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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________ .
COMMISSION FILE NUMBER: 0-20859
GERON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2287752
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
230 CONSTITUTION DRIVE, MENLO PARK, CA 94025
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (650) 473-7700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK $0.001 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 5, 2001, there were 21,781,392 shares of Common Stock
outstanding. The aggregate market value of voting stock held by non-affiliates
of the registrant was approximately $283,920,000 based upon the closing price of
the Common Stock on March 5, 2001 on The Nasdaq National Market. Shares of
Common Stock held by each officer, director and holder of five percent or more
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
Except for the historical information contained herein, the matters
discussed in this report are forward-looking statements that involve certain
risks and uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Potential risks and uncertainties
include, without limitation, those mentioned in this report and in particular,
the factors described below in Part II, Item 7, under the heading "Additional
Factors That May Affect Future Results."
DOCUMENTS INCORPORATED BY REFERENCE:
DOCUMENT FORM 10-K PARTS
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Definitive 2000 Proxy Statement, to be filed within 120 days
of December 31, 2000 (specified portions)................. III
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PART I
ITEM 1. BUSINESS
OVERVIEW
We are a biopharmaceutical company focused on discovering, developing and
commercializing therapeutic and diagnostic products for applications in oncology
and regenerative medicine, and research tools for drug discovery. Geron's
product development programs are based upon three patented core technologies:
telomerase, human embryonic stem cells and nuclear transfer. Telomeres are the
ends of chromosomes that protect chromosomes from degradation and act as a
molecular "clock" for cellular aging. Telomerase is an enzyme that restores
telomere length and rewinds the molecular "clock," thereby extending the cell's
ability to multiply or replicate. By activating telomerase, we seek to increase
the lifespan of normal cells which have prematurely aged in the body to treat
chronic degenerative diseases. Conversely, by inhibiting telomerase we hope to
kill cancer cells where telomerase is abnormally turned on and to diagnose
cancer by measuring telomerase activity. Human embryonic stem cells can develop
and differentiate into all cells and tissues in the body. As such, they are a
potential source for the manufacture of replacement cells and tissues for
applications in regenerative medicine. Nuclear transfer is a method for
generating human cells or whole animals from genetic material derived solely
from the nucleus of a single cell obtained from a single individual. We intend
to develop this technology to produce genetically matched cells that would not
be rejected by the patient's immune system for use in repairing organs damaged
by chronic degenerative disease.
We were incorporated in 1990 under the laws of Delaware. Our principal
executive offices are located at 230 Constitution Drive, Menlo Park, California,
94025. Our telephone number is (650) 473-7700.
TECHNOLOGY PLATFORMS
Telomeres and Telomerase: Their role in cellular aging and cancer
Cells are the building blocks for all tissues in the human body, and cell
division plays a critical role in the normal growth, maintenance and repair of
human tissue. However, in the human body, cell division is a limited process.
Depending on the tissue type, cells generally divide only 60 to 100 times during
the course of their normal lifespan.
We and our collaborators have shown that telomeres, located at the ends of
chromosomes, are key genetic elements involved in regulation of the cellular
aging process. Our work has shown that each time a normal cell divides,
telomeres shorten. Once telomeres reach a certain short length, cell division
halts and the cell enters a state known as senescence or aging. Our
collaborators have used mouse models to show that this type of cellular aging
can cause numerous age-related degenerative changes in mammals. We believe that
this cellular aging process, which occurs in numerous tissues throughout the
human body, causes or contributes to chronic degenerative diseases and
conditions including chronic liver disease, AIDS, macular degeneration (a
chronic disease of the eyes often leading to vision loss), atherosclerosis
(narrowing of arteries which reduces blood flow to internal organs) and impaired
wound healing.
We and our collaborators have demonstrated that telomeres serve as a
molecular "clock" for cellular aging and that the enzyme telomerase, when
introduced into normal cells, is capable of restoring telomere length or
resetting the "clock," thereby increasing the lifespan of cells without altering
their normal function or causing them to become cancerous. Human telomerase, a
complex enzyme, is composed of a ribonucleic acid component (RNA), also known as
hTR, and a protein component, known as hTERT. In 1994, in collaboration with Dr.
Carol Greider, we cloned the gene for hTR, and in 1997, in collaboration with
Dr. Thomas Cech, we cloned the gene for hTERT.
Our work and that of others has shown that telomerase is not present in
most normal cells and tissues, but that during tumor progression, telomerase is
abnormally reactivated in all major cancer types. We have shown that unlike the
mutations which cause cancer, the presence of telomerase only enables cancer
cells to maintain telomere length, providing them with indefinite replicative
capacity. We and others have shown in various
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tumor models that inhibiting telomerase activity results in telomere shortening
and therefore causes aging or death of the cancer cell.
We are working to discover and develop anti-cancer therapies based on
telomerase inhibitors, oncolytic (cancer killing) viruses and telomerase
vaccines. We also intend to continue to develop and commercialize products using
telomerase as a marker for cancer diagnosis, prognosis, patient monitoring and
screening.
Human Embryonic Stem Cells: A potential source for the manufacturing of
replacement cells and tissues
Stem cells generally are self-renewing primitive cells that can develop
into functional, differentiated cells. Human embryonic stem cells are unique
because they are pluripotent, that is they can develop into all cells and
tissues in the body. There are two types of human embryonic stem cells, also
called hESCs: human embryonic stem cells, also known as hES cells, which were
first derived by our collaborators from donated in vitro fertilized blastocysts
or very early-stage embryos; and human embryonic germ cells, also known as hEG
cells, which were derived from donated fetal material.
In addition to their pluripotent characteristics, hES cells express
telomerase and can therefore multiply or replicate indefinitely. The ability of
hES cells to divide indefinitely in the undifferentiated state without losing
pluripotency is a unique characteristic that distinguishes them from all other
stem cells discovered to date in humans. Other stem cells such as blood or gut
stem cells express telomerase at very low levels or only periodically; they
therefore age, limiting their use in research or therapeutic applications. Human
embryonic stem cells also maintain a structurally normal set of chromosomes even
after prolonged growth in culture. They do not, for example, have any abnormal
additions, deletions or rearrangements in their chromosomal structure as is
characteristic of cell lines derived from tumors or immortalized by viruses.
Although not as well characterized as hES cells, we believe that hEG cells will
share most of the characteristics of hES cells.
We intend to use hESC technology to
- enable the development of transplantation therapies by providing standard
starting material for the manufacture of cells and tissues;
- facilitate pharmaceutical research and development practices by providing
cells for screening and assigning function to newly discovered genes; and
- accelerate research in human developmental biology by identifying the
genes that control human development.
Nuclear Transfer: A potential mechanism for generating genetically matched
cells and tissues
Nuclear transfer is a method for generating human cells and whole animals
whose genetic material is derived solely from the nucleus of a single cell
obtained from a single individual. In this process, the nucleus containing all
of the chromosomal DNA is removed, or enucleated, from the egg cell and replaced
with the nucleus containing all of the chromosomal DNA from a donor somatic or
non-reproductive cell. Fusion between the resulting egg cell and the donor
somatic nucleus results in a new cell which gains a complete set of chromosomes
derived entirely from the donor nucleus. After a brief culture period, the
resulting embryo is implanted into the uterus of a female animal, where it can
develop and produce the live birth of a cloned offspring. The offspring is
essentially a genetic clone of the animal from which the donor nucleus was
obtained.
In early 1997, Dr. Ian Wilmut and his colleagues at the Roslin Institute
demonstrated with the birth of Dolly, the sheep, that the nucleus of an adult
cell can be transferred to an enucleated egg to create cloned offspring. The
birth of Dolly was significant because it demonstrated the ability of egg cell
cytoplasm, also known as the portion of the cell outside of the nucleus, to
reprogram an adult nucleus. Reprogramming enables the adult differentiated cell
nucleus to express all the genes required for full embryonic development of the
adult animal. Since Dolly was cloned, the technique has been used to clone mice,
goats, cattle and pigs from donor cells obtained from mice, goats, cattle and
pigs, respectively.
In order to complement and strengthen our technology platforms, in 1999, we
acquired Roslin Bio-Med Ltd., a commercial subsidiary of the Roslin Institute
which pioneered the use of nuclear transfer technology
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for the creation of cloned animals. We also entered into a research
collaboration with the Roslin Institute to focus on understanding the molecular
mechanisms used by animal egg cell cytoplasm to reprogram adult animal cell
nuclei.
A key objective of our collaboration with the Roslin Institute is to learn
how to confer the reprogramming capability normally found in the egg cell
cytoplasm to the cytoplasm of a somatic cell in order to eliminate reliance on
harvested eggs. In this way, we believe that transplantable genetically matched
cells could be derived from embryonic stem cells generated through nuclear
transfer using adult cells taken from the intended transplant recipient. We
believe such cells would not trigger immune rejection because they would exactly
match the tissue of the transplant recipient. We intend to develop this
technology to produce genetically matched cells for use in repairing organs
damaged by degenerative disease.
COMMERCIAL OPPORTUNITIES FOR OUR TECHNOLOGY PLATFORMS
Oncology
Cancer is a group of diseases characterized by the uncontrolled growth and
spread of abnormal cells. The American Cancer Society estimates that
approximately 1.2 million cancer cases were diagnosed in the year 2000. Overall
annual costs associated with cancer currently amount to $107 billion in the
United States alone. Because telomerase is detectable in more than 30 human
cancer types and in over 80 percent of cancer samples studied, we believe that a
telomerase inhibitor could overcome the limitations of current cancer therapies
and potentially be a broadly applicable and highly specific drug treatment for
cancer.
We are working to discover and develop anti-cancer therapies based on
telomerase inhibitors, oncolytic (cancer killing) viruses and telomerase
vaccines. We also intend to continue to develop and commercialize products using
telomerase as a marker for cancer diagnosis, prognosis, patient monitoring and
screening. We believe that we have achieved a dominant position in telomerase
research and in telomerase intellectual property which gives us a significant
advantage in the discovery and development of oncology products based on
telomerase.
Telomerase Inhibition. Telomerase activation is necessary for most cancer
cells to replicate indefinitely and thereby enable tumor growth and metastasis.
One of our strategies for the development of anti-cancer therapies is to inhibit
telomerase activity in cancer cells. Inhibiting telomerase activity should
result in telomere shortening and therefore cause the aging and eventual death
of cancer cells. Because telomerase is expressed at very low levels, if at all,
in most normal cells, the telomerase inhibition therapies described below are
not expected to be cytotoxic to normal cells. To produce a telomerase inhibitor
for the treatment of cancer, we have focused our efforts on two approaches:
template antagonists and small molecules. Both approaches have produced
compounds which we believe should advance to animal studies in 2001. We and our
collaborator have established research programs focused on our
telomerase-inhibiting compounds with the goal of advancing an inhibitor to
clinical development.
Template Antagonists. We have designed and synthesized a special class
of short-chain nucleic acid-like molecules, also known as oligonucleotides,
to target the template region, or active site, of telomerase. These
oligonucleotides have demonstrated highly potent telomerase inhibitory
activity at sub-nanomolar, or very low, concentrations in both biochemical
assays and various cellular systems. Published research by others has shown
that similar types of template antagonists inhibit the growth of malignant
human glioma (brain cancer) cells in animals. Based on these promising
results, we plan to continue tests of these oligonucleotides in animal
models of cancer in the coming year. We hold rights to this class of
oligonucleotides for telomerase inhibition, and have also developed several
new oligonucleotide-based chemistries for which we have filed our own
patent applications.
Small Molecules. Through high-throughput screening of highly diverse
chemical compound libraries, we have identified classes of small molecule
compounds that are telomerase inhibitors which are being further evaluated.
We continue to work toward improving the specificity and potency of these
small molecule compounds by modifying them chemically and testing them in
cancer cells in cell culture and in animal models.
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Oncolytic Virus. Our second anti-cancer therapeutic strategy is based on
viruses which have been manipulated or engineered to have oncolytic, or
cancer-killing, properties which would selectively target and destroy cancer
cells. We are developing customized adenoviruses, also known as common cold
viruses, that will infect and kill cancer cells which express telomerase and not
infect and kill normal cells which do not express telomerase. To pursue this
goal, we have cloned the region of the hTERT gene, called the promoter sequence,
that is responsible for turning on or off the activity of telomerase in a cell.
We have demonstrated that this promoter is turned on in telomerase-positive
cancer cells, and is turned off in most normal cells.
We are using the hTERT promoter to turn on the genes which are required for
the customized adenovirus to replicate within the cancer cell. Our data indicate
that when tumor cells are infected with the adenovirus which contains the hTERT
promoter, the virus multiplies or replicates within the cancer cells and causes
the rupture and death, or lysis, of the tumor cells. When these same
adenoviruses containing the hTERT promoter infect normal somatic tissue, there
is no similar effect on the cells. We are currently evaluating this oncolytic
virus in both local and metastatic animal tumor models. We believe that these
oncolytic viruses could be used to treat many types of primary and metastatic
cancers.
Telomerase Vaccine. Our third approach to developing an anti-cancer therapy
is to create a telomerase vaccine, exploiting the fact that telomerase is
present in all major cancer types but is expressed at very low levels, if at
all, in most normal cells. In this approach, we deliver telomerase to special
immune cells called dendritic cells which instruct the immune system to detect
cells that express telomerase and kill them.
We are conducting research to confirm the safety and efficacy of dendritic
cell telomerase vaccine therapies. In collaboration with scientists at Duke
University, we published studies in the September 2000 issue of Nature Medicine,
which demonstrate that cancer patients' immune cells can be activated with a
telomerase vaccine in the laboratory to kill their own cancer cells. This
technique was also effective in reducing tumors in animals. We are also
developing procedures to directly immunize patients using telomerase. This
direct method of vaccination would eliminate the need for manipulation of
dendritic cells in culture and could potentially allow simple vaccination
procedures to be available for all cancer patients.
Cancer Diagnostics. Telomerase is a broadly applicable and highly specific
marker for cancer because it has been detected in more than 30 human cancer
types and in over 80 percent of cancer samples studied. We believe that the
detection of telomerase may have significant clinical utility for cancer
diagnosis, prognosis, monitoring and screening. Current cancer diagnostics apply
only to a single or limited number of cancer types because they rely on
molecules expressed only by particular cancer types. However, telomerase-based
diagnostics could potentially address a broad range of cancers.
We have developed several proprietary assays for the detection of
telomerase which are based on its activity or the presence of its RNA or protein
components. The first-generation assay is the Telomeric Repeat Amplification
Protocol (TRAP) assay which can be used to detect telomerase activity in human
tissue or cells in culture. The second generation assays detect the presence of
hTR and hTERT in human tissues and body fluids. We own issued patents for the
detection of telomerase activity and the components of telomerase including
patents for the TRAP assay and diagnostic methods based on telomerase detection.
To date, our licensees have commercialized 13 research-use-only kits that
incorporate our technology.
We are working with Roche Diagnostics to develop the clinical potential of
our telomerase detection technology. Research data shows that an assay for
telomerase is a more sensitive and specific test for screening bladder cancer
than other commercially available tests. We believe that these and other data
support the clinical application of telomerase assays in diagnosis, staging,
monitoring and screening for bladder, cervical, prostate and other cancers.
Predictive Toxicology and Screening
Genomics and Human Developmental Biology. The first phase of the private
and publicly funded programs to complete the sequencing of the human genome is
now accomplished. Despite this catalogue of human gene sequences, little is
known about the structure of most genes, when and in what cells they are
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expressed or how they function. The next major hurdle is to determine the
function of these genes and to use this information to develop new diagnostic
and therapeutic approaches to treat many diseases.
Embryonic stem cells are especially suitable in the functional analysis of
genes involved in cell proliferation, differentiation and metabolism. The
effects of adding or knocking out specific genes in hESCs can be monitored,
providing evidence for the function of the gene on a particular proliferation or
differentiation process. In collaboration with Celera Genomics, we are
generating gene libraries from hESCs and sequencing them to identify genes
important for human development. We are simultaneously developing screening
procedures using hESCs to identify the function of multiple developmental genes.
Identification of the function of developmental genes will facilitate the
selection of genes that would be good targets for drug discovery.
Immortalized Cells for Research. Scientists study specific cells from
targeted tissues in order to understand their biological function. In these
studies, cells are usually isolated from tissue and maintained in culture. The
progressive changes in biological activity, morphology and proliferation as a
result of normal cell aging in tissue culture potentially limit the utility of
these cells in serial experiments and long term research. Because of these
limitations, most research laboratories utilize transformed cell lines for their
studies. Cells can be transformed by using viruses which ultimately cause the
cells to grow indefinitely in culture. However, such immortalized cell lines
have abnormal characteristics compared to non-transformed cells. For this
reason, they are not good models of normal tissue in the human body.
The telomerase-immortalized cells may be ideal for use in biological
research because these cells proliferate indefinitely and function in culture in
the same manner as the normal, mortal cells from which they were derived.
Moreover, telomerase-immortalized cells can function in the body to form normal
tissue and their capacity to differentiate into mature tissue is maintained. The
ability of these cells to maintain normal physical and biological
characteristics while retaining proliferative capacity allows them to be a
constant source of cells for repeat and long-term studies on the function of
cells both in culture and in the body. Telomerase-immortalized cells can be used
to study any of the normal biological pathways in cells and can be used to
screen for factors which influence the appropriate function of those cells.
Moreover, cells taken from diseased tissues which are then
telomerase-immortalized in culture can be used to explore the mechanism of the
disease process and to develop interventions to prevent or treat that disease.
We distribute the human telomerase gene under material transfer agreements
to academic laboratories worldwide in order to generate new applications of our
technology and to preserve our commercialization rights in these applications.
To date, we have material transfer agreements with over 500 academic
laboratories worldwide.
To distribute our telomerase-immortalized cell lines commercially, we
established an alliance with Clontech Laboratories, Inc., to distribute
telomerase-immortalized cell lines to the not-for-profit research market for
basic research applications. Under the alliance, we execute licenses with, and
receive license fees from, commercial entities that are supplied by Clontech.
Drug Screens and Toxicology. Three of the major hurdles of pharmaceutical
drug development are (i) identifying compounds with activity in diseased tissue;
(ii) understanding the metabolism and biodistribution of the compound; and (iii)
determining the potential toxic side effects of the compound. Undesirable
activity of a compound being evaluated as a candidate drug in any one of these
areas can impact the development and commercialization of the drug. The earlier
in development that a compound is found to have undesirable characteristics, the
faster these characteristics can be potentially corrected. This potentially
translates into reduced costs and time in drug development, and less harmful
exposure to patients in clinical trials.
Many prospective new drugs fail in clinical trials because of toxicity to
the liver or because of poor uptake, distribution or elimination of the active
compound in the human body. Much of the efficacy and safety of a drug will
depend on how that drug is metabolized into an active or inactive form, and on
the toxic metabolites that might be generated in the process. Hepatocytes, the
major cells of the liver, metabolize most compounds and thereby can be used to
predict many pharmacological characteristics of a drug.
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There are no completely effective systems available today to accurately
determine the metabolism or toxicity of a compound in human livers. Rat and
mouse metabolism models only approximate human metabolism. The development of
several drugs has been terminated late in human clinical trials because rodent
systems utilized early in the development process failed to predict that the
drug would be toxic to humans. Human hepatocyte cell lines available today do
not have the same attributes as their normal counterparts in the body and must
be transformed in order to maintain their proliferative capacity in culture.
Access to fresh primary human liver tissue for use in toxicity studies is very
unreliable and substantial variability can be observed depending on the
individual donor, the time and process of collection and the culture conditions
for the experiments.
We believe telomerase-immortalized hepatocytes would serve as a consistent
source of normal human liver tissue which would more closely predict the impact
of a new drug on human livers in the body. We believe that
telomerase-immortalized hepatocytes which retain normal drug metabolism enzymes
would revolutionize toxicity testing, address the largest bottleneck in new drug
research and accelerate the drug development process. To potentially meet this
need, we are creating immortalized hepatocytes using two methods. First, we will
apply our telomerase technology to immortalize human hepatocytes. In every cell
system tested, telomerase-immortalized cells have been shown to function
comparably to their normal non-immortalized counterparts. Therefore, we believe
telomerase-immortalized hepatocytes should also function comparably to
hepatocytes in a whole human liver in the body. Second, we are developing
procedures to differentiate hESCs into hepatocyte precursors and eventually into
mature hepatocytes. Functional hepatocytes, developed by either immortalization
by telomerase or derivation from hESCs, would provide a consistent and reliable
source of material for extensive and reproducible compound testing.
We intend to commercialize such cells as a means to more accurately
determine the potential toxicity and metabolism of a new candidate drug. In
addition, the availability of immortalized hepatocytes from numerous individuals
would allow a more thorough understanding of the effects of a drug candidate on
a specific individual, allowing full development of the field of
pharmacogenomics whereby a compound's activity will be correlated with an
individual's genetic make-up.
Regenerative Medicine
The preceding product opportunities are examples of how we plan to
separately use each of our three technology platforms. Additional opportunities
arise from their combination. The integration of our three technology
platforms -- telomerase, hESCs and nuclear transfer -- allow the development of
cell-based therapies that would have broad applications for the treatment of
chronic degenerative diseases which are occurring with increasing frequency in
our aging population. We are developing three basic approaches to restore organ
function lost to chronic diseases: gene, small molecule and cell-based
therapies.
We believe that the controlled activation of telomerase in the body will
have therapeutic applications for the treatment of blood, skin, liver and immune
disorders, conditions in which deficiencies in cell proliferation have been
implicated. In the gene-based approach, we intend to deliver the engineered
hTERT gene directly to cells to restore telomerase activity in order to restore
normal function to the cell. We are also developing a drug-like strategy with
our small molecule-based therapy which would reactivate the existing telomerase
gene already present in the cell to restore normal function to the cell.
In cell-based therapies, differentiated cells derived from hESCs would be
directly injected into the affected tissue where they would integrate into the
target tissue and thereby restore organ function. This approach is particularly
applicable for the regeneration of tissues that do not normally divide in the
body. Such cells include cardiomyocytes (heart muscle cells), neural cells,
hepatic (liver) cells and pancreatic islet SS cells. We are currently developing
the following cell types for therapeutic applications.
Chronic Liver Disease. There are over 25,000 deaths in the United States
every year due to chronic liver disease. This number is expected to increase
with the growing number of people who are infected with hepatitis B and C
viruses. Each year over nine billion dollars is spent in the United States alone
for the treatment and management of patients with chronic liver disease.
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Liver regeneration is not observed in most patients with chronic liver
disease. However, healthy livers, such as those used for partial transplants,
can fully regenerate within weeks after surgery. Compromised liver function and
chronic liver disease can result from prolonged exposure to various harmful
factors such as chemical toxins, chronic alcohol intake, autoimmune
inflammation, metabolic disorders and viral infections. Patients with advanced
stages of chronic liver disease often suffer from other complications such as
diabetes, bleeding disorders, portal hypertension (localized high blood
pressure), edema (fluid retention), mental dysfunction, immune dysfunction,
kidney failure and liver cancer which eventually lead to death. Treatment for
patients with advanced liver disease usually consists of liver transplantation.
Despite some success with this procedure, the majority of candidate patients do
not receive transplants due to low organ availability.
Telomerase is not normally expressed in human hepatocytes (liver cells) and
numerous studies have shown that shortened telomere lengths are observed in the
livers of patients with chronic liver disease. Studies in mice, in which the RNA
component of telomerase has been removed, show that these animals have increased
sensitivity to liver damage. Studies have shown that restoring telomerase
activity in those mice results in the restoration of hepatic regenerative
capacity.
We plan to utilize our technology platforms in several different formats to
treat liver disease. In one application, we are developing methods to generate
telomerase activity in hepatocytes. Using a gene-based therapy approach, the
telomerase gene is delivered directly to the liver to determine whether
telomerase can restore the regenerative capacity of the damaged liver. Using a
cell-based therapy approach, we will apply the same techniques being developed
to produce human hepatocytes for drug discovery to create hepatocytes for
therapeutic intervention in liver disease. Several potential alternative
cell-based therapy approaches are being explored. The first is an external
device which would incorporate immortalized human hepatocytes to supplement the
patient's own liver function during acute flares of chronic liver disease. The
second is the transplantation of immortalized hepatocytes into the patient's
liver to seed and stimulate hepatocyte repopulation. Successful development of
these therapies potentially could provide therapeutic alternatives for the high
proportion of patients who are not candidates for liver transplantation or for
whom transplantable organs are not available.
Heart Disease. Heart muscle cells, also known as cardiomyocytes, do not
regenerate during adult life. When heart muscle is damaged by injury or
decreased blood flow, functional contracting heart muscle is replaced with
nonfunctional scar tissue. Congestive heart failure, a common consequence of
heart muscle or valve damage, affects more than four million people in the
United States. This year, it is estimated that about 1.1 million people will
have a heart attack, which is the primary cause of heart muscle damage.
We intend to use cardiomyocytes derived from hESCs to treat heart disease.
Researchers have demonstrated proof of concept of our approach in mice. Mouse
embryonic stem cells were used to derive mouse cardiomyocytes. When injected
into the hearts of recipient adult mice, the cardiomyocytes repopulated the
heart tissue and stably integrated into the muscle tissue of the adult mouse
heart. These results suggest that hESC-derived cardiomyocytes could be developed
for cellular transplantation therapy in humans suffering from congestive heart
failure and the damage caused by heart attacks. We have derived human
cardiomyocytes from hESCs and observed their normal contractile function. We
plan to test these cardiomyocytes in animal models to establish the safety and
efficacy of this cell-based therapy.
Parkinson's Disease, Stroke and Spinal Cord Injury. The major neural cells
of the nervous system typically do not regenerate after injury. If a nerve cell
is damaged due to disease or injury, there is no treatment at present to restore
lost function. Millions of patients worldwide suffer from injury to the nervous
system or disorders associated with its degeneration. Strokes are caused by
blood clots or local bleeding in the brain and result in the death or
degeneration of critical brain cells. Over 500,000 Americans suffer strokes each
year. Stroke patients are often permanently compromised by loss of cognitive
motor and sensory functions for which there are no treatments available today
except costly long-term rehabilitation programs which have limited utility in
restoring function. Over one million Americans suffer from Parkinson's disease,
a neurological disorder caused by the progressive degeneration of specific cells
within the brain that control certain motor functions. In the case of spinal
cord injuries, patients are often left partly or wholly paralyzed
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because nerve and supporting cells in the spinal cord have been damaged and
cannot regenerate. Such patients are permanently disabled, often
institutionalized, and may require life support.
Embryonic stem cell-derived neural cells have been used by researchers to
treat nervous system disorders in animal models. Mouse embryonic stem cells were
stimulated to differentiate into neural cells which, when transplanted into mice
with neurological disorders, helped to restore normal function. In the case of
spinal cord injuries, neural cells derived from animal embryonic stem cells and
injected into the spinal cord injury site produced partial recovery of the
animal's ability to move and bear weight.
We have derived the major types of neural cells from hESCs in culture,
including human neurons, astrocytes and oligodendrocytes, and are characterizing
their functional properties. We have devoted a significant portion of our
research activities to develop procedures that could enable us to produce these
neural cells for transplantation therapy in humans. We will first test these
cells in appropriate animal models to determine whether they can restore normal
neural function. We intend to repair the damaged portions of patients' nervous
systems by transplanting hESC-differentiated neurons.
Skin. The skin is a major organ of the body whose deterioration with age
impacts not just human physical health but also appearance and self-esteem. The
thinning and increased wrinkling of older skin is symptomatic of impaired wound
healing and results in increased frequency of chronic ulcers. Skin cancers are
more prevalent than any other form of cancer and are believed to be caused in
part by aging of skin cells.
We have initiated a major skin program based upon the activation of
telomerase in skin cells. Our scientists and other researchers have established
that skin cells age in tissue culture and in the body with loss of telomeric
DNA. The restoration of telomerase activity in skin cells in culture
dramatically extends the healthy lifespan of these cells. Animal models of
telomere loss also correlate cellular aging with thinning of skin, graying of
hair, chronic ulcerative lesions at areas of stress and reduced ability to
repair wounds. Our approach to the therapeutic use of telomerase activation in
skin includes both small molecule drug discovery, as well as biological and
genetic methods of introducing telomerase into various skin cells.
Diabetes. It is estimated that there are as many as one million Americans
suffering from the type of diabetes known as Insulin Dependent Diabetes
Mellitus. Normally, certain cells in the pancreas, called the islet (beta)
cells, produce insulin which promotes the uptake of the sugar glucose by cells
in the human body. Degeneration of pancreatic islet (beta) cells results in a
lack of insulin in the bloodstream which results in diabetes. Although diabetics
can be treated with daily injections of insulin, these injections enable only
intermittent glucose control. As a result, patients with diabetes suffer chronic
degeneration of many organs, including the eye, kidney, nerves and blood
vessels. In some cases, patients with diabetes have been treated with islet
(beta) cell transplantation. However, poor availability of suitable sources for
islet (beta) cell transplantation and the complications of the required
co-administration of immunosuppressive drugs make this approach impractical as a
treatment for the growing numbers of individuals suffering from diabetes.
By integrating our three technology platforms -- telomerase, hESCs and
nuclear transfer -- we intend to derive histocompatible, or genetically matched,
insulin-producing islet (beta) cells for transplantation. Pilot studies are
underway with collaborators to determine the effects of telomerase expression on
primary (beta) cells derived from human islet tissue. In addition, we are
devising techniques to differentiate islet (beta) cells from hESCs which would
be used in studies of animal models of diabetes. We intend to derive long-lived,
transplantable islet (beta) cells which could support the patient's insulin
requirements for life.
Additional Applications for Nuclear Transfer
Xenotransplantation. The demand for organ transplantation far outweighs the
number of human organs available. It is estimated that there are over 150,000
people worldwide waiting for an organ. In the United States, more than 60,000
individuals were registered on transplant waiting lists at the end of 1998. That
year, however, less than half of the people listed received solid organ
transplants. The demand for organ transplantation will continue to increase as
improved technical skills and anti-rejection medication make whole organ
transplantation a realistic option for groups of people previously considered
not eligible for transplantation -- for example, those suffering from diabetes
or those over age 55.
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Programs to increase the number of registered donors are extremely
important, but these programs alone will not solve the problem of organ
shortages. One solution under consideration by the medical, pharmaceutical and
biotechnology communities is xenotransplantation -- the process of transplanting
cells, tissues or organs from one species to another, for example, from an
animal to a human. This approach potentially could be used either as a bridge to
human organ transplantation or as long-term therapy in the form of a permanent
transplant.
Pigs are the preferred source for xenotransplantation because they have
organs of comparable size and anatomy to human organs. Through nuclear transfer,
it should be possible to produce genetically modified pigs to make their organs
more suitable for transplantation to humans without causing an acute immune
rejection. Acute immune rejection of transplanted pig organs is caused by
natural human antibodies which recognize and react to certain sugar structures
present in the blood vessels of the transplanted pig tissue. By deleting the
gene for the enzyme which generates the key sugar structure that triggers the
immune rejection from the pig genome, we could clone an animal via nuclear
transfer that had organs with reduced probability of acute rejection. This would
enable the cost-effective and scalable production of identical animals for
clinical trials. Cloned herds of pigs which would no longer carry the foreign
sugar structure could become a commercial source of organs that would not be
rejected by the recipients' immune system. Such cloned pigs might serve as
sources for multiple transplantable organs such as hearts, kidneys and
pancreases.
Transgenic Animals. Our nuclear transfer technology can be applied to clone
animals that have been genetically engineered to produce proteins for human
therapeutic or industrial use. For example, herds which carry the genes to make
human antibodies could be cloned, thereby allowing for the large-scale
production of therapeutic antibodies or vaccines.
Agriculture. Our nuclear transfer and gene targeting technologies can be
used for applications in agriculture that improve livestock by producing
unlimited numbers of genetically identical animals with superior commercial
qualities. Such applications can be extended to major agricultural sectors, such
as beef, dairy, pig and chicken, to provide large numbers of animals with
superior characteristics of disease resistance, longevity, growth rate or
product quality.
We are focusing our research collaboration at the Roslin Institute on
developing more efficient nuclear transfer procedures suitable for
xenotransplantation, production of biologicals by transgenic animals and
agricultural applications. Such technologies should also prove useful in
reprogramming strategies for the production of genetically matched human cells
for tissue transplantation. We plan to widely license this technology to
companies working in these areas.
COMMERCIALIZATION
We believe that our broad scientific platforms will generate significant
opportunities for a variety of strategic collaborations. We have established and
intend to continue to establish selective collaborations with leading
pharmaceutical, diagnostic and technology companies to enhance our research,
development and commercialization capabilities and to participate in
commercialization opportunities. In each of these strategic collaborations and
in future collaborations, we retain and intend to retain co-promotion rights to
participate in the commercial success of our products.
Kyowa Hakko Collaboration
In April 1995, we entered into a license and research collaboration
agreement with Kyowa Hakko Kogyo Co., Ltd. Under the agreement, Kyowa Hakko
agreed to provide $16.0 million of research funding over four years to support
our program to discover and develop in several Asian countries a telomerase
inhibitor for the treatment of cancer. All of this research funding had been
received as of December 31, 2000. In addition, we are entitled to receive future
payments upon the achievement of certain contractual milestones relating to drug
development and regulatory progress, as well as royalty payments on product
sales. Kyowa Hakko also purchased $2.5 million of our common stock in connection
with our initial public offering. Under the Kyowa Hakko Agreement, we exercise
significant influence during the research phase and Kyowa Hakko exercises
significant influence during the development and commercialization phases. Kyowa
Hakko has agreed that it
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will not independently pursue telomerase inhibition for the treatment of cancer
in humans until March 2002. In February 2000, we amended our agreement with
Kyowa Hakko to extend the research period and the compound selection period for
one additional year each, to March 2001 and March 2002, respectively. We are
entitled to receive additional research funding as part of this extension
subject to the terms of the agreement.
Pharmacia Corporation Collaboration
In March 1997, we signed a license and research collaboration agreement
with Pharmacia Corporation to collaborate in the discovery, development and
commercialization of a new class of anti-cancer drugs that inhibit telomerase.
Under the collaboration, Pharmacia agreed to provide research funding over three
years. As of December 31, 2000, $18.8 million of research funding had been
received. In addition, the agreement provided for future payments to Geron upon
the achievement of certain contractual milestones relating to drug development
and regulatory progress, as well as royalty payments on future product sales. As
outlined in the stock purchase agreement, Pharmacia purchased equity in Geron in
installments of $2.0 million in January 1997, $4.0 million in April 1997 and
$4.0 million in March 1998. Pharmacia purchased each round of our common stock
at a premium. As part of this collaboration, we accessed the high throughput
screening capabilities and the three million compound library of Pharmacopoeia
in 1999, via an alliance between Pharmacia and Pharmacopoeia which included
telomerase inhibition. In January 2000, Pharmacia exercised an option to extend
the research period one year to March 2001 and added a one year compound
selection period for a back-up candidate. That agreement provided for additional
research funding to us as part of the extension.
In January 2001, the parties agreed to terminate the license and research
collaboration agreement. Pharmacia returned all product rights for telomerase
inhibitors to us. We plan to continue our development work on compounds that
inhibit telomerase for applications in cancer chemotherapy.
Roslin Institute Collaboration
In May 1999, we completed the acquisition of Roslin Bio-Med Ltd., a company
formed by the Roslin Institute in Midlothian, Scotland, in order to complement
and strengthen our technology platforms. Under the terms of the agreement, we
purchased all outstanding shares of Roslin Bio-Med in exchange for 2.1 million
shares of our common stock and Roslin Bio-Med became a wholly owned United
Kingdom subsidiary known as Geron Bio-Med Ltd. In addition, the Roslin Institute
transferred to us the exclusive rights to the patent applications covering
nuclear transfer technology for all animal and human-based biomedical
applications, excluding (i) human reproductive cloning, (ii) the production of
therapeutic proteins in the milk of ruminants and rabbit and (iii) the
modification of milk composition for nutraceutical use.
In connection with this acquisition, we also formed a research
collaboration with the Roslin Institute and have agreed to provide approximately
$20.0 million in applied research funding over six years. Under this
collaboration, we retain exclusive license rights to commercialize the results
of the research. This alliance brings together three complementary technologies:
telomerase, human embryonic stem cells and nuclear transfer technologies. We and
the Roslin Institute will focus on generating genetically matched human cells
and tissues with extended replicative capacity for use in repairing organ damage
caused by a range of degenerative diseases, including chronic liver disease,
heart disease, neurologic diseases, skin conditions and diabetes. We have
focused the research at the Roslin Institute on understanding the basic biology
of cellular reprogramming by animal egg cells in order to accelerate progress on
developing cells that could be transplanted without human immune rejection.
Also, we are advancing work underway at the Roslin Institute on the
development of genetically modified cloned animals for applications in
xenotransplantation and agriculture. Accordingly, we are engaged in discussions
with other companies to non-exclusively license our nuclear transfer technology
for commercial applications in agriculture, xenotransplantation and biological
production. Three such licenses have been granted thus far to AviGenics, Inc.
and Origen Therapeutics, Inc. for poultry applications, and to Clone Australia
Pty Ltd. for cattle cloning.
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Clontech Marketing Agreement
In March 1999, we entered into a development and license agreement with
Clontech Laboratories, Inc. to market the Infinity(TM) product family of primary
human cell lines immortalized with telomerase. Under the terms of the agreement,
Clontech manufactures and markets products resulting from the use of our
telomerase technology to the not-for-profit research market. Clontech also
supplies products to the biotechnology and pharmaceutical industries under
licenses to be executed between the individual commercial companies and us.
Under the Clontech agreement, Clontech paid us an up-front fee of $50,000 for
development activities. We will equally share operating profits with Clontech
from the sales of the Infinity(TM) Cell Lines, while we will retain all
licensing revenues.
In 2000, Clontech launched the hTERT-HME1 human mammary epithelial cell
line, which adds to the other two cell lines already being marketed in 1999. We
and Clontech plan to expand the family of Infinity(TM) Cell Lines in the future.
Diagnostic Collaborations
Research-Use-Only Kits. Roche Diagnostics has licensed all telomerase and
telomere length assay technologies, including TRAP, hTR, hTERT, and telomere
length, for research-use-only kits for cancer. All telomerase licenses
previously licensed to Boehringer Mannheim were transferred to Roche Diagnostics
following their acquisition of Boehringer Mannheim. Boehringer Mannheim's
telomerase-related products are now marketed under the Roche Diagnostics label.
In late 1996, Boehringer Mannheim commenced commercial sale of the TRAP research
kit. In 1999, Roche Diagnostics launched three additional research kits,
including quantitative TRAP, telomere length measurement and hTERT
quantification assays. In 2000, Roche Diagnostics launched an hTR quantification
kit. Roche Diagnostics is currently marketing a total of five kits.
Examples of other companies marketing research-use-only kits under license
include the following:
- In 1999, Roche Diagnostics entered into a sublicense agreement with Dako
under which Dako received non-exclusive rights to develop antibody
mediated telomerase detection assays and telomere length measurement
assays for research and clinical diagnostic applications in oncology. We
receive royalties from products commercialized under this sublicense. In
1999, Dako marketed two kits for measuring telomere length by
fluorescence microscopy. In 2000, Dako launched a telomere length
measurement kit for flow cytometry. Dako is currently marketing a total
of three kits.
- Kyowa Medex Co. has licensed our TRAP assay technology on a non-exclusive
basis for the research-use-only market in Japan and commenced commercial
sale of Intergen's TRAP kit in late 1996.
- We licensed the TRAP assay for research-use-only to Oncor Inc. and the
license has been subsequently transferred to the Intergen Company
following the acquisition of Oncor's research reagent division by
Intergen. Intergen is currently marketing three TRAP research kits.
- PharMingen has licensed our TRAP assay and telomere length measurement
technology on a non-exclusive basis for sale to the research-use-only
market and presently has two research kits on the market.
Although we do not expect royalties from the sale of these 13 research kits
to be significant, the use of these kits has stimulated additional studies of
telomerase activity by academic laboratories and standardized the methodology
used to evaluate the role of telomerase in cancer.
In Vitro Diagnostics. In addition to the rights described above related to
research-use-only kits, our December 1997 license, product development and
marketing agreement with Boehringer Mannheim also granted Boehringer Mannheim
rights to develop and commercialize clinical in vitro diagnostic products for
cancer on an exclusive, worldwide basis. Under the agreement, Boehringer
Mannheim provided reimbursement in the amount of $500,000 for research
previously conducted and is responsible for all clinical, regulatory,
manufacturing, marketing and sales efforts and expenses. We are entitled to
receive future payments upon achievement of certain contractual milestones
relating to levels of product sales, as well as
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royalties on product sales. Further, we have an option at our sole discretion to
exercise co-promotion rights with respect to in vitro diagnostic products in the
United States. After the acquisition of Boehringer Mannheim by Roche Diagnostics
in 1998, all telomerase licenses previously licensed to Boehringer Mannheim were
transferred to Roche Diagnostics.
Celera Genomics Collaboration
In May 2000, we entered into a collaborative research and license agreement
with Celera Genomics to combine our expertise in human embryonic stem cell
biology with Celera's comprehensive sequencing information and gene discovery
capabilities. Under the terms of the collaboration, we will work together with
Celera to identify and assign biological function to genes involved in human
cell differentiation. We will utilize the information to develop and
commercialize a number of small molecule drugs, protein therapeutics, cell and
gene therapy products, and prenatal diagnostics. Celera will utilize the
information to enhance the annotation of the human genome and develop and
commercialize probe sets for gene expression analysis. Celera and Geron will
license to third parties certain intellectual property to develop other
products.
Merix Bioscience Collaboration
In August 2000, we initiated a collaboration with Merix Bioscience, Inc. to
develop telomerase-based cancer vaccines for clinical and commercial
applications using Merix's proprietary ex vivo RNA-modified dendritic cell
technology platform. Under the terms of the collaboration, we are sponsoring
preclinical studies at Duke University to confirm the safety and efficacy of
hTERT-modified dendritic cells to mediate immune responses against tumors.
Studies will be performed in parallel by Merix. We will jointly determine the
clinical development plan for the combined technology.
RESEARCH COLLABORATIONS
We selectively enter into, and intend to continue to enter into,
collaborative research agreements with leading academic and research
institutions. We design these collaborative agreements to significantly enhance
our research and development capabilities while enabling us to obtain commercial
rights to intellectual property developed through the research collaboration.
Under these agreements, we generally provide funding or other resources for
scientific research in return for commercial rights to materials and discoveries
arising out of this research. We seek to retain rights to commercially develop
and market discoveries made under these research programs by obtaining rights to
exclusively license technology developed under them, including patents and
patent applications filed in connection with these research programs.
As of December 31, 2000, we have collaborative research agreements in
support of our oncology program with a number of institutions, including Duke
University, Lawrence Berkeley National Laboratory, the National Cancer
Institute, Stanford University, the University of Texas Southwestern Medical
School at Dallas, the University of California at San Francisco, the Memorial
Sloan-Kettering Cancer Center, Texas A&M University, Hong Kong University of
Science and Technology and the University of Pittsburgh. We have collaborative
research agreements in support of our research of telomerase-immortalized cells
with numerous institutions, including Duke University and Stanford University.
We have exclusive license and collaborative research agreements in support of
our human embryonic stem cell research and regenerative medicine program with
The Johns Hopkins University, the University of California at San Francisco, the
University of Edinburgh, the University of Wisconsin -- Madison, Cornell
University and the University of Utah.
PATENTS, PROPRIETARY TECHNOLOGY AND TRADE SECRETS
Our three core technology platforms are supported by a broad intellectual
property portfolio of issued patents and pending patent applications. We
currently own or have licensed over 67 issued or allowed United States patents,
28 granted foreign patents and over 318 patent applications that are pending
around the world.
Our policy is to seek, when appropriate, patent protection for inventions
in our core technology platforms as well as ancillary technologies that support
these platforms or otherwise provide a competitive advantage to
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us. We achieve this by filing patent applications for discoveries made by us
alone or made in conjunction with our scientific collaborators and strategic
partners. Typically, although not always, we file patent applications in the
United States and internationally through the Patent Cooperation Treaty. In
addition, we obtain licenses or options to acquire licenses from other
organizations to patent filings that may be useful in advancing our scientific
and product development programs.
Patent rights to embryonic stem cells and telomerase underpin our
regenerative medicine program. Currently, we own or have licensed rights to two
issued United States patents relating to human embryonic stem cells and human
embryonic germ cells. Our licenses to certain of these patent rights arise from
the work that we funded at The University of Wisconsin, Johns Hopkins University
and The University of California at San Francisco. We have also developed our
own stem cell intellectual property asset based, among other things, on our
discoveries of new methods for growing the cells that are suitable for large
scale culture and techniques for making cells such as hepatocytes (liver cells),
cardiomyocytes (heart muscle cells) and neural cells (nerve cells) starting from
the stem cells. We currently have over 48 patent applications pending around the
world covering various aspects of our stem cell technology.
Our product development plans for our telomerase-related technologies are
protected by over 42 issued United States patents, 13 granted foreign patents
and over 202 patent applications pending around the world. These include patents
and patent applications that cover the use of telomerase for gene-based
therapeutic applications, which is part of our regenerative medicine program.
Our telomerase intellectual property also covers our oncology program, aspects
of which include methods of detecting cancer based on telomerase, the use of
telomerase as a cancer vaccine and drugs designed to inhibit telomerase activity
in cancer cells. For example, our issued United States patents include purified
human telomerase, the cloned gene that encodes the RNA component of telomerase
and various methods of detecting and diagnosing conditions associated with
telomerase, including cancer. Our granted foreign patents include the cloned
genes that encode the RNA and protein components of human telomerase, the
promoter sequence that regulates the expression of the telomerase protein gene
and diagnostic methods. We also own several issued United States patents and
pending international patent applications directed to both small molecule and
template antagonist telomerase inhibitors, as well as particular nucleic acid
chemistry developed at Geron.
Our third technology platform, nuclear transfer, is protected in part by
the patent rights that we acquired in 1999 with the acquisition of Roslin
Bio-Med, now Geron Bio-Med. A number of patents have now issued based on that
technology, including one United States patent and 14 foreign patents. In
addition, we have more than 52 pending patent applications worldwide relating to
nuclear transfer and cell reprogramming, based both on our continued funding of
research at the Roslin Institute and our internal research programs.
Intellectual property rights to the nuclear transfer technology are the primary
asset of our licensing program through which we are granting licenses for
cloning animals for use in agriculture, xenotransplantation and
biopharmaceutical production. The use of nuclear transfer and related
reprogramming technologies in human cells may also allow us to produce
genetically matched cells for our regenerative medicine program.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and other
countries is a significant factor in the development, manufacture and marketing
of our proposed products and in our ongoing research and product development
activities. The nature and extent to which such regulation applies to us will
vary depending on the nature of any products which may be developed by us. We
anticipate that many, if not all, of our products will require regulatory
approval by governmental agencies prior to commercialization. In particular,
human therapeutic and vaccine products are subject to rigorous preclinical and
clinical testing and other approval procedures of the Food & Drug
Administration, or FDA, and similar regulatory authorities in European and other
countries. Various governmental statutes and regulations also govern or
influence testing, manufacturing, safety, labeling, storage and recordkeeping
related to such products and their marketing. The process of obtaining these
approvals and the subsequent compliance with appropriate statutes and
regulations require the expenditure of substantial time and money. Any failure
by us or our collaborators to obtain, or any delay in obtaining these approvals
may affect the marketing of any products developed by us, will prevent us from
generating product revenues and obtaining adequate cash to continue present and
planned operations.
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FDA Approval Process
Prior to commencement of clinical studies involving humans, preclinical
testing of new pharmaceutical products is generally conducted on animals in the
laboratory to evaluate the potential efficacy and the safety of the product. The
results of these studies are submitted to the FDA as a part of an
Investigational New Drug application, which must become effective before
clinical testing in humans can begin. Typically, human clinical evaluation
involves a time consuming and costly three-phase process. In Phase 1, clinical
trials are conducted with a small number of people to assess safety and to
evaluate the pattern of drug distribution and metabolism within the body. In
Phase 2, clinical trials are conducted with groups of patients afflicted with a
specific disease in order to determine preliminary efficacy, optimal dosages and
expanded evidence of safety. In Phase 3, large-scale, multi-center, comparative
trials are conducted with patients afflicted with a target disease in order to
provide enough data to demonstrate the efficacy and safety required by the FDA.
The FDA closely monitors the progress of each of the three phases of clinical
testing and may, at its discretion, re-evaluate, alter, suspend, or terminate
the testing based upon the data which have been accumulated to that point and
its assessment of the risk/benefit ratio to the patient. Monitoring of all
aspects of the study to minimize risks is a continuing process. Reports of all
adverse events must be made to the FDA.
The results of the preclinical and clinical testing on a non-biologic drug
and certain diagnostic drugs are submitted to the FDA in the form of a New Drug
Application, or NDA, for approval prior to commencement of commercial sales. In
the case of vaccines or gene and cell therapies, the results of clinical trials
are submitted as a Biologics License Application. In responding to a NDA or
Biologics License Application, the FDA may grant marketing approval, request
additional information or deny the application if the FDA determines that the
application does not satisfy its regulatory approval criteria. There can be no
assurance that approvals will be granted on a timely basis, if at all, for any
of our products. Similar procedures are in place in countries outside the United
States.
European and Other Regulatory Approval
Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities in Europe and other countries will likely be
necessary prior to commencement of marketing the product in such countries. The
regulatory authorities in each country may impose their own requirements and may
refuse to grant, or may require additional data before granting an approval,
even though the relevant product has been approved by the FDA or another
authority. As with the FDA, the regulatory authorities in the European Union, or
EU, countries and other developed countries have lengthy approval processes for
pharmaceutical products. The process for gaining approval in particular
countries varies, but generally follows a similar sequence to that described for
FDA approval. In Europe, the European Committee for Proprietary Medicinal
Products provides a mechanism for EU-member states to exchange information on
all aspects of product licensing. The EU has established a European agency for
the evaluation of medical products, with both a centralized community procedure
and a decentralized procedure, the latter being based on the principle of
licensing within one member country followed by mutual recognition by the other
member countries.
Other Regulations
We are also subject to various United States, federal, state, local and
international laws, regulations and recommendations relating to safe working
conditions, laboratory and manufacturing practices and the use and disposal of
hazardous or potentially hazardous substances, including radioactive compounds
and infectious disease agents, used in connection with our research work. We
cannot accurately predict the extent of government regulation which might result
from future legislation or administrative action.
SCIENTIFIC ADVISORS AND CONSULTANTS
We have consulting agreements with a number of leading academic scientists
and clinicians. These individuals serve as members of our Scientific Advisory
Board or as key consultants with respect to our product development programs and
strategies. They are distinguished scientists and clinicians with expertise in
numerous scientific fields, including the genetics of aging, embryonic stem
cells, nuclear transfer, cell
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senescence and telomere and telomerase biology, as well as developmental
biology, cellular biology and molecular biology.
We established the advisory board to provide us with expert advice and
consultation on our scientific programs and strategies. Members of the advisory
board also serve as important contacts for us throughout the broader scientific
community. The advisory board meets at least once annually as a whole or in
smaller groups to focus on general strategy and certain specific scientific
issues. We also contact individual members of the advisory board to provide
advice and consultation on an ad hoc basis, as appropriate.
We retain each member of the advisory board according to the terms of a
consulting agreement between the advisory board member and us. Under such
consulting agreements, some advisory board members hold options to purchase our
common stock, subject to the vesting requirements contained in the consulting
agreements. In addition, we pay advisory board members a consulting fee and
reimburse them for out-of-pocket expenses incurred in attending each advisory
board meeting. Most members of the advisory board are employed by institutions
other than ours, and therefore may have commitments to, or consulting or
advisory agreements with, other entities or academic institutions that may limit
their availability to us.
As of December 31, 2000, our advisory board members and key consultants
included the following individuals:
STEPHEN BENKOVIC, PH.D., is Professor of Chemistry at the Pennsylvania
State University and is a member of our Scientific Advisory Board. Dr. Benkovic
is a member of the Chemical Society and the recipient of the 1998 Chemical
Pioneer Award given by the American Institute of Chemists. He is an
internationally recognized expert in protein chemistry, including the enzymology
of DNA polymerases.
DAVID BOTSTEIN, PH.D., is Professor and Chairman of the Department of
Genetics, Stanford University School of Medicine. He was elected to the National
Academy of Sciences in 1981 and to the Institute of Medicine in 1993. His
current research activities include studies of yeast genetics and cell biology,
linkage mapping of human genes predisposing to manic-depressive illness and the
development and maintenance of the Saccharomyces Genome Database on the World
Wide Web. He has received numerous awards, including the Genetics Society of
America Medal (1985) and the Allen Award of the American Society of Human
Genetics (1989). Dr. Botstein has served on numerous committees including the
National Institutes of Health (NIH) Program Advisory Panel on the Human Genome
(1989 - 90) and the Advisory Council of the National Center for Human Genome
Research (1990 - 95).
JUDITH CAMPISI, PH.D., is a Senior Scientist and Acting Chair, Department
of Cancer Biology, Lawrence Berkeley National Laboratory. She has been an
Established Investigator of the American Heart Association and currently has a
MERIT Award from the NIA, and serves on its Board of Scientific Counselors. Her
major interests are the cellular and molecular biology of senescence and
tumorigenesis.
JOHN CLARK, OBE, FRSE, PH.D., is Head of the Division of Molecular Biology
at the Roslin Institute and is the leader of Geron Bio-Med's cellular
reprogramming team. Dr. Clark was a scientific founder of PPL Therapeutics, plc
and is also a Professor in the Division of Biology at Edinburgh University. He
received the Order of the British Empire from the Queen of England in 1997 for
his contribution to biotechnology and particularly his pioneering work on the
modification of milk composition by genetic engineering of livestock. He was
elected to the Royal Society of Edinburgh in 1999. Current research areas
include use of genetically modified animals for biomedical and agricultural
applications and fundamental studies of the control of gene expression.
DOUGLAS HANAHAN, PH.D., is a Professor of Biochemistry in the Department of
Biochemistry and Biophysics and Associate Director of the Hormone Research
Institute, University of California at San Francisco and is a member of our
Scientific Advisory Board. His major research interests are the cellular and
genetic mechanisms of tumor development and autoimmunity. Prior to joining the
University of California at San Francisco in 1988, Dr. Hanahan was with the Cold
Spring Harbor Laboratory for nine years, where he developed technologies for
recombinant DNA and molecular cloning and established transgenic mouse models to
study cancer and autoimmune diseases.
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RUDOLF JAENISCH, PH.D., is a Professor of Biology at the Massachusetts
Institute of Technology, a member of the Whitehead Institute for Biomedical
Research and a member of our Scientific Advisory Board. Dr. Jaenisch is
internationally known for his research on the control of gene expression in
mammalian development and genetic disease. He has recently turned his attention
to the use of mammalian cloning technology to distinguish epigenetic and genetic
alterations in the genome and their role in growth and development.
MALCOLM MOORE, PH.D., is a Professor of Biology at the Sloan-Kettering
Division, Cornell Graduate School of Medical Sciences and is internationally
known for his pioneering work in hematopoiesis, growth factors and cytokines. He
is also currently incumbent of the Enid A. Haupt Chair of Cell Biology, Memorial
Sloan-Kettering Cancer Center. Dr. Moore received the William B. Coley Award For
Distinguished Research in Immunology by the Cancer Research Institute in June
1995.
ROGER A. PEDERSEN, PH.D., is a Professor of Obstetrics, Gynecology and
Reproductive Sciences at the University of California at San Francisco, where he
teaches developmental genetics and mammalian embryology. He received his B.A.
degree from Stanford University, and his Ph.D. at Yale University. He completed
his postdoctoral research at the Johns Hopkins University. Since 1991 he has
served as Series Editor of Current Topics in Developmental Biology. He has
written numerous original publications and reviews on early mouse development,
and co-produced two instructional videotapes on the use of mice in transgenic
and gene targeting research.
JERRY W. SHAY, PH.D., is a Professor of Cell Biology and Neuroscience at
the University of Texas Southwestern Medical Center at Dallas and is a member of
our Scientific Advisory Board. Dr. Shay's research focuses on molecular
mechanisms of tumorigenesis and immortalization with a particular emphasis on
cancer of the breast. Dr. Shay has numerous publications, honors and patents. He
is also on the editorial board for the Journal of Clinical Pathology.
JAMES D. WATSON, PH.D., is President of Cold Spring Harbor Laboratory and
is a member of our Scientific Advisory Board. Dr. Watson is the former head of
the NIH Human Genome Project and is famous for his 1953 discovery with Francis
Crick of the double helical structure of DNA for which they shared the Nobel
Prize.
IAN WILMUT, OBE, B.SC., PH.D., D.SC., F.MED.SCI., is Professor of the
Division of Biological Science of the University of Edinburgh and is the head of
the Geron Bio-Med nuclear transfer team. Professor Wilmut has received numerous
prizes, including the Sir John Hammond Prize by the British Society of Animal
Production, the Golden Plate Award by the American Academy of Achievement of
Science and Technology, the Lord Lloyd of Kilgerran Prize by the Foundation of
Science and Technology, and the Order of the British Empire from the Queen of
England in 1999. He is the leader of the team that cloned Dolly, the first
animal to develop after nuclear transfer from an adult cell, and is an
internationally recognized expert in the field of nuclear transfer. Current
research areas include early mammalian development, embryo manipulation, nuclear
transfer and gene targeting in mice, cattle, sheep and pigs.
WOODRING E. WRIGHT, M.D., PH.D., is a Professor of Cell Biology and
Neuroscience at the University of Texas Southwestern Medical Center at Dallas
and is a member of our Scientific Advisory Board. He is widely recognized as a
leading molecular biologist working in the field of cellular senescence and on
the molecular basis of muscle development.
GERON ETHICS ADVISORY BOARD
In July 1998, we created an Ethics Advisory Board whose members represent a
variety of philosophical and theological traditions with broad knowledge in
health care ethics. The advisory board functions as an independent entity,
consulting and giving advice to us on the ethical aspects of our work. Members
of the advisory board have no financial interest in Geron.
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As of December 31, 2000, the Ethics Advisory Board consisted of the
following individuals:
KAREN LEBACQZ, PH.D., is the Robert Gordon Sproul Professor of Theological
Ethics at the Pacific School of Religion in the Graduate Theological Union,
Berkeley, California. She has published extensively on ethics and genetics as
well as research ethics and served on the National Commission for the Protection
of Human Subjects of Biomedical and Behavioral Research.
ALBERT JONSEN, PH.D., is Professor Emeritus of Ethics in Medicine and
former chairperson of the Department of Medical History and Ethics, School of
Medicine, University of Washington. He has contributed chapters to more than 70
books on medicine and health care and his articles have appeared in numerous
publications.
TED PETERS, PH.D., is Professor of Systematic Theology at Pacific Lutheran
Theological Seminary. He conducts research at the Center for Theology and the
National Sciences where he is principle investigator for a research project on
"Theological and Ethical Implications of the Human Genome Initiative." He is
also editor of Genetics: Issues of Social Justice.
ERNLE W. D. YOUNG, PH.D., is Clinical Professor of Ethics in the Department
of Medicine and Pediatrics at Stanford University School of Medicine, a
Co-Director of Stanford University's Center for Biomedical Ethics, the Clinical
Ethics Consultant to Stanford University Hospital and to Veterans' Affairs
hospitals in Palo Alto and Fresno, California. He has published extensively on
issues in bioethics.
LAURIE ZOLOTH-DORFMAN, PH.D., is Associate Professor of Social Ethics and
Director of the Program in Jewish Studies at San Francisco State University and
a Co-Founder of The Ethics Practice, a group which provides education services
and consultation on bioethics to health care providers and health care systems.
She has published on bioethics, religion, and health care.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
executive officers of Geron Corporation:
NAME AGE POSITION
---- --- --------
Thomas B. Okarma, Ph.D., M.D. ......... 55 President, Chief Executive Officer and
Director
David L. Greenwood..................... 49 Chief Financial Officer, Senior Vice
President Corporate Development, Treasurer
and Secretary
David J. Earp, Ph.D., J.D. ............ 36 Vice President, Intellectual Property
Calvin B. Harley, Ph.D. ............... 48 Chief Scientific Officer
Jane S. Lebkowski, Ph.D. .............. 45 Vice President, Cell and Gene Therapies
Jeannine M. Niacaris................... 48 Vice President, Human Resources and
Administrative Services
William D. Stempel, J.D. .............. 47 Vice President and General Counsel
Richard L. Tolman, Ph.D. .............. 59 Vice President, Drug Discovery
THOMAS B. OKARMA, PH.D., M.D., has served as our President, Chief Executive
Officer and director since July 1999. He is also a director of Geron Bio-Med
Limited, a United Kingdom company. From May 1998 until July 1999, Dr. Okarma was
the Vice President of Research and Development. From December 1997 until May
1998, Dr. Okarma was Vice President of Cell Therapies. From 1985 until joining
us, Dr. Okarma, the scientific founder of Applied Immune Sciences, Inc., served
initially as Vice President of Research and Development and then as its
chairman, chief executive officer and a director, until 1995 when it was
acquired by Rhone-Poulenc Rorer. Dr. Okarma was a Senior Vice President at
Rhone-Poulenc Rorer from the time of the acquisition of Applied Immune Sciences,
Inc. until December 1996. From 1980 to 1985, Dr. Okarma was a member of the
faculty of the Department of Medicine at Stanford University School of Medicine.
Dr. Okarma holds a A.B. from Dartmouth College and a M.D. and Ph.D. from
Stanford University.
DAVID L. GREENWOOD has served as our Chief Financial Officer, Treasurer and
Secretary since August 1995, Vice President of Corporate Development since April
1997 and Senior Vice President of Corporate
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Development since August 1999. He is also a director of Geron Bio-Med Limited, a
United Kingdom company. From 1979 until joining us, Mr. Greenwood held various
positions with J.P. Morgan & Co. Incorporated, an international banking firm,
and its subsidiaries, J.P. Morgan Securities Inc. and Morgan Guaranty Trust
Company of New York. Mr. Greenwood holds a B.A. from Pacific Lutheran University
and an M.B.A. from Harvard Business School.
DAVID J. EARP, J.D., PH.D., joined us in June 1999 and has served as our
Vice President, Intellectual Property since October 1999. From 1992 until
joining us, Dr. Earp was with the intellectual property law firm of Klarquist
Sparkman Campbell Leigh and Whinston, LLP where his practice focused on
biotechnology patent law. Dr. Earp holds a B.S. in microbiology from the
University of Leeds, England, a Ph.D. in biochemistry and molecular biology from
The University of Cambridge, England, and conducted postdoctoral research at the
University of California at Berkeley. He received his J.D. magna cum laude from
the Northwestern School of Law of Lewis and Clark College in Portland, Oregon.
CALVIN B. HARLEY, PH.D., has served as our Chief Scientific Officer since
July 1996. From May 1994 until July 1996, Dr. Harley was Vice President of
Research and from April 1993 to May 1994, Dr. Harley was Director, Cell Biology.
Dr. Harley was an Associate Professor from 1989 until joining us, and from 1982
to 1989, an Assistant Professor of Biochemistry at McMaster University. Dr.
Harley was also an executive of the Canadian Association on Gerontology,
Division of Biological Sciences from 1987 to 1991. Dr. Harley holds a B.S. from
the University of Waterloo and a Ph.D. from McMaster University, and conducted
postdoctoral work at the University of Sussex and the University of California
at San Francisco.
JANE S. LEBKOWSKI, PH.D., has served as our Vice President of Cell and Gene
Therapies since August 1999. Since joining us in April 1998 and until August
1999, Dr. Lebkowski served as Senior Director, Cell and Gene Therapies.
Formerly, Dr. Lebkowski was employed at Applied Immune Sciences, from 1986 to
1995 where she served as Vice President, Research and Development. In 1995,
Applied Immune Sciences was acquired by Rhone-Poulenc Rorer, at which time Dr.
Lebkowski was appointed Vice President, Discovery & Product Development. Dr.
Lebkowski graduated Phi Beta Kappa with a B.S. in Chemistry and Biology from
Syracuse University and received her Ph.D. from Princeton University.
JEANNINE M. NIACARIS, joined us in November 1999 and has served as our Vice
President, Human Resources and Administrative Services since June 2000.
Previously, she held senior human resources positions at several biotech
companies including Matrix Pharmaceuticals, Sequus Pharmaceuticals and Affymax
Research Institute. She holds a B.A. in Education from Western Washington
University and a M.A. in Human Resources from Redland University.
WILLIAM D. STEMPEL, J.D., has served as our Vice President and General
Counsel since January 2001. From 1998 until joining us, Mr. Stempel was the
General Counsel at UCSF Stanford Health Care in San Francisco. From 1987 to
1998, Mr. Stempel was Deputy General Counsel at Yale University where he worked
in a wide range of areas including intellectual property, medical affairs and
research administration. Mr. Stempel holds B.A. and J.D. degrees from Yale
University. He is a member of the bars of the States of California, Connecticut
and New York, and the United States District Courts for the District of
Connecticut, Southern District of New York and Eastern District of New York.
RICHARD L. TOLMAN, PH.D., has served as our Vice President of Drug
Discovery since August 1999. From December 1998 until August 1999, Dr. Tolman
served as Senior Director, Medicinal Chemistry overseeing the program to
discover and develop a small molecule telomerase inhibitor. From 1973 until
joining us, Dr. Tolman was employed at the Merck Research Laboratories where he
served as Senior Director, Medicinal Chemistry. He received a B.A. in Chemistry
with Honors from Brigham Young University and earned a Ph.D. with distinction
from the University of Utah.
EMPLOYEES
As of December 31, 2000, we had 112 full-time employees of whom 32 hold
Ph.D. degrees and 39 hold other advanced degrees. Of the total workforce, 89 are
engaged in, or directly support, our research and development activities and 23
are engaged in business development, finance and administration. We also
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retain outside consultants. None of our employees is covered by a collective
bargaining agreement, nor have we experienced work stoppages. We consider
relations with our employees to be good.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
Our business is subject to various risks, including those described below.
You should carefully consider these risk factors, together with all of the other
information included in this Form 10-K. Any of these risks could materially
adversely affect our business, operating results and financial condition.
OUR BUSINESS IS AT AN EARLY STAGE OF DEVELOPMENT AND WE MAY NOT DEVELOP ANY
PRODUCTS THAT REACH CLINICAL TRIALS
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, the study of human embryonic stem
cells, and the process of nuclear transfer are relatively new areas of research.
Our business is at an early stage of development. We have not yet produced any
products that have progressed to clinical trials and we may never do so. Our
ability to produce products that progress to clinical trials is subject to our
ability to, among other things:
- continue to have success with our research and development efforts;
- select therapeutic compounds for development;
- obtain the required regulatory approvals; and
- manufacture and market resulting products.
If and when potential lead drug compounds or product candidates are
identified through our research programs, they will require significant
preclinical and clinical testing prior to regulatory approval in the United
States and elsewhere. In addition, we will also need to determine whether any of
these potential products can be manufactured in commercial quantities at an
acceptable cost. Our efforts may not result in a product that can be marketed.
Because of the significant scientific, regulatory and commercial milestones that
must be reached for any of our research programs to be successful, any program
may be abandoned, even after significant resources have been expended.
WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE FUTURE LOSSES; CONTINUED
LOSSES COULD IMPAIR OUR ABILITY TO SUSTAIN OPERATIONS
We have incurred net operating losses every year since our operations began
in 1990. As of December 31, 2000, our accumulated deficit was approximately
$149.8 million. Losses have resulted principally from costs incurred in
connection with our research and development activities and from general and
administrative costs associated with our operations. We expect to incur
additional operating losses over the next several years as our research and
development efforts and preclinical testing activities are expanded.
Substantially all of our revenues to date have been research support payments
under the collaboration agreements with Kyowa Hakko and Pharmacia. In 2001, we
regained our rights to telomerase inhibitors from Pharmacia. Kyowa Hakko will
provide additional research funding through 2001. We may be unsuccessful in
entering into any new corporate collaboration that results in revenues. Even if
we are able to obtain new collaboration arrangements with third parties, the
revenues generated from these arrangements will be insufficient to continue or
expand our research activities and otherwise sustain our operations.
We are unable to estimate at this time the level of revenue to be received
from the sale of diagnostic products, and do not currently expect to receive
significant revenues from the sale of research-use-only kits. Our ability to
continue or expand our research activities and otherwise sustain our operations
is dependent on our ability, alone or with others to, among other things,
manufacture and market therapeutic products.
We may never receive material revenues from product sales or if we do
receive revenues, such revenues may not be sufficient to continue or expand our
research activities and otherwise sustain our operations.
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WE WILL NEED ADDITIONAL CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR
PRODUCTS, AND OUR ABILITY TO OBTAIN THE NECESSARY FUNDING IS UNCERTAIN
We will require substantial capital resources in order to conduct our
operations and develop our products. While we estimate that our existing capital
resources, payments under the Kyowa Hakko collaborative agreement, interest
income and equipment financing arrangements will be sufficient to fund our
current level of operations through March 2003, we cannot guarantee that this
will be the case. The timing and degree of any future capital requirements will
depend on many factors, including:
- the accuracy of the assumptions underlying our estimates for our capital
needs in 2001 and beyond;
- continued scientific progress in our research and development programs;
- the magnitude and scope of our research and development programs;
- our ability to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and marketing;
- our progress with preclinical and clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; and
- the potential for new technologies and products.
We intend to acquire additional funding through strategic collaborations,
public or private equity financings and capital lease transactions. Additional
financing may not be available on acceptable terms, or at all. Additional equity
financings could result in significant dilution to stockholders. Further, in the
event that additional funds are obtained through arrangements with collaborative
partners, these arrangements may require us to relinquish rights to some of our
technologies, product candidates or products that we would otherwise seek to
develop or commercialize ourselves. If sufficient capital is not available, we
may be required to delay, reduce the scope of or eliminate one or more of our
research or development programs, each of which could have a material adverse
effect on our business.
OUR INABILITY TO IDENTIFY AN EFFECTIVE INHIBITOR OF TELOMERASE MAY PREVENT US
FROM DEVELOPING A VIABLE CANCER TREATMENT PRODUCT, WHICH WOULD ADVERSELY IMPACT
OUR FUTURE BUSINESS PROSPECTS
As a result of our drug discovery efforts to date, we have identified
compounds in laboratory studies that demonstrate potential for inhibiting
telomerase in humans. However, additional development efforts will be required
before we select a lead compound for preclinical development and clinical trials
as a telomerase inhibitor for cancer. We will have to conduct additional
research before we can select a compound and we may never identify a compound
that will enable us to fully develop a commercially viable treatment for cancer.
If and when selected, a lead compound may prove to have undesirable and
unintended side effects or other characteristics affecting its safety or
effectiveness that may prevent or limit its commercial use. In terms of safety,
our discoveries may result in cancer treatment solutions that cause unacceptable
side effects for the human body. Our discoveries may also not be as effective as
is necessary to market a commercially viable product for the treatment of
cancer. As a result, telomerase inhibition may need to be used in conjunction
with other cancer therapies. Accordingly, it may become extremely difficult for
us to proceed with preclinical and clinical development, to obtain regulatory
approval or to market a telomerase inhibitor for the treatment of cancer. If we
abandon our research for cancer treatment for any of these reasons or for other
reasons, our business prospects would be materially and adversely affected.
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IF OUR ACCESS TO NECESSARY TISSUE SAMPLES, INFORMATION OR LICENSED TECHNOLOGIES
IS RESTRICTED, WE WILL NOT BE ABLE TO DEVELOP OUR BUSINESS
To continue the research and development of our therapeutic and diagnostic
products, we need access to normal and diseased human and other tissue samples,
other biological materials and related clinical and other information. We
compete with many other companies for these materials and information. We may
not be able to obtain or maintain access to these materials and information on
acceptable terms, if at all. In addition, government regulation in the United
States and foreign countries could result in restricted access to, or
prohibiting the use of, human and other tissue samples. If we lose access to
sufficient numbers or sources of tissue samples, or if tighter restrictions are
imposed on our use of the information generated from tissue samples, our
business will be materially harmed.
SOME OF OUR COMPETITORS MAY DEVELOP TECHNOLOGIES THAT ARE SUPERIOR TO OR MORE
COST-EFFECTIVE THAN OURS, WHICH MAY IMPACT THE COMMERCIAL VIABILITY OF OUR
TECHNOLOGIES AND WHICH MAY SIGNIFICANTLY DAMAGE OUR ABILITY TO SUSTAIN
OPERATIONS
The pharmaceutical and biotechnology industries are intensely competitive.
We believe that other pharmaceutical and biotechnology companies and research
organizations currently engage in or have in the past engaged in efforts related
to the biological mechanisms of cell aging and cell immortality, including the
study of telomeres, telomerase, human embryonic stem cells and nuclear transfer.
In addition, other products and therapies that could compete directly with the
products that we are seeking to develop and market currently exist or are being
developed by pharmaceutical and biopharmaceutical companies and by academic and
other research organizations.
Many companies are also developing alternative therapies to treat cancer
and, in this regard, are competitors of ours. Many of the pharmaceutical
companies developing and marketing these competing products have significantly
greater financial resources and expertise than we do in:
- research and development;
- manufacturing;
- preclinical and clinical testing;
- obtaining regulatory approvals; and
- marketing.
Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and established
companies. Academic institutions, government agencies and other public and
private research organizations may also conduct research, seek patent protection
and establish collaborative arrangements for research, clinical development and
marketing of products similar to ours. These companies and institutions compete
with us in recruiting and retaining qualified scientific and management
personnel as well as in acquiring technologies complementary to our programs.
There is also competition for access to libraries of compounds to use for
screening. Should we fail to secure and maintain access to sufficiently broad
libraries of compounds for screening potential targets, our business would be
materially harmed.
In addition to the above factors, we expect to face competition in the
following areas:
- product efficacy and safety;
- the timing and scope of regulatory consents;
- availability of resources;
- reimbursement coverage;
- price; and
- patent position, including potentially dominant patent positions of
others.
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As a result of the foregoing, our competitors may develop more effective or
more affordable products, or achieve earlier patent protection or product
commercialization than us. Most significantly, competitive products may render
the products that we develop obsolete.
THE ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF OUR RESEARCH USING EMBRYONIC STEM
CELLS AND NUCLEAR TRANSFER COULD PREVENT US FROM DEVELOPING OR GAINING
ACCEPTANCE FOR COMMERCIALLY VIABLE PRODUCTS IN THIS AREA
Our programs in regenerative medicine may involve the use of human
embryonic stem cells that would be derived from human embryonic or fetal tissue.
The use of human embryonic stem cells gives rise to ethical, legal and social
issues regarding the appropriate use of these cells. In the event that our
research related to human embryonic stem cells becomes the subject of adverse
commentary or publicity, the market price for our common stock could be
significantly harmed.
Some groups have voiced opposition to our technology and practices. The
concepts of cell regeneration, cell immortality, and genetic cloning have
stimulated significant ethical debates in both the social and political arenas.
We use human embryonic stem cells derived through a process that uses either
donated embryos that are no longer needed following a successful in vitro
fertilization procedure or donated fetal material as the starting material.
Further, many research institutions, including some of our scientific
collaborators, have adopted policies regarding the ethical use of human
embryonic and fetal tissue. These policies may have the effect of limiting the
scope of research conducted using human embryonic stem cells, resulting in
reduced scientific progress. In addition, the United States government and its
agencies currently do not fund research which involves the use of human
embryonic tissue and may in the future regulate or otherwise restrict or
prohibit the public or private use of human embryonic or fetal tissue. Our
inability to conduct research using human embryonic stem cells due to such
factors as government regulation or otherwise could have a material adverse
effect on us. Finally, we acquired Roslin Bio-Med to gain the rights to nuclear
transfer technology. The Roslin Institute produced Dolly the sheep in
1997 -- the first mammal cloned from an adult cell in history. Geron acquired
exclusive rights to this technology for all areas except human cloning and
certain other limited applications. Although we will not be pursuing human
reproductive cloning, all of the techniques we continue to develop for use in
agricultural cloning and our nuclear transfer work for organ regeneration are
directly applicable to human cloning should some other group in the future
decide to pursue this avenue. Negative associations with any or all of these
practices could:
- harm our ability to establish critical partnerships and collaborations;
- prompt government regulation of our technologies;
- cause delays in our research and development; and
- cause a decrease in the price of our stock.
Also, if regulatory bodies were to ban nuclear transfer processes, our
research using nuclear transfer technology could be cancelled and our business
could be significantly harmed.
PUBLIC ATTITUDES TOWARDS GENE THERAPY MAY NEGATIVELY AFFECT REGULATORY APPROVAL
OR PUBLIC PERCEPTION OF OUR PRODUCTS
The commercial success of our product candidates will depend in part on
public acceptance of the use of gene therapies for the prevention or treatment
of human diseases. Public attitudes may be influenced by claims that gene
therapy is unsafe, and gene therapy may not gain the acceptance of the public or
the medical community. Adverse events in the field of gene therapy that have
occurred or may occur in the future also may result in greater governmental
regulation of our product candidates and potential regulatory delays relating to
the testing or approval of our product candidates.
Negative public reaction to gene therapy in the development of certain of
our therapies could result in greater government regulation, stricter clinical
trial oversight, commercial product labeling requirements of gene therapies, and
could cause a decrease in the demand for any products that we may develop. The
subject of genetically modified organisms has received negative publicity in
Europe, which has aroused public debate.
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The adverse publicity in Europe could lead to greater regulation and trade
restrictions on imports of genetically altered products. If similar adverse
public reaction occurs in the United States, genetic research and resultant
products could be subject to greater domestic regulation and could cause a
decrease in the demand for our potential products.
EVEN IF WE REACH CLINICAL TRIALS WITH ONE OR MORE OF OUR PRODUCTS, THEY MAY NOT
RESULT IN ANY COMMERCIALLY VIABLE PRODUCTS
We do not expect to generate any significant revenues from product sales
for a period of several years. We may never generate revenues from product sales
or become profitable because of a variety of risks inherent in our business,
including risks that:
- clinical trials may not demonstrate the safety and efficacy of our
products;
- completion of clinical trials may be delayed, or costs of clinical trials
may exceed anticipated amounts;
- we may not be able to obtain regulatory approval of our products, or may
experience delays in obtaining such approvals;
- we may not be able to manufacture our drugs economically on a commercial
scale;
- we and our licensees may not be able to successfully market our products;
- physicians may not prescribe our products, or patients may not accept
such products;
- others may have proprietary rights which prevent us from marketing our
products; and
- competitors may sell similar, superior or lower-cost products.
IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO PURSUE
THE DEVELOPMENT OF OUR INTENDED TECHNOLOGIES AND PRODUCTS
Our success will depend on our ability to obtain and enforce patents for
our discoveries; however, legal principles for biotechnology patents in the
United States and in other countries are not firmly established and the extent
to which we will be able to obtain patent coverage is uncertain.
Protection of our proprietary compounds and technology is critically
important to our business. Our success will depend in part on our ability to
obtain and enforce our patents and maintain trade secrets, both in the United
States and in other countries. The patent positions of pharmaceutical and
biopharmaceutical companies, including ours, are highly uncertain and involve
complex legal and technical questions for which legal principles are not firmly
established. We may not continue to develop products or processes that are
patentable, and it is possible that patents will not issue from any of our
pending applications, including allowed patent applications. Further, our
current patents, or patents that issue on pending applications, may be
challenged, invalidated or circumvented, and our current or future patent rights
may not provide proprietary protection or competitive advantages to us. In the
event that we are unsuccessful in obtaining and enforcing patents, our business
would be negatively impacted.
Patent applications filed in the United States prior to November 29, 2000,
are maintained in secrecy until patents issue. Publication of discoveries in the
scientific or patent literature tends to lag behind actual discoveries by at
least several months and sometimes several years. Therefore, the persons or
entities that we or our licensors name as inventors in our patents and patent
applications may not have been the first to invent the inventions disclosed in
the patent applications or patents, or file patent applications for these
inventions. As a result, we may not be able to obtain patents from discoveries
that we otherwise would consider patentable and that we consider to be
significant to our future success.
Patent prosecution or litigation may also be necessary to obtain patents,
enforce any patents issued or licensed to us or to determine the scope and
validity of our proprietary rights or the proprietary rights of another. We may
not be successful in any patent prosecution or litigation. Patent prosecution
and litigation in general can be extremely expensive and time consuming, even if
the outcome is favorable to us. An adverse
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outcome in a patent prosecution, litigation or any other proceeding in a court
or patent office could subject our business to significant liabilities to other
parties, require disputed rights to be licensed from other parties or require us
to cease using the disputed technology.
WE MAY BE SUBJECT TO INFRINGEMENT CLAIMS THAT ARE COSTLY TO DEFEND, AND WHICH
MAY LIMIT OUR ABILITY TO USE DISPUTED TECHNOLOGIES AND PREVENT US FROM PURSUING
RESEARCH AND DEVELOPMENT OR COMMERCIALIZATION OF POTENTIAL PRODUCTS
Our commercial success depends significantly on our ability to operate
without infringing patents and proprietary rights of others. Our technologies
may infringe the patents or proprietary rights of others. In addition, we may
become aware of discoveries and technology controlled by third parties that are
advantageous to our research programs. In the event our technologies do infringe
on the rights of others or we require the use of discoveries and technology
controlled by third parties, we may be prevented from pursuing research,
development or commercialization of potential products or may be required to
obtain licenses to these patents or other proprietary rights or develop or
obtain alternative technologies. We may not be able to obtain alternative
technologies or any required license on commercially favorable terms, if at all.
If we do not obtain the necessary licenses or alternative technologies, we may
be delayed or prevented from pursuing the development of some potential
products. Our breach of an existing license or failure to obtain alternative
technologies or a license to any technology that we may require to develop or
commercialize our products will significantly and negatively affect our
business.
Patent law relating to the scope and enforceability of claims in the
technology fields in which we operate is still evolving, and the degree of
future protection for any of our proprietary rights is highly uncertain. In this
regard, patents may not issue from any of our patent applications or our
existing patents may be found to be invalid by a court. In addition, our success
may become dependent on our ability to obtain licenses for using the patented
discoveries of others. We are aware of patent applications and patents that have
been filed by others with respect to our technologies and we may have to obtain
licenses to use these technologies. Moreover, other patent applications may be
granted priority over patent applications that we or any of our licensors have
filed. Furthermore, others may independently develop similar or alternative
technologies, duplicate any of our technologies or design around the patented
technologies we have developed. In the event that we are unable to acquire
licenses to critical technologies that we cannot patent ourselves, we may be
required to expend significant time and resources to develop alternative
technology, and we may not be successful in this regard. If we cannot acquire or
develop the necessary technology, we may be prevented from pursuing some of our
business objectives. Moreover, one or more of our competitors could acquire or
license the necessary technology. Any of these events could materially harm our
business.
We may be subject to claims or litigation as a result of entering into
license agreements with third parties or infringing on the patents of others.
For example, we signed a licensing and sponsored research agreement relating to
our research relating to embryonic stem cells with The Johns Hopkins University
School of Medicine in August 1997. Prior to signing this agreement, we had been
informed by a third party that we and Johns Hopkins University would violate the
rights of that third party and another academic institution in doing so. After a
review of the correspondence with the third party and Johns Hopkins University,
as well as related documents, including an issued United States patent, we
believe that both we and Johns Hopkins University have substantial defenses to
any claims that might be asserted by the third party. We have agreed to provide
indemnification to Johns Hopkins University relating to potential claims.
However, any litigation resulting from this matter may divert significant
resources, both financial and otherwise, from our research programs. We may be
unsuccessful if the matter is litigated. If the outcome of litigation is
unfavorable to us, our business could be materially and adversely affected.
MUCH OF THE INFORMATION AND KNOW-HOW THAT IS CRITICAL TO OUR BUSINESS IS NOT
PATENTABLE AND WE MAY NOT BE ABLE TO PREVENT OTHERS FROM OBTAINING THIS
INFORMATION AND ESTABLISHING COMPETITIVE ENTERPRISES
We sometimes rely on trade secrets to protect our proprietary technology,
especially in circumstances in which patent protection is not believed to be
appropriate or obtainable. We attempt to protect our proprietary technology in
part by confidentiality agreements with our employees, consultants,
collaborators and contrac-
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tors. We cannot assure you that these agreements will not be breached, that we
would have adequate remedies for any breach, or that our trade secrets will not
otherwise become known or be independently discovered by competitors, any of
which would harm our business significantly.
SOME OF OUR PATENTS AND PATENT APPLICATIONS RELATING TO TELOMERASE MAY BE
SUBJECT TO CHALLENGE. IN 1999, THE UNITED STATES PATENT AND TRADEMARK OFFICE
SUSPENDED PROSECUTION OF TWO OF OUR PATENT APPLICATIONS. THESE MATTERS COULD
JEOPARDIZE OUR ABILITY TO COMMERCIALIZE TELOMERASE PRODUCTS
Our patents and patent applications relating to telomerase are critically
important to our development and commercialization of therapeutic and diagnostic
products for applications in oncology and regenerative medicine. Patent
applications covering cloned human telomerase and its uses are pending in
several countries and patent prosecution is ongoing. Although we have been
granted patents in the United Kingdom and Switzerland, we have received
rejections in certain other countries and we may be unable to overcome those
rejections or any others that we may encounter.
In 1999, the United States Patent and Trademark Office suspended
prosecution of two of our patent applications relating to cloned human
telomerase pending possible declaration of an interference. This event signified
that the United States Patent and Trademark Office had determined that at least
one other entity had filed a patent application claiming cloned human telomerase
or its uses. In an interference, among other things, the United States Patent
and Trademark Office seeks to determine who made the claimed invention first;
that party typically, although not always, is awarded the patent. Examination of
one of our previously suspended cases has now been resumed. This does not mean
that the United States Patent and Trademark Office will necessarily issue a
patent to us for this subject matter, nor does it preclude the declaration of an
interference either before or after such a patent is issued.
Based on the information presently available to us, we believe that we
cloned the human telomerase protein prior to any other entity. However, we do
not yet have access to other entities' invention records or their patent
application files, which are maintained in secrecy by the United States Patent
and Trademark Office. We, therefore, do not have access to all pertinent
information for this analysis. Moreover, as interferences are typically complex
and highly contested legal proceedings subject to appeal, accurately predicting
an outcome is not possible, particularly at this stage. An interference would
divert significant resources, both financial and otherwise, from our research
programs.
If interferences or other challenges to our patents are not resolved
promptly in our favor, our existing business relationships could be jeopardized
and we could be delayed or prevented from entering into new collaborations or
from commercializing telomerase products, which could materially harm our
business.
WE DEPEND ON OUR COLLABORATORS TO HELP US COMPLETE THE PROCESS OF DEVELOPING AND
TESTING OUR PRODUCTS AND OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS MAY
BE IMPAIRED OR DELAYED IF OUR COLLABORATIVE PARTNERSHIPS ARE UNSUCCESSFUL
Our strategy for the development, clinical testing and commercialization of
our products requires entering into collaborations with corporate partners,
licensors, licensees and others. We are dependent upon the subsequent success of
these other parties in performing their respective responsibilities and the
continued cooperation of our partners. Our collaborators may not cooperate with
us or perform their obligations under our agreements with them. We cannot
control the amount and timing of our collaborators' resources that will be
devoted to our research activities related to our collaborative agreements with
them. Our collaborators may choose to pursue existing or alternative
technologies in preference to those being developed in collaboration with us.
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Our ability to successfully develop and commercialize telomerase inhibition
products depends on our corporate alliance with Kyowa Hakko. Our ability to
successfully develop and commercialize telomerase diagnostic products depends on
our corporate alliance with Roche Diagnostics. Under our collaborative
agreements with these collaborators, we rely significantly on them, among other
activities, to:
- design and conduct advanced clinical trials in the event that we reach
clinical trials;
- fund research and development activities with us;
- pay us fees upon the achievement of milestones; and
- co-promote with us any commercial products that result from our
collaborations.
The development and commercialization of products from these collaborations
will be delayed if Kyowa Hakko or Roche Diagnostics fail to conduct these
collaborative activities in a timely manner or at all. In addition, Kyowa Hakko
or Roche Diagnostics could terminate their agreements with us and we may not
receive any development or milestone payments. If we do not receive research
funds or achieve milestones set forth in the agreements, or if Kyowa Hakko or
Roche Diagnostics or any of our future collaborators breach or terminate
collaborative agreements with us, our business may be materially harmed.
OUR RELIANCE ON THE RESEARCH ACTIVITIES OF OUR NON-EMPLOYEE SCIENTIFIC ADVISORS
AND OTHER RESEARCH INSTITUTIONS, WHOSE ACTIVITIES ARE NOT WHOLLY WITHIN OUR
CONTROL, MAY LEAD TO DELAYS IN TECHNOLOGICAL DEVELOPMENTS
We rely extensively and have relationships with scientific advisors at
academic and other institutions, some of whom conduct research at our request.
These scientific advisors are not our employees and may have commitments to, or
consulting or advisory contracts with, other entities that may limit their
availability to us. We have limited control over the activities of these
advisors and, except as otherwise required by our collaboration and consulting
agreements, can expect only limited amounts of their time to be dedicated to our
activities. If our scientific advisors are unable or refuse to contribute to the
d