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Geron unloads its stem cell coffers to BioTime in stock deal

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After more than a year of not-so-secret negotiations, Geron ($GERN) has finally auctioned off its long-stalled embryonic stem cell pipeline, handing it over to a newly created BioTime ($BTX) subsidiary in exchange for shares.

Under the deal, BioTime gets all the intellectual property and cell banks related to Geron's four suspended lines, and the company has launched a subsidiary called Asterias Biotherapeutics to advance the treatments. In exchange, Geron will receive about 6.5 million shares of Asterias, good for a 21.4% stake, and undisclosed royalties if any of the assets gets commercialized.

Now, Asterias has its work cut out for it, and BioTime has recruited ex-Geron CEO Thomas Okarma to help revive the four long-shelved cell lines. Headlining the deal are OPC1, a Phase I asset studied in spinal cord injury with applications in multiple sclerosis and stroke, and VAC1, a Phase II-ready cancer vaccine. The other two preclinical assets have applications in osteoarthritis and heart failure, the companies said.

To get started, Asterias has a $5 million cash investment from its parent and another $5 million in equity financing from Romulus Films, plus nearly 9 million shares of BioTime with 5-year warrants to buy 5 million more.

Geron abandoned its embryonic program in late 2011, saying it just couldn't afford to continue after funding the world's first in-human stem cell study on OPC1 in 2010. The company signed a letter of intent with BioTime in November, and the two have been hammering out a deal ever since.

The Menlo Park, CA, biotech had hoped to reinvent itself as a developer of cancer therapies, but Geron ran into an immediate setback in December when its brain cancer treatment flunked Phase II, leading the company to pull the plug on the product and lay off nearly half of its workforce.

- read the announcement

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