* Shares down as much as 28 pct on stem cell retreat
* Shares hit 5-year low
* Co says stem cell research has “tremendous promise”
Nov 15 (Reuters) - Shares of Geron Corp , the first company conduct human embryonic stem cell trials, fell by as much as 28 percent on Tuesday, a day after the biotech company said it was getting out of stem cell research to focus on cancer drugs.
Geron executives said on a conference call on Tuesday that getting out of the stem cell field was strictly a business decision. Investments pay off much faster in oncology than in stem cells, they said.
“We’re making these changes because in the current environment of economic scarcity and uncertain economic conditions, we need to focus our resources on advancing our Phase 2 trials ... Both of these (cancer) drug candidates target major medical needs and have important clinical milestones that are occurring over the next 20 months,” Geron Chief Executive Officer John Scarlett told analysts.
The company said it saw promise in its two cancer programs, imetelstat and GRN1005.
Geron is testing imetelstat in mid-stage trials for breast cancer and non-small cell lung cancer, while GRN1005 is being tested in a mid-stage trial as a treatment for brain cancer.
By narrowing its focus to oncology, Geron expects to have sufficient financial resources to see the research through without having to raise additional capital, Scarlett said.
“These were business decisions we took on behalf of our shareholders ... We still think the (stem cell) field has tremendous promise,” added Scarlett, who took the helm a couple of months ago.
After the market closed on Monday, the company said it was quitting embroyonic stem cell research, and cut 66 full-time positions, or 38 percent of its workforce.
“This is a shock to the (stem cell research industry) system ... because the unequivocal leader in the embryonic stem cell space is now getting out of the stem cell space,” WBB Securities analyst Steve Brozak said.
Geron officials said it was a difficult decision since Geron has been widely recognized as a leader in the field and said it was actively seeking partners or buyers to drive its programs forward. The company said it is engaged in “a number of conversations” with potential partners.
According to Brozak, investors’ focus will now be on which company will take the stem cell leadership mantle and how Geron shareholders will benefit from that transaction.
Brozak said BioTime Inc would be a potential partner for Geron, as the company is the closest in terms of its understanding the science and has sufficient resources.
Companies such as Athersys Inc , Pluristem Therapeutics Inc and Australia’s Mesoblast Ltd are also currently developing stem cell therapies.
Geron management said one of its small stem cell programs treating spinal cord injury has already treated four of the eight patients it had approval to treat. A new partner would have the option to continue the trial.
Geron was the first company to start a U.S.-approved clinical trial using human embryonic stem cells in patients with spinal cord injury. In October, Geron reported data from an early-stage trial that showed its embryonic stem cell-based therapy was safe in all four patients who received the treatment.
The company said on Monday it would close further enrollment of patients for its GRNOPC1 trial for spinal cord injury.
Embryonic stem cell therapy has been controversial because some of these cells are derived from human embryos, often by destroying them. Last month, Europe’s top court banned patenting stem cells involving destruction of embryos.
However, researchers see great potential in stem cells, which have the ability to multiply into different type of cells and act as a repair system for the human body. The World Health Organization estimates these cells may one day be used to treat diseases such as Parkinson’s and Alzheimer’s, which are currently incurable.
With its restructuring, Geron Chief Financial officer David Greenwood said Geron’s projected use of balance sheet cash for 2011 will increase to a range of about $65 million to $70 million. He said he expects to end 2011 with cash in excess of $150 million.
Shares of Menlo Park, California-based Geron, which touched a five-year low of $1.59, were down 49 cents, or 22 percent, to $1.71 on Nasdaq in afternoon trading. BioTime shares were up 7.1 percent to $4.52 on the NYSE Amex.