UPDATE: Geron, GE Unit Team Up In Stem-Cell Development Pact
June 30 2009 - 11:34AM
Dow Jones News
Geron Corp. (GERN) agreed to provide stem cells to General
Electric Co.'s (GE) GE Healthcare for use in tools that test drug
treatments for their toxic effects on the body, particularly the
heart and liver.
Financial terms were not disclosed, but the news sent shares of
biotech company Geron up $1.18, or 17.7%, to $7.88 Tuesday.
Investors applauded the support of a deep-pocketed company like GE
Healthcare, the possibility of Geron securing a royalty stream and
the potential use for Geron's stem cell platform. GE's shares were
down 6 cents to $11.70.
"We had an asset that we were not able to exploit fully," said
David Earp, Geron's senior vice president for business development
and chief patents counsel.
Konstantin Fiedler, GE Healthcare's cell-technologies general
manager, said he expects the market for toxicity testing under the
deal to be in the low hundreds of millions of dollars. Analysts
expect Geron to begin receiving royalties as early as next
year.
In January, Geron received clearance from the U.S. Food and Drug
Administration for the first-ever human trial of a medical
treatment derived from embryonic stem cells.
Tuesday, Geron said it is giving GE Healthcare an exclusive
license regarding the growth and differentiation of the cells.
Scientists from both companies will work on the project, with GE
Healthcare funding research and development and being responsible
for any manufacturing, sales and distribution of products developed
under the deal.
Shares of other stem-cell companies rose. StemCells Inc. (STEM)
added 2.4% to $1.72, Aastrom Biosciences Inc. (ASTM) rose 4% to 42
cents and Neostem Inc. (NBS) gained 16% to $2.05.
Joe Pantginis, an analyst at Merriman Curham Ford, said Geron
shares rose on the likelihood of near-term royalty payments plus on
the research and development and manufacturing heft that GE
provides. Needham analyst Mark Monane also pointed to the fact that
the companies expect the first product by early 2010.
For GE, the announcement comes as the conglomerate aims to both
reposition its health-care group as well as to align its business
units to benefit from White House priorities.
About two months ago, GE unveiled a campaign focused on how GE
is improving access and quality to health care globally while
lowering costs, The Wall Street Journal reported. Most of GE
Healthcare's revenue now comes from diagnostic and imaging
equipment, but sales are under pressure as public and private
insurers try to reduce health-care costs.
-By Brendan Conway, Dow Jones Newswires; 212-416-2670;
brendan.conway@dowjones.com
(Mike Barris contributed to this report.)