Geron Corp. is removing itself from the field it pioneered – stem cell research. Late Monday, the company said it would halt its study of a stem cell-based treatment for spinal cord injury, the first embryonic stem cell trial approved in the U.S.
This announcement leaves the few U.S. companies pursuing medicines using embryonic stem cells, which are capable of morphing into any of the more than 220 cell types in the human body in uncertainty. Scientists hope that one day stem cells might be used to replace or repair damaged tissue from ailments such as heart disease, Parkinson's and stroke.
Geron, set in Menlo Park, Calif., had long been viewed as the undisputed leader in stem cell therapies, thanks to patents on technology used to grow, manipulate and inject stem cells into the human body. The company helped finance researchers at the University of Wisconsin who first isolated human embryonic stem cells in 1998, allowing the cells to be grown in the laboratory.
Experts say Geron's departure is more a symbolic setback than a real one, since the vast majority of work in the field will continue to be funded by government and academic institutions. Geron said it still believes in the potential of stem cells and the company is seeking a partner or buyer for its stem cells division. Analysts say Geron's stem cell business could be acquired by Alameda, Calif.-based BioTime, a company founded by former Geron scientists. Other potential acquirers could include larger pharmaceutical companies like Celgene Corp., Pfizer Inc. and Teva Pharmaceuticals, which have dabbled in stem cells without making major investments.
Geron has no products on the market and would have spent $25 million per year to continue its stem cell program. In the announcement the company said it could make more money by completing two experimental cancer drugs that are already in mid-stage testing. Geron only began testing its stem cell treatment last year after a decade of research, and it could have been a decade more before federal regulators approved it for general use.
Experts say stem cell companies face particular challenges in the current economic climate, when investors want to see experimental therapies turned quickly into marketable products. “I think it points out the difficulty of bringing some of these cell therapies through to clinical applications if the main driving force has to be a financially viable product,” said Dr. Timothy Kamp, director of the stem cell medical program at the University of Wisconsin.
Geron's stock price fell 45 cents, or 20 percent, to close at $1.75 Tuesday. The company's shares have steadily declined since mid-2004 amid regulatory and funding challenges for the stem cells space. Companies in the field have consistently underperformed the broader Standard and Poor's 500 index of companies. By dropping the stem cell program — the company is cutting its work force by 66 people, or 38 percent — Geron will be able to last without needing to raise new money until it receives results of clinical trials of its cancer drugs over the next 18 months.
University of Wisconsin professor Alta Charo said Geron's move “may suggest that a different business model is needed, one with a longer timeline for return on investment.” Charo is a professor of bioethics and helped draft the National Academies guidelines for stem cell research.
CEO Dr. John Scarlett told investors and analysts Tuesday that focusing on cancer drugs will allow Geron to make more money in a shorter period of time, particularly when “big pharma and big biotech companies are increasingly hungry for first-in-class cancer programs.” He stressed that Geron's study has not encountered any problems and that it hopes another company will acquire and continue its work. “I hope that we're not letting anybody down. And we genuinely believe that the program itself has a future and we'll be looking to find a suitable home for it,” Scarlett said.
President George W. Bush had limited the availability of federal funding to embryonic stem cell groups that were already in existence in 2001, but which in many cases had drawbacks. In 2009 President Barack Obama's removed that limitation, increasing stem cell funding for dozens of additional stem cell lines.
“I deeply believe in the promise of stem cells…I don’t think that promise is in any way, shape or form changed by what we’re doing,” Scarlett said.
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