A year after announcing its decision to exit stem cell
) announced that it has entered into a non-binding letter of
intent (LOI) with
) and BioTime`s subsidiary, BioTime Acquisition Corporation
(BAC), regarding the stem cell program.
According to the LOI, Geron will provide BAC with the
intellectual property and other assets related to its
discontinued human embryonic stem cell programs. BioTime will
provide BAC with cash ($5 million), shares ($30 million),
warrants to purchase 8 million shares at a pre-determined price,
rights to use certain human embryonic stem cell lines, and
minority stakes in two subsidiaries of BioTime.
Meanwhile, Geron stockholders would have a 21.4% stake in BAC
along with warrants to purchase 8 million shares at a
pre-determined price. Geron would also be entitled to receive
royalties on the sale of products covered by the patents acquired
by BAC from Geron.
Apart from Geron, BioTime would have a 71.6% stake in BAC and
the remaining 7% would be owned by a private investor (for an
investment of $5 million). BioTime will also have warrants which
would allow the company to increase its stake in BAC by 2%.
However, this would lead to a 2% dilution in Geron's stake. Geron
and BioTime are yet to sign a definitive agreement.
We currently have a Neutral recommendation on Geron, which
carries a Zacks #3 Rank (short-term 'Hold' rating). Geron
suffered a huge setback earlier in September with the
discontinuation of its oncology candidate, imetelstat, for breast
cancer. Moreover, the company said that the chances of moving the
candidate into phase III development for non-small cell lung
cancer (NSCLC) are pretty low.
Given the imetelstat update, we have low expectations from
this candidate and expect investor focus to shift entirely to
GRN1005 which is currently in phase II studies for brain
metastases arising from NSCLC and breast cancer. The company
expects to present interim data from the GRN1005 breast cancer
trial (GRABM-B) in early December. We prefer to remain on the
sidelines until we see data on GRN1005.
(BTX): ETF Research Reports
GERON CORP (GERN): Free Stock Analysis Report
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