Geron and GE Form Partnership

The Wall Street Journal, July 1, 2009

The embryonic stem cell company Geron, and the multinational conglomerate General Electric, have announced the signing of a global licensing agreement in which Geron will provide human embryonic stem cells (hESCs) to GE's Healthcare division for the toxicity testing of drugs. The hESCs will not be used for the development of cell-based therapies.

According to a statement that GE made in 2005, "GE will not be associated with the primary harvest of human embyro-derived cells or tissues. We acknowledge the considerable debate and take very seriously the ethical and societal issues associated with research using stem cells derived from embryonic or fetal tissue. We conduct our research in an ethically and scientifically responsible manner."

Therefore, according to Geron, the hESCs that are to be provided to GE were derived from human embryonic stem cell lines that were approved under policies established by the Bush administration in 2001. Contrary to popular misconception, hESC research was not forbidden under the Bush administration but in fact was conducted in laboratories and corporations across the entire United States during the entire Bush presidency. As long as the research met specific guidelines, it even received federal funding, and if it did not meet those guidelines then the research was usually conducted anyway, but with private funding instead of federal funding.

Under the new agreement between GE and Geron, Geron will provide the hESCs to GE who will develop and commercialize lab equipment that facilitates the use of the hESCs in drug development and toxicity screening. The lab equipment will then be marketed to pharmaceutical companies and research labs. According to Konstantin Fiedler, general manager of cell technologies at GE's Healthcare division, the market for toxicity testing is expected to be in the hundreds of millions of dollars by 2020, from which Geron will begin receiving royalties by 2010.

Scientists from both companies will collaborate in the venture, with GE Healthcare providing all R&D funding. According to David Earp, senior vice president for business development and chief patents counsel at Geron, "We had an asset that we were not able to exploit fully." According to Konstantin Fiedler, general manager of cell technologies at GE Healthcare, "This agreement marks a further step in GE Healthcare's cell technology strategy aimed at addressing the potential of stem cell applications in the drug discovery and therapy markets."

In 2008, GE earned over $17 billion in revenue, of which approximately $1.5 billion was through its life-sciences related business, which GE began expanding in 2003 with a number of acquisitions and parnerships that included the $9.5 billion acquisition of Amersham PLC, a biotech firm based in the UK which had developed specialized technology in nucleic acid blotting, radiochemical labeling and detection. Other acquisitions and partnerships in the biotech sector have included an agreement between GE and the StemSource technology division of Cytori Therapeutics, a stem cell banking company whose products GE will commercialize in ten European countries. (Please see the related news article on this website, entitled, "Cytori and General Electric Agree Upon Collaboration", dated May 8, 2009). In the past, most of the revenue generated from GE's Healthcare division has come from diagnostic and imaging equipment, sales of which are declining in response to the efforts by public and private insurers to reduce costs. GE is now in the process of plans to reposition its business strategies.

In January of this year, Geron received FDA clearance to commence the first hESC clinical trials ever to be performed, which were to begin in the summer. Results of the trials will not be obtained for years, however. (Please see the related news article on this website, entitled, "FDA Approves First Human Embryonic Stem Cell Trial", dated January 23, 2009).

Contrary to popular misconception, actual cell-based therapies are still years away for hESCs, and even decades away by some accounts - which is precisely why this new licensing agreement between Geron and GE involves the use of hESCs not for the development of cell-based therapies, per se, but for the use of the hESCs in the development and toxicity testing of drugs. Even Dr. James Thomson, "the father of embryonic stem cell science", who was the first person ever to isolate a hESC in the laboratory, has emphasized this point on a number of occasions. His own company, Cellular Dynamics International (CDI), which he cofounded in 2004, also specializes not in the development of clinical therapies from hESCs, but instead in the use of hESCs for drug development and toxicity testing. (Please see the related news article on this website, entitled, "Cellular Dynamics and Mount Sinai Sign Licensing Agreement", dated May 29, 2009).

Financial details of the agreement between Geron and GE were not disclosed.

Geron's shares rose 15% after the announcement, to $7.67, while GE's stock fell to $11.72.