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CEO Dr. John Scarlett told investors and analysts Tuesday that focusing on cancer drugs will allow Geron to make more money in a shorter period of time, particularly when "big pharma and big biotech companies are increasingly hungry for first-in-class cancer programs."
He stressed that Geron's study has not encountered any problems and that it hopes another company will acquire and continue its work.
"I hope that we're not letting anybody down. And we genuinely believe that the program itself has a future and we'll be looking to find a suitable home for it," Scarlett said.
Analysts say Geron's stem cell business could be acquired by Alameda, Calif.-based BioTime, a company founded by former Geron scientists. Other potential acquirers could include larger pharmaceutical companies like Celgene Corp., Pfizer Inc. and Teva Pharmaceuticals, which have dabbled in stem cells without making major investments.
Analysts said the company's decision reflects the challenges confronting all cash-strapped biotech and drug developers during the economic downturn, when venture capital has all but dried up.
"This was a classic business school calculation: You have two blockbuster programs but only enough money for one, so you choose the one that is further along," said Steve Brozak, president of WBB Securities.
Geron expects to report mid-stage data from two experimental cancer drugs in 2012 and 2013, whereas its stem cell study was in preliminary safety testing and only included four patients.
There are currently no embryonic stem cell-based therapies on the market and, besides Geron, only Marlborough, Mass-based Advanced Cell Technology has FDA approval to test a product. Advanced Cell Technology had just $14 million in cash at the end of the third quarter. By contrast, Geron completed the period with over $180 million on hand.
For now the vast majority of stem cell research will continue to be funded by state and federal governments. In the last fiscal year the National Institutes of Health designated over $164 million in funding for embryonic stem cell research, up from $141 million the year before.
Opponents of the research object because the cells were obtained from destroyed human embryos. Though current research is using cells culled long ago, opponents also fear research success would spur destruction of new embryos. Proponents say the research cells come mostly from extra embryos discarded anyway by fertility clinics.
President George W. Bush had limited the availability of federal funding to embryonic stem cell groups that were already in existence in 2001, but which in many cases had drawbacks. In 2009 President Barack Obama's removed that limitation, increasing stem cell funding for dozens of additional stem cell lines.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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