cell programs:It will sell them to BioTime Inc., a stem cell developer based in the SanFrancisco Bay Area that was founded by former Geron scientists.

Geron announced in mid-November a non-binding letter ofintent to sell the programs to BioTime's recently formed subsidiary, BioTimeAcquisition Corp. (BAC), for $5 million in cash, $30 million in shares, warrantsto purchase 8 million shares at a predetermined price, rights to use certainhuman embryonic stem cell lines and minority stakes in two subsidiaries ofBioTime.

If the non-binding agreement is finalized, BioTime would ownapproximately 71.6 percent, and a private investor would own approximately 7percent, of the outstanding BAC common stock, for an additional $5 millioninvestment. BioTime would also receive warrants that would enable it toincrease its ownership in BAC by approximately 2 percent, which would dilutethe Geron stockholders' ownership in BAC to 19.2 percent. BAC would also becommitted to pay to Geron royalties on the sale of products that arecommercialized in reliance upon Geron patents acquired by BAC.

A publicly traded company since 1992, BioTime isheadquartered in the San Francisco Bay Area and has subsidiary offices inSingapore, China and Israel. The company's focus is on regenerative medicine,particularly in the areas of advanced macular degeneration, cancer, cartilagerepair and multiple sclerosis. Through its ReCyte Therapeutics subsidiary, BioTimeis also working to reverse the developmental aging of human cells inage-related vascular and blood disorders such as coronary disease and heartfailure. BioTime also sells its proprietary human embryonic cell and progenitorcell lines to researchers, scientists, universities and companies.

In November 2011, Geron announced it would exit the stemcell research arena, despite having an ongoing U.S. Food and DrugAdministration-approved clinical trial for spinal cord injury. The company hadreceived millions in loan funding for the program from the California Institutefor Regenerative Medicine (CIRM), a taxpayer-funded institute for stem cellresearch in California. Geron repaid the CIRM loan—with interest—and decidedinstead to focus on the development of other programs, including itsexperimental cancer drug, imetelstat.

In December, Geron announced that in mid-stage clinicaltrials, 100 percent of patients responded to the drug, and most patients whohad a specific gene mutation responded to the drug. The results came from 14patients with essential thrombocytopenia who were not helped by othertreatments or could not tolerate the side effects of those treatments.

At press time, no news of specific signing and closing termsand conditions was announced.