After more than a decade of pioneering work in the embryonic stem cell field, Geron ($GERN) has pulled out the white flag, abandoning its ESC programs and laying off 66 workers as it scrambles to regroup around its experimental cancer therapeutics. The unexpected moves rattled investors, triggering a sell-off of its shares overnight, which plunged 17%.
Newly-named Geron CEO John Scarlett said that the Menlo Park, CA-based biotech simply had no other choice. Forced to conserve cash after putting its stem cell therapy for spinal cord injuries through its first small human test, the best Geron could do was offer to hand the work over to a potential partner. "We need to focus our resources on advancing these Phase II clinical trials of our two cancer drugs," Scarlett told Bloomberg.
The post mortem for these programs is going to be brutal for everyone in the ESC field--if not the entire biotech industry.
Analyst Steve Brozak of WBB Securities told the AP that Geron had been unable to bring in partners and new cash while it was still in very early-stage testing. And VCs are less and less patient as development timelines grow longer and longer. "It could be outsourced to a place like China very easily," he warned the news wire in apocalyptic terms. "In that case, this would be the de facto abdication of U.S. leadership in biotechnology."
Advanced Cell Technology ($ACTC)--which has experienced its own near-death experiences as it scrounged for cash to pay for cutting-edge work--is now the solo player engaged in ESC trials with a study underway for macular degeneration. That's not likely to encourage anyone to jump into these frigid waters.