Geron's Hurry-Up-and-Wait Strategy

Stem cells were certainly high-risk, but don't be fooled into thinking that Geron (Nasdaq: GERN  ) dropping them from its repertoire means the company is suddenly risk-free, because it isn't. You're still going to need a strong stomach to see Geron through to profitability.

Yesterday, the biotech announced the start of a phase 2 trial testing GRN1005 in patients with non-small-cell lung cancer that has spread to the brain. This is the second phase 2 trial for GRN1005; the company started one in breast cancer that had spread to the brain in earlier this month.

The good news is that brain metastases are a highly unmet need. The bad news is that there's a reason for that. It's challenging to get a drug across the blood-brain barrier. Geron thinks it has solved the problem by attaching a known tumor killer -- Bristol-Myers Squibb's (NYSE: BMY  ) Taxol, which has been around for so long that it already has generic competition -- to a small protein that targets the drug across the blood-brain barrier.

It sounds feasible, but so did stem cells. The phase 1 data for GFN1005 looked promising, but it'll take additional patients in larger phase 2 trials to prove that the concept has merit. Unfortunately, investors will have to wait more than a year, until the second quarter of 2013, before they'll get to see the data.

Geron has a more advanced drug, imetelstat, but it won't finish much earlier. The company is guiding for the four phase 2 trials to be completed by the end of next year.

Waiting a year for a binary event is asking an awful lot of biotech investors. I wouldn't be surprised to see investors abandon the stock during the first half of the year rather than sit on shares without any catalysts. At that point, Foolish investors will have two options: follow suit into companies with catalysts like Aeterna Zentaris (Nasdaq: AEZS  ) and Keryx Biopharmaceuticals (Nasdaq: KERX  ) for their perifosine phase 3 data or use the potential dip as an opportunity to buy additional shares of Geron.

Either way, you'll need a strong stomach. But that's something that'll never disappear from biotech investing.

Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 23, 2011, at 4:38 PM, mruyog wrote:

    Mr. Orelli,

    You miss one point: If Geron's trial results are very encouraging and/or partnership deals for its hESC work are signed, the share price will jump high enough to take that chance!! It hasn't done so in last several years can not be the basis for assuming that the future will be the repeat of the past!

  • Report this Comment On December 24, 2011, at 9:28 PM, tazamatic wrote:

    Brian Orelli Geron has two diffrent drugs in Phase 2 trials. Imetelstat is in multiple phase 2 trials with results coming in the end of 2012. Geron has not completely given up on Stem Cells they have just come to the conclusion that they can not afford to advance those programs currently with the EU ruling on Stem Cell Patents and the current ecconomic climmant they will only proceed with apartner. Geron is currently in Patent litigation with Viacyte over definitive Endo derm cell types. this litigation covers Hepatocytes and Islet cells. Geron is the senior Party in this litigation. April 5 is the date this is supposed to go to the judge as the last filing in the case will have been completed. Viacyte is partialy owned by J&J and has licensing deals on some of these cell types with Pfizer and Cellular Dynamics. I would not expect Geron to complete their partnership deal until this litigation ends. The EU needs to fix their legislation on Stem cell patent abillity or the result would be a company developes treatments at great expense then anyone could do those treatments. The Spinal cord trial has had no adverse effects and there is no cavitation at the injury site. The dose used in the trial was 1/10th of the estimated effective dose. There is no sign of any teratomas or other signs of cancer developing from the treatment. The ecconomics for the trial made were not there for cost recovery from cost of treatment and cost of research for acute spinal cord injury. The bigger more cost effective target for OPC1 is MS. They have reported compelling data to support this in primates. The most puzzling move by Geron this year is the handing out $600,000 dollars in bonuses to 4 executives in a year that has seen the stock price drop 73% and they ended the Stem Cell programs because they needed to conserve capital how can the Board of directors justify these bonuses. One has to ask how the new CEO can say they have not lost anything in the Cancer pipeline with his act Geron has halted GRNVAC1 and GRNVAC2. The DDO in the UK had approved funding for GRNVAC2 phase 1 trials.

  • Report this Comment On December 25, 2011, at 1:44 AM, KJTech wrote:

    Geron's stem cell program is of deep personal significance to me since it has given my wife, a Parkinson's patient, at least seven extra years of life (and counting).

    On April 10th 1996 , she was diagnosed with Bipolar Disorder. In June, 2000 her psychiatrist noted behavioral symptoms not necessarily associated with Bipolar Disorder and recommended she be evaluated neurologically. The examination revealed she was additionally suffering from Parkinson’s Disease. Over the next four years the Parkinson’s symptoms developed rapidly. By August, 2004 it had reached Stage 4 with symptoms including facial paralysis, asymmetric tremor, mental confusion, deteriorating eyesight, limited short and long term memory and others.

    During the two years following her diagnosis, we explored various treatment options through contact with research institutions, studying medical publications and browsing the internet. Nothing emerged as obvious until I attended the March Meeting of the Santa Clara Section of the American Chemical Society featuring a presentation by Geron's then President, Dr. Thomas Okarma, entitled “Human Embryonic Stem Cells – Progress and Promise”. Following the formal presentation I joined a number of other scientists, in a lively discussion with Tom. As the conversation progressed, I became convinced that pluripotent human embryonic stem cell therapy could be a basis for treating Parkinson’s.

    No reputable clinics willing or able to provide this type of therapy could be located in North America. As a result we worked a clinic in Europe. On September 8, 2004 she was infused with 1.5 MM pluripotent CD34+ cells derived from Cord Blood. Specialized subsets (CD133+/- and CD34-) were included in the infusion. We remained in our hotel for a week following the treatment to allow for adverse reaction. A transient 1°F increase in temperature was the only symptom noted.

    Positive changes were unexpectedly rapid with some occurring within a couple of weeks. These changes included regain of facial expression and improvement in cognitive ability. She described it as like a curtain being drawn back in her mind. In subsequent weeks vast improvement in long and short term memory became apparent. We later realized that she was no longer lactose intolerant. Lower back pain resulting from a prior lumbar disk problem was greatly reduced.

    In September, 2006, we traveled to the Miami offices of renowned Parkinson’s specialist Dr. Abraham Lieberman. At the time he was Medical Director of the Miami based National Parkinson’s Foundation. He currently is the Director of the Muhammad Ali Parkinson Center at the Barrow Neurological Institute in Phoenix. Dr. Liebermann confirmed that Margaret’s Parkinson’s disease appeared to have been arrested. His observations were confirmed by whole body MRI imaging a month later. The MRI also documented repair of the spinal cord lesion and of some Parkinson’s related brain damage. There had been hope, (basis studies at Jefferson Medical College in Philadelphia and at the University of Copenhagen hypothesizing a common etiology between Parkinson’s and Bipolar Disorder) that the therapy could have had a positive effect on her bipolar disorder. Unfortunately, this has not been the case.

    The research of Geron and others has centered on differentiation of pluripotent stem cells into populations targeted to address specific injury or disease. This would result in high value therapies. Since there were no Parkinson’s targeted differentiated cells available to us, we were had to rely on the natural ability of pluripotent cells to identify and target conditions in her body – which they did. We had only to address the blood-brain barrier and other issues such as heavy metals and certain other materials with teratogenic tendencies.

    I mention this because our experience infers a basic difficulty in isolating high value therapies that would be of profitable interest to Geron (or any other company looking for a reasonable return on R&D Investment). This could be another instance of new technology eventually capable of turning an existing business model on its ear. Anyone want to invest in a factory making buggy whips, 8 track tapes or a slide rules?

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