Good Riddance to Geron

For years now, I’ve been telling my subscribers that Geron (NASDAQ: GERN) is not a serious player in the stem cell space. Financial and non-financial media, however, have inevitably treated the company as if it is the only really important stem cell company.

I’ve said repeatedly, in fact, that the company’s technology for acquiring therapeutic stem cells is flawed and obsolete. Specifically, Geron’s stem cell production technique is “heterogeneous differentiation.” In other words, stem cells are allowed to differentiate into many thousands of stem cell types. Scientists attempt to isolate or “cherry pick” the right type of stem cells and multiply them into usable numbers.

The technology doesn’t work. It’s somewhat amazing to me that it’s taken this long for the company to admit it bet wrong but it finally has. The press release, distributed yesterday, states that, “Geron Corporation … today announced that, effective immediately, the Company will focus on its first-in-class oncology programs. As a consequence, the Company will discontinue further development of its stem cell programs and is seeking partners for these novel assets.”

The scientific tools do not exist to screen and identify every single stem cell using heterogeneous differentiation. That, however, is exactly what is needed to produce a pure population of therapeutic cells using that production strategy. So the result is impure cell populations that include stem cells of unknown varieties.

Scientists who developed and supported this technology argued that stem cells require matching “zip codes” to develop. This means that, in theory, a dental stem cell transplanted into the spine would not engraft and become a tooth. Spinal nerve cells with the right biological zip codes would engraft and repair severed nerves.

So far, so good — but there’s more to the story. Stem cells with the wrong zip codes may not turn into inappropriate body parts, but they do cause problems. Geron found microcysts, bubbles of inappropriate tissues, when their heterogeneously differentiated cells were transplanted into living animals.

But I warned my readers that this would likely be the case before it happened. Therefore, my readers should not have been surprised when Geron’s first request to the FDA for clinical tests of a spinal cord therapy was rejected over concerns about impurities in the cell populations. In fact, Geron’s failures on the stem cell front were actually evidence that Biotime Inc. (AMEX: BTX) is the real leader in regenerative medicine.

As I’ve explained before, BioTime has pioneered its own pure stem cell production technology. Known as ACTCellerate, it involves the mapping of stem cell development shepherding cells through the phases of development to produce large pure quantities of identical purified stem cells. If you were at the Vancouver gathering in July, you have seen BioTime CEO Dr. Michael West present the genetic evidence that he can do this.

Then, very recently, BioTime partnered with Cornell University to commercialize a technology capable of producing large quantities of purified endothelial precursor stem cells. This is BioTime’s ReCyte technology. The patient’s own cells are first converted to become induced pluripotent stem cells, identical in function to embryonic cells. They are then potentiated to become endothelial precursors, suitable for rejuvenating the heart, vascular and immune system.

This technology will, I believe, be the most successful medical blockbuster in history. As heart disease kills most of us, it will significantly extend healthy lifespans. Moreover, it will happen much sooner than almost anybody believes. I expect, by the way, to have even more good news for you about this revolutionary therapy in weeks or months to come.

This is not to say that Geron is worthless, by the way. The company still has important assets. It is not, however, an important player in regenerative medicine. Nor has it been for some time. I foresee several benefits from Geron’s exit from the space.

First of all, financial analysts might actually be forced to look around and ask questions about the regenerative playing field. If they ask scientists rather than journalists those questions, they will have to recognize that the company run by “the father of regenerative medicine,” Dr. West, is driving the science.

The second benefit will come from the buying opportunity by widespread misunderstanding. Typically, the market responds to bad news about a single stem cell company by selling off the entire industry. Already, the usual suspects are declaring Geron’s departure from regenerative medicine the end of stem cell medicine.

An Associated Press story has it that Geron’s move has “stark implications” for development of stem cell therapies in the United States. Andrew Pollack of the New York Times says basically the same thing, “The move is expected to be widely seen as a setback for the field,” he writes, “because of Geron’s central role.” Geron’s “central role,” however, is primarily among incurious journalists.

If you believe, as I do, that Dr. Michael West and BioTime are the true innovators, then we will probably have a valuable opportunity to buy BioTime at artificially depressed levels. While I’m not encouraging “trading,” the opportunity exists to make significant short term gains when the conventional wisdom is so wildly wrong.


Patrick Cox