GERON CORP - Annual Report: 2010 (Form 10-K)

 

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2010
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

Delaware	75-2287752
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
230 Constitution Drive, Menlo Park, CA	94025
(Address of principal executive offices)	(Zip Code)

 

 

Title of each class	Name of each exchange on which registered
Common Stock, $0.001 par value	Nasdaq Global Select Market

 

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

 

	o		Large accelerated filer	x		Accelerated filer
	o		Non-accelerated filer (Do not check if a smaller reporting company)	o		Smaller reporting company

 

		Form 10-K
Document		Parts
Portions of the Registrant’s definitive proxy statement for the 2011 annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days of the Registrant’s fiscal year ended December 31, 2010		III

 

				Page
		PART I
Item 1.		Business		3
Item 1A.		Risk Factors		20
Item 1B.		Unresolved Staff Comments		34
Item 2.		Properties		34
Item 3.		Legal Proceedings		35
Item 4.		(Removed and Reserved)		35
		PART II
Item 5.		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		35
Item 6.		Selected Financial Data		37
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk		48
Item 8.		Consolidated Financial Statements and Supplementary Data		49
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		78
Item 9A.		Controls and Procedures		78
Item 9B.		Other Information		79
		PART III
Item 10.		Directors, Executive Officers and Corporate Governance		80
Item 11.		Executive Compensation		80
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		80
Item 13.		Certain Relationships and Related Transactions, and Director Independence		80
Item 14.		Principal Accounting Fees and Services		80
		PART IV
Item 15.		Exhibits and Financial Statement Schedules		81
		SIGNATURES		82

 

 

 

     This annual report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Geron Corporation (Geron or the Company) to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The risks and uncertainties referred to above include, without limitation, risks inherent in the development and commercialization of potential products, the uncertainty and preliminary nature of clinical trial results or regulatory approvals or clearances, need to raise additional capital, dependence upon collaborators, protection of our intellectual property rights and other risks that are described herein and that are otherwise described from time to time in Geron’s Securities and Exchange Commission reports including, but not limited to, the factors described in Item 1A, “Risk Factors,” of this annual report. Geron assumes no obligation and does not intend to update these forward-looking statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

     We are developing anti-cancer therapies based on telomerase inhibitors and telomerase therapeutic vaccines. Through our licensee, we also intend to develop products using telomerase as a marker for cancer diagnosis, prognosis, patient monitoring and screening.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     The following table briefly describes the cancer therapeutic and diagnostic products being developed by us or our licensees and the stage of development of these product candidates.

 

	Product			Patient
Product	Description	Disease Treatment	Development Stage	Enrollment Status
Imetelstat	Telomerase Inhibitor	Non-Small Cell Lung	Phase 2 Trial	Open
(GRN163L)		Cancer (NSCLC)
		Breast Cancer	Phase 2 Trial	Open
		Multiple Myeloma	Phase 2 Trial	Open
		Essential	Phase 2 Trial	Open
		Thrombocythemia
GRNVAC1	Telomerase Cancer	Acute Myelogenous	Phase 2 Trial	Completed
	Vaccine	Leukemia
GRN1005	Peptide-Conjugated	Brain Metastases	Phase 2 Trial	Planned to open in
	Paclitaxel	(Breast Cancer &		second half of 2011
		NSCLC)
		Glioblastoma	Phase 2 Trial	Planned to open in
		Multiforme		2012

		Disease
Licensees	Product Description	Treatment/Application	Development Stage
Merck & Co.	Telomerase Cancer	Prostate and Solid Tumors	Phase 1 Trial
	Vaccine
Sienna Cancer	Telomerase Diagnostic	Bladder Cancer	Preclinical Development
Diagnostics

 

 

 

 

 

 

 

     Having met our main objectives for Phase 1 of assessing the safety, tolerability, pharmacokinetics and pharmacodynamics of imetelstat, we are advancing the product candidate through Phase 2 clinical trials in four different malignancies, including two large randomized studies and two single arm studies.

 

 

 

				Primary
Indication	Design	Aim	Population	Endpoint	Enrollment
Non-Small	Open label, multi-center,	Efficacy	Recurrent locally	Progression Free	Approx. 96
Cell Lung	randomized, imetelstat	and Safety	advanced or Stage IV	Survival (PFS)
Cancer	as maintenance treatment		disease (completed first
(NSCLC)	plus standard therapy		line platinum-based
	(observation +/-		doublet induction
	bevacizumab) vs.		therapy +/-
	standard therapy only		bevacizumab)
Breast Cancer	Open label, multi-center,	Efficacy	Locally recurrent or	PFS	Approx. 156
	randomized, imetelstat	and Safety	metastatic disease
	plus paclitaxel +/-		without prior
	bevacizumab vs.		chemotherapy or after
	paclitaxel +/-		one non-taxane based
	bevacizumab only		chemotherapy in the
			metastatic setting
Multiple	Open-label, single agent	Efficacy	Detectable but non-	Objective	Up to 48
Myeloma		and Safety	progressing disease	response rate
			after prior therapy
Essential	Open label, multi-center,	Efficacy	Disease requiring	Hematologic	Approx. 40
Thrombo-	single agent	and Safety	cytoreduction and have	response rate
cythemia			failed/intolerant of
			previous therapy or
			refuse standard therapy

 

 

 

 

     Telomerase Therapeutic Vaccine (GRNVAC1). The goal of therapeutic cancer vaccines is to “teach” the patient’s own immune system to attack cancer cells while sparing other cells. This is done by repeatedly exposing the immune system to a substance (antigen) that is either specifically expressed or over-expressed by cancer cells in a way that subsequently induces an immune response to any cells that express that antigen on their surface. We believe that the characteristics of telomerase make it an ideal antigen for cancer vaccines.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     In July 2005, we entered into a worldwide exclusive research, development and commercialization license agreement with Merck & Co., Inc. for cancer vaccines targeting telomerase by methods other than dendritic cell delivery. In 2008, Merck initiated a Phase 1 clinical trial of V934/V935, a non-dendritic cell-based cancer vaccine candidate targeting telomerase to assess the safety, tolerability and immunogenicity of the vaccine candidate in patients with solid tumors, including NSCLC and prostate carcinoma. On February 23, 2011, Merck notified us that it would not continue further development of V934/V935 beyond completion of the Phase 1 trial, and provided a 90-day notice of termination of the license agreement, which termination is to be effective after the last patient visit in the trial. All rights granted to Merck under the license will revert to Geron upon termination. Merck’s decision to end their program is the result of Merck’s ongoing portfolio prioritization and not a result of data generated in the clinical trial.

 

 

 

 

 

 

 

     The nature of the toxicities related to GRN1005 was similar to other taxanes, such as paclitaxel, with dose-limiting toxicity due to neutropenia. At the recommended Phase 2 dose of 650mg/m2 the frequency of severe neutropenia was greater than for naked paclitaxel but this was easily manageable and did not compromise dosing.

 

 

 

 

     We have also entered into a research and collaboration agreement with Angiochem to utilize these receptor-targeting peptides to transport telomerase inhibitors into the CNS.

 

 

 

 

 

 

 

				Patient
			Development	Enrollment
Product	Product Description	Disease Treatment	Stage	Status
GRNOPC1	Oligodendrocytes	Spinal Cord Injury	Phase 1 Trial	Open
		Other CNS Indications*	Research	N/A
GRNCM1	Cardiomyocytes	Heart Disease	Preclinical	N/A
GRNIC1	Islets	Type 1 Diabetes	Research	N/A
GRNCHND1	Chondrocytes	Osteoarthritis	Research	N/A
GRNVAC2	Mature Dendritic Cells	Cancer Immunotherapy	Product Research	N/A
--	Immature Dendritic Cells	Immune Rejection	Research	N/A

 

Licensees/Collaborators	Product Description	Application	Development Stage
Corning Incorporated	Synthemax™ Synthetic	Culture of hESCs	On Market
	Surface Matrix
GE Healthcare UK Ltd.	Cardiomyocytes	Drug Screening	On Market
	Hepatocytes	Drug Screening	Research

 

 

 

     We have derived oligodendrocyte progenitor cells (GRNOPC1) from hESCs. Oligodendrocytes are naturally occurring cells in the nervous system that have several functions. Oligodendrocytes produce myelin (insulating layers of cell membrane) that wraps around the axons of neurons to enable them to conduct electrical impulses. Myelin enables efficient conduction of nerve impulses in the same manner as insulation prevents short circuits in an electrical wire. Without myelin, many of the nerves in the brain and spinal cord cannot function properly. Oligodendrocytes also produce neurotrophic factors (biologicals that enhance neuronal survival and function) to support the maintenance of nerve cells. Oligodendrocytes are lost in spinal cord injury, resulting in loss of myelin and neuronal function that cause paralysis in many patients.

 

 

 

 

 

				Primary	Estimated
Indication	Design	Aim	Population	Endpoint	Enrollment
Spinal Cord Injury	Open label, multi- center	Safety	Neurologically complete (ASIA Impairment Scale A), traumatic injury to the thoracic region (between T-3 and T-10)	Safety	Up to 10

 

 

 

 

 

     Our collaborators have shown that GRNCM1 does not cause cardiac arrhythmias after transplantation into a guinea pig model of chronic heart damage designed to test this potential safety concern reported of certain other cell types. An arrhythmia is an abnormality of the heart rhythm, which can cause the heart to pump less efficiently. These data were presented in May 2010 at the Annual Scientific Sessions of the Heart Rhythm Society.

 

 

 

 

 

 

 

 

 

 

 

 

     We are researching drug candidates to treat various degenerative diseases by the controlled activation of telomerase. Data published by us and others have indicated that cellular senescence caused by shortening telomeres, which occurs in numerous tissues throughout the human body, causes or contributes to chronic degenerative diseases and conditions including bone and marrow diseases, pulmonary fibrosis, HIV/AIDS, liver disease, macular degeneration, cardiovascular diseases and impaired wound healing. Controlled activation of telomerase may restore the regenerative and functional capacity of cells in various organ systems impacted by senescence, injury or chronic disease.

 

 

Product	Product Description	Disease Treatment	Development Stage
GRN510	Telomerase Activator	Fibrotic Diseases	Research

 

 

 

 

 

 

 

 

 

     Through our licensees, we make telomerase-immortalized cell lines commercially available to the research market and to companies for basic research and for use in drug discovery and biologics production applications. We have granted royalty-bearing licenses to the American Type Culture Collection and Lonza Walkersville, Inc. (formerly Cambrex BioSciences) under which these organizations produce and sell telomerase-immortalized cells for both academic research and commercial drug discovery. We have also licensed the telomerase gene to a number of pharmaceutical and biotechnology companies for use in their internal research programs.

 

 

 

 

 

 

 

 

 

     In early 1997, Dr. Ian Wilmut and his colleagues at the Roslin Institute were the first to demonstrate, with the birth of Dolly the sheep, that the nucleus of an adult cell can be transferred to an enucleated egg to create cloned offspring. The birth of Dolly was significant because it demonstrated the ability of egg cell cytoplasm, the portion of the egg outside of the nucleus, to reprogram an adult somatic nucleus. Reprogramming enables the adult somatic cell nucleus to express all the genes required for the full embryonic development of the animal. In addition to sheep, the technique has been used to clone mice, rats, goats, cattle, rabbits, cats, dogs and pigs from donor cells and enucleated eggs from each respective animal species. In 1999, we acquired Roslin Bio-Med Ltd., a commercial subsidiary of the Roslin Institute, and an exclusive license for the use of nuclear transfer technology in multiple applications in animal and human biology.

 

 

 

 

 

 

 

 

 

 

 

 

     With the foregoing in mind, below we provide an overview of the patent protection for our major programs. It is important to note that all of our product candidates are still under development, so further innovation and associated patent filings may provide additional patent coverage. Furthermore, the patent expiration ranges given are for the U.S. only and only for patent families where patents have already issued (i.e., they do not account for recently filed patent families where the expiration date of patents yet to issue may be after the last expiration date given here). The stated expiration dates also do not account for potential patent extensions that may be available. We endeavor to monitor worldwide patent filings by third parties that are relevant to our business. Based on this monitoring, we may determine that an action is appropriate to protect our business interests. Such actions may include negotiating patent licenses where appropriate, filing oppositions or reexaminations against a patent, or filing a request for the declaration of an interference with a U.S. patent application or issued patent. Similarly, third parties may take similar actions against our patents. By way of example, in 2005 we were involved in interference proceedings that we had initiated at the U.S. Patent and Trademark Office involving patents and patent applications for nuclear transfer technology; judgments in those actions were entered in our favor. In 2009, we initiated a patent interference proceeding involving patent rights relating to the production of endoderm cells from hESCs, and that proceeding is currently ongoing. We are currently also involved in patent opposition proceedings before the European Patent Office and the Australian Patent Office both as the party holding the opposed patent, and in opposition to patents granted or proposed to be granted to another entity. The information provided here should be reviewed in the context of the section entitled “Risks Related to Protecting Our Intellectual Property” that begins on page 24.

 

 

 

 

 

 

 

 

 

     By way of example, our hESC portfolio includes patents and patent applications covering technologies that we believe will facilitate the commercial-scale production of hESCs, such as methods for growing the cells without the need for cell feeder layers, and novel synthetic growth surfaces that we are developing in conjunction with Corning Life Sciences. We also own or have licensed patent rights covering cell types that can be made from hESCs, including hepatocytes (liver cells), cardiomyocytes (heart muscle cells), neural cells (nerve cells, including dopaminergic neurons and oligodendrocytes), chondrocytes (cartilage cells), pancreatic islet ß cells, osteoblasts (bone cells), hematopoietic cells (blood-forming cells) and dendritic cells.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     We believe that the quality and breadth of our technology platforms, the skills of our employees and our ability to recruit and retain skilled employees, our patent portfolio and our capabilities for research and development are competitive strengths. However, many large pharmaceutical and biotechnology companies have significantly larger intellectual property estates than we do, more substantial capital resources than we have, and greater capabilities and experience than we do in preclinical and clinical development, sales, marketing, manufacturing and regulatory affairs.

 

 

 

     Regulation by governmental authorities in the United States and other countries is a significant factor in the development, manufacture and marketing of our proposed products and in our ongoing research and product development activities. The nature and extent to which such regulation applies to us will vary depending on the nature of any products which may be developed by us. We anticipate that many, if not all, of our proposed products will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical and clinical testing and other approval procedures of the FDA and similar regulatory authorities in European and other countries. Various governmental statutes and regulations also govern or influence testing, manufacturing, safety, labeling, storage and recordkeeping related to such products and their marketing. The process of obtaining these approvals and the subsequent compliance with appropriate statutes and regulations require the expenditure of substantial time and money, and there can be no guarantee that approvals will be granted.

 

 

 

 

 

     The results of the preclinical and clinical testing on non-biologic drugs and certain diagnostic drugs are submitted to the FDA in the form of a New Drug Application (NDA) for approval prior to commencement of commercial sales. In the case of vaccines or gene and cell therapies, the results of clinical trials are submitted as a Biologics License Application (BLA). In responding to an NDA/BLA submission, the FDA may grant marketing approval, may request additional information, may deny the application if it determines that the application does not provide an adequate basis for approval, and may also refuse to review an application that has been submitted if it determines that the application does not provide an adequate basis for filing and review. There can be no assurance that approvals will be granted on a timely basis, if at all, for any of our proposed products.

 

 

 

 

 

 

 

 

 

 

     The following table sets forth certain information with respect to our executive officers:

 

Name		Age		Position
David L. Greenwood		59		President, Interim Chief Executive Officer and
				Chief Financial Officer
Stephen M. Kelsey, M.D., F.R.C.P., F.R.C.Path.		50		Executive Vice President, Chief Medical
				Officer, Oncology
David J. Earp, J.D., Ph.D.		46		Senior Vice President, Business Development,
				Chief Patent Counsel and Secretary
Melissa A. Kelly Behrs		47		Senior Vice President, Therapeutic
				Development, Oncology
Jane S. Lebkowski, Ph.D.		55		Senior Vice President, Chief Scientific Officer,
				Cell Therapies
Katharine E. Spink, Ph.D.		36		Senior Vice President Operations,
				Cell Therapies
Olivia K. Bloom		42		Vice President, Chief Accounting Officer, Treasurer

 

 

 

 

 

     Jane S. Lebkowski, Ph.D., has served as our Senior Vice President, Chief Scientific Officer, Cell Therapies since February 2009 and Senior Vice President of Cell Therapies since January 2004. From August 1999 until January 2004, Dr. Lebkowski served as our Vice President of Cell Therapies. From April 1998 until August 1999, Dr. Lebkowski served as our Senior Director, Cell and Gene Therapies. From 1986 until joining us in 1998, Dr. Lebkowski served as vice president, research and development at Applied Immune Sciences. In 1995, Applied Immune Sciences was acquired by Rhone-Poulenc Rorer, at which time Dr. Lebkowski was appointed vice president, discovery & product development. Dr. Lebkowski received a B.S. in chemistry and biology from Syracuse University and received her Ph.D. from Princeton University.

 

 

 

 

 

 

 

 

 

 

 

 

     Potential lead drug compounds or other product candidates and technologies require significant preclinical and clinical testing prior to regulatory approval in the United States and other countries. Our product candidates may prove to have undesirable and unintended side effects or other characteristics adversely affecting their safety, efficacy or cost-effectiveness that could prevent or limit their commercial use. In addition, our product candidates may not prove to be more effective for treating disease or injury than current therapies. Accordingly, we may have to delay or abandon efforts to research, develop or obtain regulatory approvals to market our product candidates. In addition, we will need to determine whether any of our potential products can be manufactured in commercial quantities at an acceptable cost. Our research and development efforts may not result in a product that can be or will be approved by regulators or marketed successfully. Competitors may have proprietary rights which prevent us from developing and marketing our products or they may sell similar, superior or lower-cost products. Because of the significant scientific, regulatory and commercial milestones that must be reached for any of our development programs or product candidates to be successful, any program or product candidate may be abandoned, even after we have expended significant resources, such as our investments or prospective investments in telomerase technology, receptor-targeting peptide technology to cross the BBB, hESCs, imetelstat, GRN1005 (formerly ANG1005), GRNVAC1 and GRNOPC1, which could adversely affect our business and materially and adversely affect our stock price.

 

 

 

 

 

 

 

 

 

 

 

     We have incurred operating losses every year since our operations began in 1990. As of December 31, 2010, our accumulated deficit was approximately $688.7 million. Losses have resulted principally from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations. We expect to incur additional operating losses and, as our development efforts and clinical testing activities continue, our operating losses may increase in size.

 

 

 

 

 

 

     We do not have any committed sources of capital, other than our equipment financing facility. Additional financing through strategic collaborations, public or private equity financings, capital lease transactions or other financing sources may not be available on acceptable terms, or at all. The receptivity of the public and private equity markets to proposed financings is substantially affected by the general economic, market and political climate and by other factors which are unpredictable and over which we have no control. Additional equity financings, if we obtain them, could result in significant dilution to our stockholders. Further, in the event that additional funds are obtained through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of our technologies, product candidates or proposed products that we would otherwise seek to develop and commercialize ourselves. If sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of our programs, any of which could have a material adverse effect on our business.

 

 

 

 

 

 

 

 

 

 

 

 

     Any product candidate that we or our collaborators develop must receive all relevant regulatory agency approvals before it may be marketed in the United States or other countries. Obtaining regulatory approval is a lengthy, expensive and uncertain process. Because certain of our product candidates involve the application of new technologies or are based upon a new therapeutic approach, they may be subject to substantial additional review by various government regulatory authorities, and, as a result, the process of obtaining regulatory approvals for them may proceed more slowly than for product candidates based upon more conventional technologies.

 

 

 

 

 

 

 

 

 

 

     The patent positions of pharmaceutical and biopharmaceutical companies, including ours, are highly uncertain and involve complex legal and technical questions. In particular, legal principles for biotechnology and pharmaceutical patents in the United States and in other countries are evolving, and the extent to which we will be able to obtain patent coverage to protect our technology, or enforce issued patents, is uncertain. In the United States, recent court decisions in patent cases as well as proposed legislative changes to the patent system only exacerbate this uncertainty. Furthermore, significant amendments to the regulations governing the process of obtaining patents were proposed in a new rule package by the United States Patent and Trademark Office (the Patent Office) in 2007. The proposed new rules were widely regarded as detrimental to the interests of biotechnology and pharmaceutical companies. The implementation of the rule package was blocked by a court injunction requested by a pharmaceutical company. The Patent Office challenged the court decision through an appeal to the U.S. Court of Appeals for the Federal Circuit (CAFC), but the appeal was dismissed in November 2009, after the Patent Office changed course and rescinded the proposed new rules. At this point we do not know whether the Patent Office will attempt to introduce new rules to replace those that were recently withdrawn or whether any such new rules would also be challenged.

 

 

 

 

 

 

 

 

     In parallel, Pharmexa opposed a European patent held by Geron, the claims of which cover many facets of human telomerase, including the use of telomerase peptides in cancer vaccines. In June 2006, the OD of the EPO revoked three of the granted claims in Geron’s patent, specifically the three claims covering telomerase peptide cancer vaccines. We have appealed that decision to the TBA, and that appeal is still pending. Because this appeal is ongoing, the outcome cannot be determined at this time. We have recently been awarded a second European patent with claims to telomerase peptides, and this patent has also been opposed by KAEL-GemVax. We cannot predict the outcome of this opposition or any subsequent appeal of the decision in the opposition.

 

 

 

 

 

 

 

     Our business depends on several critical technologies that are based in part on patents licensed from third parties, including the rights we licensed from Angiochem in connection with our exclusive worldwide license we entered into in December 2010. Those third-party license agreements impose obligations on us, such as payment obligations and obligations to diligently pursue development of commercial products under the licensed patents. If a licensor believes that we have failed to meet our obligations under a license agreement, the licensor could seek to limit or terminate our license rights, which could lead to costly and time-consuming litigation and, potentially, a loss of the licensed rights. During the period of any such litigation our ability to carry out the development and commercialization of potential products could be significantly and negatively affected. If our license rights were restricted or ultimately lost, our ability to continue our business based on the affected technology would be severely adversely affected.

 

 

 

 

 

 

     We sometimes rely on trade secrets to protect our proprietary technology, especially in circumstances in which we believe patent protection is not appropriate or available. We attempt to protect our proprietary technology in part by confidentiality agreements with our employees, consultants, collaborators and contractors. We cannot assure you that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors, any of which would harm our business significantly.

 

 

 

 

     Our strategy for the development, clinical testing and commercialization of our product candidates requires that we enter into collaborations with corporate partners, licensors, licensees and others. We are dependent upon the subsequent success of these other parties in performing their respective responsibilities and the continued cooperation of our partners. By way of examples: Merck is developing cancer vaccines targeted to telomerase other than dendritic cell-based vaccines; Sienna is developing cancer diagnostics using our telomerase technology; and GE Healthcare UK Limited is developing cell-based assays using cells derived from our hESCs. Our collaborators may not cooperate with us or perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators’ resources that will be devoted to activities related to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us.

 

     The development and commercialization of potential products will be delayed if collaborators or other partners fail to conduct these activities in a timely manner or at all. In addition, our collaborators could terminate their agreements with us and we may not receive any development or milestone payments. If we do not achieve milestones set forth in the agreements, or if our collaborators breach or terminate their collaborative agreements with us, our business may be materially harmed.

 

 

 

 

 

 

 

 

 

     Our future success depends to a significant extent on the skills, experience and efforts of our executive officers and key members of our scientific staff. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. We may be unable to retain our current personnel or attract or assimilate other highly qualified management and scientific personnel in the future on acceptable terms. The loss of any or all of these individuals could harm our business and might significantly delay or prevent the achievement of research, development or business objectives.

 

 

 

 

 

 

 

 

 

 

     Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for research, clinical development and marketing of products similar to ours. These companies and institutions compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies complementary to our programs.

 

     As a result of the foregoing, our competitors may develop more effective or more affordable products, or achieve earlier patent protection or product commercialization than we do. Most significantly, competitive products may render any product candidates that we develop obsolete, which would negatively impact our business and ability to sustain operations.

 

 

 

 

     Our ability to successfully commercialize our product candidates will depend significantly on our ability to obtain acceptable prices and the availability of reimbursement to the patient from third-party payors. In March 2010, President Obama signed the Patient Protection and Affordability Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the PPACA) into law. Focused on expanding healthcare coverage to millions of uninsured Americans and reducing the rate of increase in healthcare costs, the PPACA contains numerous initiatives that impact the pharmaceutical industry. These include, among other things:

 

     While the PPACA may increase the number of patients who have insurance coverage for our product candidates, its cost containment measures could also adversely affect reimbursement for our potential products. Cost control initiatives could decrease the price that we receive for any product candidate we may develop in the future. If our potential products are not considered cost-effective or if we fail to generate adequate third-party reimbursement for the users of our potential products and treatments, then we may be unable to maintain price levels sufficient to realize an appropriate return on our investment for potential products currently in development, which could have an adverse impact on our business.

 

 

 

 

 

 

 

 

 

     In addition, the stock market is subject to other factors outside our control that can cause extreme price and volume fluctuations. In the third and fourth quarters of 2008, as well as during 2009, broad distress in the financial markets and the economy have resulted in greatly increased market uncertainty and instability in both U.S. and international capital and credit markets. These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment have recently contributed to substantial market volatility, and if such market conditions persist, the price of our common stock may fluctuate or decline. Securities class action litigation has often been brought against companies, including many biotechnology companies, which experience volatility in the market price of their securities. Litigation brought against us could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business.

 

 

     On January 31, 2011, a purported shareholder derivative complaint against the members of our board of directors and one of our executive officers was filed in the Superior Court of California for the County of San Mateo. The Company is named as a nominal defendant. The complaint, which is based on the same factual background as the dismissed class action, generally alleges that the defendants breached their fiduciary duties by misrepresenting and/or failing to disclose material information regarding the Company’s financial condition, and seeks unspecified monetary damages and other relief. The action was removed to the U.S. District Court for the Northern District of California. Another similar derivative action was filed on February 14, 2011 in the Superior Court of California for the County of San Mateo.

 

 

 

 

     The sale of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could significantly and negatively affect the market price of our common stock. As of December 31, 2010, we had 200,000,000 shares of common stock authorized for issuance and 122,616,729 shares of common stock outstanding. In addition, as of December 31, 2010, we have reserved for future issuance approximately 22,305,001 shares of common stock for our stock plans, potential milestone payments and outstanding warrants.

 

 

 

 

 

 

 

 

 

     Our share purchase rights plan could prevent stockholders from profiting from an increase in the market value of their shares as a result of a change of control of us by delaying or preventing a change of control. In addition, our Board of Directors has the authority, without further action by our stockholders, to issue additional shares of common stock, and to fix the rights and preferences of one or more series of preferred stock.

 

     In addition to our share purchase rights plan and the undesignated preferred stock, provisions of our charter documents and bylaws may make it substantially more difficult for a third party to acquire control of us and may prevent changes in our management, including provisions that:

     Provisions of Delaware law may also inhibit potential acquisition bids for us or prevent us from engaging in business combinations. In addition, we have severance agreements with several employees and a change of control severance plan which could require an acquiror to pay a higher price. Either collectively or individually, these provisions may prevent holders of our common stock from benefiting from what they may believe are the positive aspects of acquisitions and takeovers, including the potential realization of a higher rate of return on their investment from these types of transactions.

 

 

 

 

 

 

 

 

 

 

 

 

 

     On December 21, 2010, a purported securities class action complaint was filed in the U.S. District Court for the Northern District of California, naming us and one of our executive officers as defendants. The lawsuit alleged that the defendants made materially false or misleading public statements regarding our financial condition in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The plaintiff sought to represent a class of investors who purchased our common stock between July 30, 2010 and December 6, 2010 and sought damages, attorney’s fees and other relief. The case was voluntarily dismissed, without prejudice, on February 14, 2011, which dismissal was so ordered by the Court on February 15, 2011. As is typical in this type of litigation, it is possible that similar lawsuits may yet be filed in the same or other courts that name the same or additional defendants.

 

 

 

 

     None.

 

 

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

     Our common stock is quoted on the Nasdaq Global Select Market under the symbol GERN. The high and low closing sales prices as reported by the Nasdaq Global Select Market of our common stock for each of the quarters in the years ended December 31, 2010 and 2009 are as follows:

 

	High					Low
Year ended December 31, 2010
First quarter		$	6.57				$	5.26
Second quarter		$	6.15				$	4.94
Third quarter		$	6.07				$	4.54
Fourth quarter		$	6.37				$	4.72
Year ended December 31, 2009
First quarter		$	8.15				$	3.79
Second quarter		$	7.67				$	4.41
Third quarter		$	9.17				$	6.48
Fourth quarter		$	7.08				$	5.19

 

     As of February 22, 2011, there were approximately 759 stockholders of record of the Company’s common stock. This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. We are engaged in a highly dynamic industry, which often results in significant volatility of our common stock price. On February 22, 2011, the closing sales price for our common stock was $4.88 per share.

 

 

 

 

 

 

 

(1)		This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
(2)		Shows the cumulative total return on investment assuming an investment of $100 in each of Geron, the Nasdaq-US and the Nasdaq-Pharmaceutical on December 30, 2005. The cumulative total return on Geron stock has been computed based on a price of $8.61 per share, the price at which Geron’s shares closed on December 30, 2005.

 

 

     On December 6, 2010, we entered into an exclusive license agreement with Angiochem, Inc. and as consideration for the license rights, we paid Angiochem an upfront payment of $7.5 million in cash and agreed to issue $27.5 million of shares of our common stock, subject to a maximum of 9,000,000 shares. Based on the five-day volume weighted average closing price of our common stock immediately preceding the issuance date, we issued to Angiochem 5,261,144 shares of common stock (Angiochem Shares) on January 5, 2011. We filed with the Securities and Exchange Commission a registration statement on Form S-3 on January 7, 2011, which was declared effective on January 13, 2011. Sales by Angiochem of their shares are subject to certain monthly volume restrictions.

 

 

		Year Ended December 31,
		2010				2009				2008				2007				2006
		(In thousands, except share and per share data)
Consolidated Statements of Operations Data:
Revenues from collaborative agreements		$	925			$	450			$	294			$	672			$	622
License fees and royalties			2,638				1,276				2,509				6,950				2,655
Total revenues			3,563				1,726				2,803				7,622				3,277
Operating expenses:
Research and development			61,687				57,617				53,664				54,624				41,234
Acquired in-process research and
development (1)			35,000				—				—				—				—
General and administrative			18,043				14,343				16,183				15,837				9,403
Total operating expenses			114,730				71,960				69,847				70,461				50,637
Loss from operations			(111,167	)			(70,234	)			(67,044	)			(62,839	)			(47,360	)
Unrealized gain on fair value of derivatives			190				157				418				15,453				7,421
Interest and other income			2,045				1,374				5,542				10,791				8,704
Losses recognized under equity method
investment			(2,347	)			(1,338	)			(844	)			—				—
Interest and other expense			(98	)			(143	)			(93	)			(102	)			(130	)
Net loss			(111,377	)			(70,184	)			(62,021	)			(36,697	)			(31,365	)
Deemed dividend on derivatives (2)			—				(190	)			—				(9,081	)			—
Net loss applicable to common stockholders		$	(111,377	)		$	(70,374	)		$	(62,021	)		$	(45,778	)		$	(31,365	)
Basic and diluted net loss per share:
Net loss per share applicable to common
stockholders		$	(1.14	)		$	(0.80	)		$	(0.79	)		$	(0.62	)		$	(0.47	)
Shares used in computing net loss per share
applicable to common stockholders			97,601,520				88,078,557				78,187,795				74,206,249				66,057,367
____________________

(1)	On December 6, 2010, we and Angiochem, Inc. (Angiochem) entered into an Exclusive License Agreement that provides us with a worldwide exclusive license, with the right to grant sublicenses, to Angiochem’s proprietary peptide technology that facilitates the transfer of anti-cancer compounds across the BBB to be used with tubulin disassembly inhibitors to enable the treatment of primary brain cancers and cancers that have metastasized to the brain.
	As consideration for the license rights, we paid Angiochem an upfront payment of $7.5 million in cash and agreed to issue to Angiochem $27.5 million of shares of our common stock on or about January 5, 2011. The number of shares of common stock we actually issued to Angiochem (Angiochem Shares) was based on the five-day volume weighted average closing price of our common stock immediately preceding the issuance date. We issued to Angiochem 5,261,144 shares of common stock on January 5, 2011.
	We acquired the license rights for Angiochem’s proprietary receptor-targeting peptides for the clinical development of ANG1005 (now GRN1005), a novel taxane derivative for which Angiochem has performed two Phase 1 clinical studies in brain metastases and glioblastoma multiforme. We plan to further develop GRN1005 in Phase 2 clinical trials for these indications. Further clinical and process development of GRN1005 is required before any viable commercial application can be identified or utilized. We have concluded that this technology has no alternative future use, and accordingly, expensed the upfront payment of $35.0 million as acquired in-process research and development at the time of acquisition.

 

(2)	In April 2009, in connection with our continued collaboration with an investor and licensee and the data received under the collaboration relevant to our therapeutic programs, we modified the terms of certain outstanding warrants held by this investor by extending the exercise term and reducing the exercise price. The exercise term of warrants to purchase 200,000 shares of common stock was extended to March 9, 2012 from March 9, 2010 and the exercise price was modified to $17.50 per share from $67.09 per share. The exercise term of warrants to purchase 100,000 shares of common stock was extended to March 9, 2012 from March 9, 2010 and the exercise price was unchanged at $12.50 per share. In connection with the modifications, we recognized a deemed dividend of approximately $190,000 in our consolidated statements of operations for the incremental fair value of the modified warrants.
	In February 2007, in exchange for the exercise of certain warrants, we issued new warrants to the same institutional investors. The aggregate fair value of $3.7 million for the new warrants was recognized as a deemed dividend. In December 2007, we modified the terms of certain outstanding warrants by extending the exercise term and reducing the exercise price. In connection with the modifications, we received $3.6 million in cash consideration from the institutional investors holding the outstanding warrants. We recognized a deemed dividend of $5.4 million for the incremental fair value of the modified warrants, net of the cash consideration received from the institutional investors for the modifications.

		December 31,
		2010				2009				2008				2007				2006
		(In thousands)
Consolidated Balance Sheet Data:
Cash, restricted cash, cash equivalents
and marketable securities		$	221,274			$	167,070			$	163,655			$	208,444			$	213,860
Working capital			154,168				110,324				160,535				200,655				170,377
Total assets			233,584				180,382				176,218				218,896				220,800
Long-term obligations			—				—				—				427				—
Accumulated deficit			(688,650	)			(577,267	)			(506,893	)			(444,872	)			(399,094	)
Total stockholders’ equity			192,735				172,577				168,455				205,674				173,919

 

 

     The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K.

 

 

 

 

 

 

 

 

 

 

     Since our inception, a substantial portion of our revenues has been generated from research and licensing agreements. Revenue under such agreements typically includes upfront signing or license fees, cost reimbursements, milestone payments and royalties on future product sales.

 

 

 

 

 

 

 

 

 

     The fair value for PSAs is determined using the fair value of our common stock on the date of grant and reduced for estimated forfeitures, as applicable. Compensation expense for PSAs is recognized over the period from the date the performance condition is determined to be probable of occurring through the date the applicable condition is expected to be met. If the performance condition is not considered probable of being achieved, no expense is recognized until such time as the performance condition is considered probable of being met, if ever. We evaluate whether performance conditions are probable of occurring, as well as the expected performance period, on a quarterly basis.

 

 

 

 

 

 

 

 

 

 

 

 

 

     Warrants to purchase common stock and non-employee options are normally traded less actively, have trade activity that is one way, and/or traded in less-developed markets and are therefore valued based upon models with significant unobservable market parameters, resulting in Level 3 categorization. The fair value for these instruments is calculated using the Black Scholes option-pricing model. The model’s inputs reflect assumptions that market participants would use in pricing the instrument in a current period transaction. Inputs to the model include stock volatility, dividend yields, expected term of the derivatives and risk-free interest rates. See the following discussion, “Fair Value of Derivatives,” for information on derivation of inputs to the model. Changes to the model’s inputs are not changes to valuation methodologies, but instead reflect direct or indirect impacts from changes in market conditions. Accordingly, results from the valuation model in one period may not be indicative of future period measurements. Instruments classified as Level 3 include derivative liabilities, representing all of total financial liabilities measured at fair value as of December 31, 2010.

 

 

 

 

 

 

 

 

 

 

 

 

     For a further discussion regarding VIEs, see Note 3 on Joint Venture and Related Party Transactions in Notes to Consolidated Financial Statements of this Form 10-K.

 

 

 

 

 

 

 

 

 

 

 

     Our oncology programs focus on treating or diagnosing cancer by targeting or detecting the presence of telomerase, either inhibiting activity of the telomerase enzyme, diagnosing cancer by detecting the presence of telomerase, or using telomerase as a target for therapeutic vaccines. Our core knowledge base in telomerase and telomere biology supports all these approaches, and our scientists may contribute to any or all of these programs in a given period. We have recently in-licensed receptor-targeting peptide technology to develop therapeutic compounds that can cross the BBB by targeting a natural receptor-based mechanism normally used by essential substances to enter the brain, thereby allowing treatment of tumors in the brain, including primary brain cancers and metastases. The following table briefly describes our cancer therapeutic product candidates and their stage of development:

 

	Product			Patient
Product	Description	Disease Treatment	Development Stage	Enrollment Status
Imetelstat	Telomerase Inhibitor	Non-Small Cell Lung	Phase 2 Trial	Open
(GRN163L)		Cancer (NSCLC)
		Breast Cancer	Phase 2 Trial	Open
		Multiple Myeloma	Phase 2 Trial	Open
		Essential	Phase 2 Trial	Open
		Thrombocythemia
GRNVAC1	Telomerase Cancer	Acute Myelogenous	Phase 2 Trial	Completed
	Vaccine	Leukemia
GRN1005	Peptide-Conjugated	Brain Metastases	Phase 2 Trial	Planned to open in
	Paclitaxel	(Breast Cancer &		second half of 2011
		NSCLC)
		Glioblastoma	Phase 2 Trial	Planned to open in
		Multiforme		2012

 

 

 

 

 

 

     Our hESC therapy programs focus on treating injuries and degenerative diseases with cell therapies based on cells derived from hESCs. A core of knowledge of hESC biology, as well as a significant continuing effort in deriving, growing, maintaining, and differentiating hESCs, underlies all aspects of this group of programs. Many of our researchers are allocated to more than one hESC program, and the percentage allocations of time change as the resource needs of individual programs vary. The following table briefly describes the hESC-derived product candidates being developed by us or our collaborators and the stage of development of these product candidates:

 

				Patient
			Development	Enrollment
Product	Product Description	Disease Treatment	Stage	Status
GRNOPC1	Oligodendrocytes	Spinal Cord Injury	Phase 1 Trial	Open
		Other CNS Indications*	Research	N/A
GRNCM1	Cardiomyocytes	Heart Disease	Preclinical	N/A
GRNIC1	Islets	Type 1 Diabetes	Research	N/A
GRNCHND1	Chondrocytes	Osteoarthritis	Research	N/A
GRNVAC2	Mature Dendritic Cells	Cancer Immunotherapy	Product Research	N/A
--	Immature Dendritic Cells	Immune Rejection	Research	N/A

 

     We have developed proprietary methods to grow, maintain, and scale the culture of undifferentiated hESCs that use feeder cell-free and serum-free media with chemically defined components. Moreover, we have developed scalable processes to differentiate these cells into therapeutically relevant cells. We have developed cryopreserved formulations of hESC-derived cells to enable our business model of delivering “on demand” cells for therapeutic use. We initiated the Phase 1 clinical trial of GRNOPC1 in patients with spinal cord injury with the first subject receiving cells in October 2010. This is the first FDA-approved clinical trial of a cellular therapy derived from hESCs to be initiated. The clinical trial is a Phase 1 multi-center study designed to assess the safety and tolerability of GRNOPC1 in patients with complete ASIA (American Spinal Injury Association) Impairment Scale grade A thoracic spinal cord injuries. Two clinical sites were opened in 2010 for patient enrollment.

 

 

		Year Ended December 31,
		2010			2009			2008
Oncology		$	30,603		$	29,543		$	30,259
hESC Therapies			31,084			28,074			23,405
Total		$	61,687		$	57,617		$	53,664

 

 

 

     The lengthy process of seeking these regulatory reviews and approvals, and the subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could materially adversely affect our business. In responding to an NDA or BLA submission, the FDA may grant marketing approval, may request additional information, may deny the application if it determines that the application does not provide an adequate basis for approval, and may also refuse to review an application that has been submitted if it determines that the application does not provide an adequate basis for filing and review. We cannot provide assurance that any approval required by the FDA will be obtained on a timely basis, if at all.

 

 

 

 

 

 

 

 

 

 

 

 

     Other income was $1.2 million, $98,000 and $84,000 for the years ended December 31, 2010, 2009 and 2008, respectively. In November 2010, Geron received a total of $1.2 million in grants under the Qualifying Therapeutic Discovery Project (QTDP) program. The maximum grant amount was awarded to each of the five Geron programs that were eligible for QTDP funding and included oncology and human embryonic stem cell projects. Other income in 2009 and 2008 primarily represented tax refunds for certain research tax credits under the Housing Assistance Tax Act of 2008 resulting from our election to forego bonus depreciation with respect to investments in bonus eligible property during 2009 and 2008.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     We estimate that our existing capital resources, interest income and equipment financing facility will be sufficient to fund our current level of operations through at least December 2012. However, our future capital requirements will be substantial. Changes in our research and development plans or other changes affecting our operating expenses or cash balances may result in the expenditure of available resources before such time. Factors that may require us to use our available capital resources sooner than we anticipate include:

 

 

 

 

 

 

 

 

     Net cash provided by financing activities in 2010 and 2009 was $104.1 million and $51.6 million, respectively. Net cash used in financing activities in 2008 was $162,000. Net cash provided by financing activities in 2010 primarily reflected receipt of approximately $93.7 million in net proceeds from an underwritten public offering of 20,000,000 shares of our common stock at a public offering price of $5.00 per share after deducting underwriting discounts and commissions and offering expenses and the receipt of approximately $10.0 million in net proceeds from the sale of 1,481,481 shares of our common stock and warrants to purchase an additional 740,741 shares of our common stock to certain institutional investors in connection with the exchange of warrants held by those investors for shares of our common stock. Net cash provided by financing activities in 2009 primarily reflected receipt of approximately $45.9 million in net proceeds from an underwritten public offering of 7,250,000 shares of our common stock at a public offering price of $6.60 per share after deducting underwriting discounts and commissions and offering expenses and receipt of net proceeds of $3.6 million from the sale of 550,000 shares of our common stock and warrants to purchase an additional 150,000 shares of our common stock with an exercise price of $9.00 per share to certain institutional investors. Net cash used in financing activities in 2008 primarily reflected the repurchase of vested stock from certain employees to provide funds for minimum payroll tax withholding requirements.

 

 

 

		Principal Payments Due by Period
					Less Than									After
Contractual Obligations (1)		Total			1 Year			1-3 Years			4-5 Years			5 Years
		(In thousands)
Equipment lease		$	44		$	19		$	25		$	—		$	—
Operating leases (2)			—			—			—			—			—
Research funding (3)			3,585			1,671			1,022			367			525
Total contractual cash obligations		$	3,629		$	1,690		$	1,047		$	367		$	525
____________________

(1)		This table does not include any milestone payments under research collaborations or license agreements as the timing and likelihood of such payments are not known. In addition, this table does not include payments under our severance plan if there were a change in control of the Company or severance payments to key employees under involuntary termination.
(2)		In March 2008, we issued 742,158 shares of our common stock to the lessor of our premises at 200 and 230 Constitution Drive in payment of our monthly rental obligation from August 1, 2008 through July 31, 2012. In May 2007, we issued 210,569 shares of our common stock to the lessor of our premises at 149 Commonwealth Drive in payment of our monthly rental obligation from May 1, 2007 through April 30, 2010. In January 2010, we extended the lease at our premises at 149 Commonwealth Drive. In January 2010 and April 2010, we issued an aggregate of 187,999 shares of our common stock to the lessor of those premises in payment of our monthly rental obligation from May 1, 2010 through July 31, 2012. The fair value of the common stock issuances has been recorded as a prepaid asset and is being amortized to rent expense on a straight-line basis over the lease periods. Future minimum payments under non-cancelable operating leases are zero through July 31, 2012, as a result of the prepayments of rent with our common stock.
(3)		Research funding is comprised of sponsored research commitments at various laboratories around the world.

 

 

     None.

 

 

 

 

 

 

     Interest Rate Risk. The primary objective of our investment activities is to manage our marketable securities portfolio to preserve principal and liquidity while maximizing the return on the investment portfolio through the full investment of available funds without significantly increasing risk. To achieve this objective, we invest in widely diversified investments consisting of both fixed rate and floating rate interest earning instruments, which both carry a degree of interest rate risk. Fixed rate securities may have their fair value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future interest income may fall short of expectations due to changes in market conditions and in interest rates or we may suffer losses in principal if forced to sell securities which may have declined in fair value due to changes in interest rates.

 

 

 

 

 

	Page
Report of Independent Registered Public Accounting Firm	50
Consolidated Balance Sheets	51
Consolidated Statements of Operations	52
Consolidated Statements of Stockholders’ Equity	53
Consolidated Statements of Cash Flows	54
Notes to Consolidated Financial Statements	55
Supplemental Data: Quarterly Financial Information	76

 

 

 

 

 

 

 

 

 

 

 

 

	December 31,
	2010				2009
	(In thousands, except share
	and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	45,972			$	34,601
Restricted cash		792				791
Current portion of marketable securities		140,599				77,009
Interest and other receivables		1,799				1,318
Current portion of prepaid assets		5,855				4,060
Total current assets		195,017				117,779
Noncurrent portion of marketable securities		33,911				54,669
Noncurrent portion of prepaid assets		854				2,372
Investments in licensees		504				1,328
Property and equipment, net		3,088				3,938
Deposits and other assets		210				296
	$	233,584			$	180,382
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,462			$	2,176
Accrued compensation		6,186				1,757
Accrued liabilities		2,644				1,925
Stock issuance obligation		27,500				—
Current portion of deferred revenue		350				700
Fair value of derivatives		707				897
Total current liabilities		40,849				7,455
Noncurrent portion of deferred revenue		—				350
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 3,000,000 shares authorized; no shares
issued and outstanding at December 31, 2010 and 2009		—				—
Common stock, $0.001 par value; 200,000,000 shares authorized;
122,616,729 and 92,521,946 shares issued and outstanding at
December 31, 2010 and 2009, respectively		123				92
Additional paid-in capital		881,358				750,158
Accumulated deficit		(688,650	)			(577,267	)
Accumulated other comprehensive loss		(96	)			(406	)
Total stockholders’ equity		192,735				172,577
	$	233,584			$	180,382

 

 

 

 

		Year Ended December 31,
		2010				2009				2008
		(In thousands, except share and per share data)
Revenues from collaborative agreements (including
amounts from related parties: 2010-none, 2009-none,
2008-$79)		$	925			$	450			$	294
License fees and royalties (including amounts from related
parties: 2010-none, 2009-none, 2008-$1,500)			2,638				1,276				2,509
Total revenues			3,563				1,726				2,803
Operating expenses:
Research and development (including amounts
for related parties: 2010-$697, 2009-$1,755,
2008-$794)			61,687				57,617				53,664
Acquired in-process research and development			35,000				—				—
General and administrative			18,043				14,343				16,183
Total operating expenses			114,730				71,960				69,847
Loss from operations			(111,167	)			(70,234	)			(67,044	)
Unrealized gain on fair value of derivatives			190				157				418
Interest and other income			2,045				1,374				5,542
Losses recognized under equity method investment			(2,347	)			(1,338	)			(844	)
Interest and other expense			(98	)			(143	)			(93	)
Net loss			(111,377	)			(70,184	)			(62,021	)
Deemed dividend on derivatives			—				(190	)			—
Net loss applicable to common stockholders		$	(111,377	)		$	(70,374	)		$	(62,021	)
Basic and diluted net loss per share applicable to common
stockholders:
Net loss per share applicable to common stockholders		$	(1.14	)		$	(0.80	)		$	(0.79	)
Shares used in computing net loss per share applicable to
common stockholders			97,601,520				88,078,557				78,187,795

See accompanying notes.

 

 

 

 

														Accumulated
							Additional							Other				Total
		Common Stock					Paid-In			Accumulated				Comprehensive				Stockholders’
		Shares		Amount			Capital			Deficit				Income (Loss)				Equity
		(In thousands, except share data)
Balances at December 31, 2007		76,062,439		$	76		$	650,437		$	(444,872	)		$	33			$	205,674
Net loss		—			—			—			(62,021	)			—				(62,021	)
Net change in unrealized gain (loss) on marketable
securities and investments in licensees		—			—			—			—				16				16
Cumulative translation adjustment		—			—			—			—				(9	)			(9	)
Comprehensive loss																			(62,014	)
Stock-based compensation related to issuance
of common stock in exchange for services		2,294,685			2			9,789			—				—				9,791
Issuance of common stock under employee stock
plans, net		2,506,424			3			2,463			—				—				2,466
Stock-based compensation for equity-based awards
to employees and directors		—			—			11,493			—				—				11,493
401(k) contribution		206,916			—			1,045			—				—				1,045
Balances at December 31, 2008		81,070,464			81			675,227			(506,893	)			40				168,455
Net loss		—			—			—			(70,184	)			—				(70,184	)
Net change in unrealized gain (loss) on marketable
securities and investments in licensees		—			—			—			—				(445	)			(445	)
Cumulative translation adjustment		—			—			—			—				(1	)			(1	)
Comprehensive loss																			(70,630	)
Issuance of common stock in connection with public
offering, net of issuance costs of $1,916		7,250,000			7			45,926			—				—				45,933
Issuance of common stock in connection with private
offering, net of issuance costs of $18		550,000			1			3,584			—				—				3,585
Reclassification of fair value of derivatives, net		—			—			130			—				—				130
Deemed dividend in connection with amendments to
warrants to purchase common stock		—			—			190			(190	)			—				—
Stock-based compensation related to issuance of common
stock and options in exchange for services		1,272,438			1			8,114			—				—				8,115
Issuance of common stock under employee stock
plans, net		2,110,418			2			5,253			—				—				5,255
Stock-based compensation for equity-based awards
to employees and directors		—			—			10,575			—				—				10,575
401(k) contribution		268,626			—			1,159			—				—				1,159
Balances at December 31, 2009		92,521,946			92			750,158			(577,267	)			(406	)			172,577
Net loss		—			—			—			(111,377	)			—				(111,377	)
Net change in unrealized gain (loss) on marketable
securities and investments in licensees		—			—			—			—				306				306
Cumulative translation adjustment		—			—			—			—				4				4
Comprehensive loss																			(111,067	)
Issuance of common stock in connection with public
offering, net of issuance costs of $6,300		20,000,000			20			93,680			—				—				93,700
Issuance of common stock in connection with private
offering, net of issuance costs of $44		4,181,481			4			9,952			—				—				9,956
Stock-based compensation related to issuance of common
stock and options in exchange for services		1,994,993			2			11,685			—				—				11,687
Issuance of common stock under employee stock
plans, net		3,654,057			4			547			—				—				551
Stock-based compensation for equity-based awards
to employees and directors		—			—			13,718			—				—				13,718
Distribution to TA Therapeutics, Ltd. shareholder		—			—			—			(6	)			—				(6	)
401(k) contribution		264,252			1			1,618			—				—				1,619
Balances at December 31, 2010		122,616,729		$	123		$	881,358		$	(688,650	)		$	(96	)		$	192,735

See accompanying notes.