Geron Dumps Stem Cell R&D Programs, Axes 38% of Workforce
[Update: 3:35 pm PT] Geron, for better or worse, has been the poster child for embryonic stem cell therapies for a decade. And now with a new CEO at the helm, that’s all in the past.
Menlo Park, CA-based Geron (NASDAQ: GERN) said today it is getting out of the business of developing stem cell therapies so that it can concentrate more on developing cancer drugs. As part of the decision, Geron is cutting 66 jobs, or about 38 percent of its workforce. It will now look to unload its stem cell therapies onto partners.
The decision was made to conserve cash, the company said. Geron had $180.3 million in cash and investments in the bank at the end of September, and it had a net loss of about $65 million in the first nine months of the year, according to its most recent quarterly report. Shares of the company dropped about 12 percent in after-hours trading, to $1.93, after the announcement.
“In the current environment of capital scarcity and uncertain economic conditions, we intend to focus our resources,” said Geron CEO John “Chip” Scarlett, in a statement.
Geron has seen some major changes this year, and getting out of stem cells is the biggest. Longtime CEO Thomas Okarma left the company in February, a few months after Geron’s long-delayed stem cell therapy for spinal cord injuries entered its first clinical trial. In May, Geron secured $25 million from the California Institute for Regenerative Medicine (CIRM), which was supposed to provide matching support to help Geron finance clinical trials of its experimental stem cell therapy.
But that deal came a few months before Scarlett was brought in at the end of September to be the new CEO. Geron now says it will focus its resources on imetelstat, its telomerase inhibitor for cancer, along with GRN1005, another cancer drug. The company said it plans to stop enrolling new patients in the clinical trial of stem cells for spinal cord injury, although it said it will continue to gather data on all the patients who have already enrolled.
[Updated comment from analyst] “Geron’s new CEO John Scarlett did not take long to make his presence felt,” said Cory Kasimov, an analyst with JP Morgan, in a note to clients. “After a little less than two months at the helm, he’s turning Geron into a more focused company. As enticing as the upside could have been for the stem cell therapies (and it’s undoubtedly what Geron is best known for), it was impractical for a public company of this size to commit so many resources to both cell therapy and oncology (which likely carries more near-term tangible value).”