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In Its Bumpy Second Life, Geron Signs Top Drug Over to J&J

Xconomy San Francisco — 

As we saw this week with Dendreon (NASDAQ: DNDN), pioneers in the biomedical industry can end up with arrows in their back, bleeding to death. Geron (NASDAQ: GERN) has avoided that fate.

Based in Menlo Park, CA, the former developer of a cutting-edge stem-cell therapy decided three years ago to ditch stem cells, even though it had managed to start a landmark study in people with spinal cord injuries, and instead pursue a more conventional biotech line: modified nucleic acids to treat cancer.

Since the switch, Geron has devoted most of its attention to developing its main product, imetelstat, in blood disorders. Today Geron said it has handed off ownership of imetelstat to the Janssen Biotech group of Johnson & Johnson (NYSE: JNJ) for $35 million. Janssen gets worldwide rights to imetelstat not just for oncology but for “other human therapeutic uses,” Geron said in a statement. The potential payouts could reach $900 million.

Geron is still on the hook to move imetelstat forward, however. The two companies will split development costs for two upcoming studies: a Phase 2 trial in myelofibrosis, a form of leukemia; and a Phase 2 study in myelodysplastic syndrome (MDS), in which the bone marrow doesn’t produce enough healthy blood cells. The myelofibrosis study should start in mid-2015, but Geron gave no guidance about the timing of the MDS study.

The deal comes just ten days after the FDA let Geron resume imetelstat clinical trials. All activity with the drug was suspended in March—what the FDA calls a “full clinical hold”— because of potential liver toxicity. Imetelstat is an engineered oligonucleotide (the same kind of material that makes RNA and DNA) that blocks the activity of an enzyme called telomerase.

In after-hours trading, Geron shares were up more than 30 percent as of this writing.

As Geron signs away rights to its flagship candidate, its old stem-cell program has returned to the headlines as well.

Asterias Biotherapeutics (NYSE MKT: AST), also in Menlo Park, re-launched Geron’s old spinal cord study earlier this year and said this week it would open more trial sites and recruit patients faster to speed up the clinical progress. Asterias is a spinoff of BioTime, across the bay in Alameda, CA, which bought Geron’s stem cell assets in 2013.

The program has been backed for years, first at Geron and now at Asterias, with funds from the California Institute of Regenerative Medicine, the publicly funded stem cell agency. CIRM, as it is known, is pushing hard to turn its billions of funding dollars into promising therapies and convince donors to support those programs once CIRM’s funding runs out. The Asterias spinal-cord program is one of the agency’s top priorities.