Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-40984 and
Registration Statement No. 333-73938
Prospectus Supplement to Prospectus dated July 7, 2000
GERON CORPORATION
2,666,062 SHARES
OF COMMON STOCK
You should read this prospectus supplement and the accompanying
prospectus carefully before you invest. Both documents contain information you
should consider when making your investment decision This prospectus supplement
adds to or supersedes similar information contained in that certain prospectus
of Geron Corporation, dated July 7, 2000, as amended and supplemented from time
to time.
The selling stockholder is offering up to 2,666,062 shares of Geron
Corporation common stock.
The selling stockholder will determine the price of the common stock
independent of Geron. Our common stock trades on the Nasdaq National Market
under the symbol GERN. On November 26, 2001, the last reported sale price of our
common stock was $10.96 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 OF THIS SUPPLEMENT.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the prospectus. Any representation to the contrary is a
criminal offense.
----------------------
The date of this prospectus supplement is November 27, 2001
RECENT DEVELOPMENTS
On November 9, 2001, we entered into a restructuring agreement with the
holder of our Series C Two Percent (2%) Convertible Debentures and our Series D
Zero Coupon Convertible Debentures. The restructuring agreement provided for the
conversion by the investor of the remaining outstanding principal balance of our
Series C debentures into shares of our common stock, the conversion by the
investor of a portion of our Series D debentures into shares of our common
stock, and the amendment of the terms of the remaining principal balance of the
Series D debentures, as well as the terms of warrants issued in connection with
the Series D debentures.
We issued $25 million of our Series D debentures to the investor on June
29, 2000. The Series D debentures were convertible by the investor at a fixed
conversion price of $29.95 per share and matured on June 29, 2003. In addition,
the investor received stock purchase warrants to purchase 834,836 shares of our
common stock at a fixed exercise price of $37.43 per share with an eighteen
month exercise period. In July 2000, we filed a registration statement on Form
S-3 (to which this prospectus supplement relates) to cover the sale of the
shares of our common stock by the investor upon the conversion of the Series D
debentures and the exercise of the Series D warrants.
The restructuring agreement provided for the conversion of $10 million
of the outstanding principal amount of Series D debentures held by the investor
into 1,011,122 shares of our common stock. The remaining $15 million principal
balance of the Series D debentures held by the investor were amended and
restated to:
- carry a two and one-half percent coupon,
- adjust the fixed conversion price to $20 per share, and
- extend the maturity date to June 30, 2005.
The terms of investor's warrant, received in connection with the Series
D debentures, were amended and restated into two separate warrants, a Series D-1
Stock Purchase Warrant to purchase 333,935 shares of our common stock with a
fixed exercise price of $15.625 per share and an exercise period extended to
June 30, 2003, and a Series D-2 Stock Purchase Warrant to purchase 500,901
shares of our common stock with a fixed exercise price of $25 per share and an
exercise period extended to December 31, 2006.
Under the terms of the restructuring agreement, we agreed to file an
additional registration statement on Form S-3 pursuant to Rule 462(b) of the
Securities Act of 1933, as amended, to cover the additional shares of common
stock issuable upon conversion of the Series D debentures and exercise of the
Series D warrants.
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RISK FACTORS
Before you decide whether to purchase any of our securities, in addition
to the other information in this prospectus, you should carefully consider the
following risk factor as well as the risk factors set forth under the heading
"Risk Factors" in the section entitled "Item 1--Business" in our most recent
Annual Report on Form 10-K, which is incorporated by reference into this
prospectus, as the same may be updated from time to time by our future filings
under the Securities Exchange Act. For more information, see the section
entitled "Where You Can Find More Information."
OUR BUSINESS IS AT AN EARLY STAGE OF DEVELOPMENT.
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, the study of human embryonic stem
cells, and the process of nuclear transfer are relatively new areas of research.
Our business is at an early stage of development. Our ability to produce
products that progress to and through clinical trials is subject to our ability
to, among other things:
- continue to have success with our research and development
efforts;
- select therapeutic compounds for development;
- obtain the required regulatory approvals; and
- manufacture and market resulting products.
When potential lead drug compounds or product candidates are identified
through our research programs, they will require significant preclinical and
clinical testing prior to regulatory approval in the United States and
elsewhere. In addition, we will also need to determine whether any of these
potential products can be manufactured in commercial quantities at an acceptable
cost. Our efforts may not result in a product that can be marketed. Because of
the significant scientific, regulatory and commercial milestones that must be
reached for any of our research programs to be successful, any program may be
abandoned, even after significant resources have been expended.
WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE FUTURE LOSSES, CONTINUED
LOSSES COULD IMPAIR OUR ABILITY TO SUSTAIN OPERATIONS.
We have incurred net operating losses every year since our operations
began in 1990. As of September 30, 2001, our accumulated deficit was
approximately $172.4 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 over the next several years as our research
and development efforts and preclinical testing activities are expanded.
Substantially all of our revenues to date have been research support payments
under the collaboration agreements with Kyowa Hakko and Pharmacia. In 2001, we
regained our right to telomerase inhibitors from Pharmacia and we will not
receive future payments from Pharmacia. Kyowa Hakko provided additional research
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funding in 2001. We may be unsuccessful in entering into any new corporate
collaboration that results in revenues. Even if we are able to obtain new
collaboration arrangements with third parties the revenues generated from these
arrangements will be insufficient to continue or expand our research activities
and otherwise sustain our operations.
We are unable to estimate at this time the level of revenue to be
received from the sale of diagnostic products and telomerase-immortalized cell
lines, and do not currently expect to receive significant revenues from the sale
of these products. Our ability to continue or expand our research activities and
otherwise sustain our operations is dependent on our ability, alone or with
others to, among other things, manufacture and market therapeutic products.
We may never receive material revenues from product sales or if we do
receive revenues, such revenues may not be sufficient to continue or expand our
research activities and otherwise sustain our operations.
WE WILL NEED ADDITIONAL CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR
PRODUCTS, AND OUR ABILITY TO OBTAIN THE NECESSARY FUNDING IS UNCERTAIN.
We will require substantial capital resources in order to conduct our
operations and develop our products. While we estimate that our existing capital
resources, interest income and equipment financing arrangements will be
sufficient to fund our current level of operations through December 31, 2002, we
cannot guarantee that this will be the case. The timing and degree of any future
capital requirements will depend on many factors, including:
- the accuracy of the assumptions underlying our estimates for our
capital needs in 2001 and beyond;
- continued scientific progress in our research and development
programs;
- the magnitude and scope of our research and development
programs;
- our ability to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and
marketing;
- our progress with preclinical and clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the costs involved in preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims; and
- the potential for new technologies and products.
We intend to acquire additional funding through strategic
collaborations, public or private equity financings, capital lease transactions
or other financing sources that may be available. Additional financing may not
be available on acceptable terms, or at all. Additional equity financings could
result in significant dilution to 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 products that we would otherwise seek to
develop and commercialize ourselves. If sufficient
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capital is not available, we may be required to delay, reduce the scope of or
eliminate one or more of our research or development programs, each of which
could have a material adverse effect on our business.
We may be unable to identify a safe and effective inhibitor of telomerase which
may prevent us from developing a viable cancer treatment product, which would
adversely impact our future business prospects.
As a result of our drug discovery efforts to date, we have identified
compounds in laboratory studies that demonstrate potential for inhibiting
telomerase in humans. Kyowa Hakko has selected one of these compounds, GRN 163,
as a lead compound for preclinical development as a telomerase inhibitor for
cancer. Further research is required to determine if this compound can be fully
developed as an efficacious, safe and commercially viable treatment for cancer.
This compound, and other compounds we have identified, may prove to have
undesirable and unintended side effects or other characteristics adversely
affecting its safety or efficacy that would likely prevent or limit its
commercial use. Accordingly, it may not be appropriate for us to proceed with
clinical development, to obtain regulatory approval or to market a telomerase
inhibitor for the treatment of cancer. If we abandon our research for cancer
treatment for any of these reasons or for other reasons, our business prospects
would be materially and adversely affected.
IF OUR ACCESS TO NECESSARY TISSUE SAMPLES, INFORMATION OR LICENSED TECHNOLOGIES
IS RESTRICTED, WE WILL NOT BE ABLE TO DEVELOP OUR BUSINESS.
To continue the research and development of our therapeutic and
diagnostic products, we need access to normal and diseased human and other
tissue samples, other biological materials and related clinical and other
information. We compete with many other companies for these materials and
information. We may not be able to obtain or maintain access to these materials
and information on acceptable terms, if at all. In addition, government
regulation in the United States and foreign countries could result in restricted
access to, or prohibiting the use of, human and other tissue samples. If we lose
access to sufficient numbers or sources of tissue samples, or if tighter
restrictions are imposed on our use of the information generated from tissue
samples, our business will be materially harmed.
SOME OF OUR COMPETITORS MAY DEVELOP TECHNOLOGIES THAT ARE SUPERIOR TO OR MORE
COST-EFFECTIVE THAN OURS, WHICH MAY IMPACT THE COMMERCIAL VIABILITY OF OUR
TECHNOLOGIES AND WHICH MAY SIGNIFICANTLY DAMAGE OUR ABILITY TO SUSTAIN
OPERATIONS.
The pharmaceutical and biotechnology industries are intensely
competitive. We believe that other pharmaceutical and biotechnology companies
and research organizations currently engage in or have in the past engaged in
efforts related to the biological mechanisms of cell aging and cell immortality,
including the study of telomeres, telomerase, human embryonic stem cells, and
nuclear transfer. In addition, other products and therapies that could compete
directly with the products that we are seeking to develop and market currently
exist or are being developed by pharmaceutical and biopharmaceutical companies
and by academic and other research organizations.
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Many companies are also developing alternative therapies to treat cancer
and, in this regard, are competitors of ours. Many of the pharmaceutical
companies developing and marketing these competing products have significantly
greater financial resources and expertise than we do in:
- research and development;
- manufacturing;
- preclinical and clinical testing;
- obtaining regulatory approvals; and
- marketing.
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.
There is also competition for access to libraries of compounds to use for
screening. Should we fail to secure and maintain access to sufficiently broad
libraries of compounds for screening potential targets, our business would be
materially harmed.
In addition to the above factors, we expect to face competition in the
following areas:
- product efficacy and safety;
- the timing and scope of regulatory consents;
- availability of resources;
- reimbursement coverage;
- price; and
- patent position, including potentially dominant patent positions
of others.
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 us. Most significantly, competitive products may render
the products that we develop obsolete.
THE ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF OUR RESEARCH USING EMBRYONIC STEM
CELLS AND NUCLEAR TRANSFER COULD PREVENT US FROM DEVELOPING OR GAINING
ACCEPTANCE FOR COMMERCIALLY VIABLE PRODUCTS IN THIS AREA.
Our programs in regenerative medicine may involve the use of human
embryonic stem cells that would be derived from human embryonic or fetal tissue.
The use of human embryonic stem cells gives rise to ethical, legal and social
issues regarding the appropriate use of these cells.
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In the event that our research related to human embryonic stem cells becomes the
subject of adverse commentary or publicity, the market price for our common
stock could be significantly harmed.
Some groups have voiced opposition to our technology and practices. The
concepts of cell regeneration, cell immortality, and genetic cloning have
stimulated significant debate in social and political arenas. We use human
embryonic stem cells derived through a process that uses either donated embryos
that are no longer necessary following a successful in vitro fertilization
procedure or donated fetal material as the starting material. Further, many
research institutions, including some of our scientific collaborators, have
adopted policies regarding the ethical use of human embryonic and fetal tissue.
These policies may have the effect of limiting the scope of research conducted
using human embryonic stem cells, resulting in reduced scientific progress. In
addition, the United States government and its agencies have in recent years
refused to fund research which involves the use of human embryonic tissue.
President Bush, however, announced on August 9, 2001 that he would permit
federal funding of research on human embryonic stem cells using the limited
number of embryonic stem cell lines that had already been created. A newly
created president's council will monitor stem cell research, and the guidelines
and regulations it recommends may include restrictions on the scope of research
using human embryonic or fetal tissue. Our inability to conduct research using
human embryonic stem cells due to such factors as government regulation or
otherwise could have a material adverse effect on us. Finally we acquired Roslin
Bio-Med to gain the rights to nuclear transfer technology. The Roslin Institute
produced Dolly the sheep in 1997 -- the first mammal cloned from an adult cell.
Geron acquired exclusive rights to this technology for all areas except human
cloning and certain other limited applications. Although we will not be pursuing
human reproductive cloning, we continue to develop techniques for use in
agricultural cloning and for possible application in human regenerative
medicine. Government imposed restrictions with respect to any or all of these
practices could:
- harm our ability to establish critical partnerships and
collaborations;
- prompt government regulation of our technologies;
- cause delays in our research and development; and
- cause a decrease in the price of our stock.
If human therapeutic cloning is restricted or banned (as it would be
under bill H.R. 2505 recently passed by the U.S. House of Representatives), our
ability to commercialize those applications could be significantly harmed. Also,
if regulatory bodies were to ban nuclear transfer processes, our research using
nuclear transfer technology could be cancelled and our business could be
significantly harmed.
PUBLIC ATTITUDES TOWARDS GENE THERAPY MAY NEGATIVELY AFFECT REGULATORY APPROVAL
OR PUBLIC PERCEPTION OF OUR PRODUCTS.
The commercial success of our product candidates will depend in part on
public acceptance of the use of gene therapies for the prevention or treatment
of human diseases. Public attitudes may be influenced by claims that gene
therapy is unsafe, and gene therapy may not gain the acceptance of the public or
the medical community. Adverse events in the field of
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gene therapy that have occurred or may occur in the future also may result in
greater governmental regulation of our product candidates and potential
regulatory delays relating to the testing or approval of our product candidates.
Negative public reaction to gene therapy in the development of certain
of our therapies could result in greater government regulation, stricter
clinical trial oversight, commercial product labeling requirements of gene
therapies and could cause a decrease in the demand for any products that we may
develop. The subject of genetically modified organisms has received negative
publicity in Europe, which has aroused public debate. The adverse publicity in
Europe could lead to greater regulation and trade restrictions on imports of
genetically altered products. If similar adverse public reaction occurs in the
United States, genetic research and resultant products could be subject to
greater domestic regulation and could cause a decrease in the demand for our
potential products.
ENTRY INTO CLINICAL TRIALS WITH ONE OR MORE PRODUCTS MAY NOT RESULT IN ANY
COMMERCIALLY VIABLE PRODUCTS.
We do not expect to generate any significant revenues from product sales
for a period of several years. We may never generate revenues from product sales
or become profitable because of a variety of risks inherent in our business,
including risks that:
- clinical trials may not demonstrate the safety and efficacy of
our products;
- completion of clinical trials may be delayed, or costs of
clinical trials may exceed anticipated amounts;
- we may not be able to obtain regulatory approval of our
products, or may experience delays in obtaining such approvals;
- we may not be able to manufacture our drugs economically on a
commercial scale;
- we and our licensees may not be able to successfully market our
products;
- physicians may not prescribe our products, or patients may not
accept such products;
- others may have proprietary rights which prevent us from
marketing our products; and
- competitors may sell similar, superior or lower-cost products.
IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO PURSUE
THE DEVELOPMENT OF OUR INTENDED TECHNOLOGIES AND PRODUCTS.
Our success will depend on our ability to obtain and enforce patents for
our discoveries; however, legal principles for biotechnology patents in the
United States and in other countries are not firmly established and the extent
to which we will be able to obtain patent coverage is uncertain.
Protection of our proprietary compounds and technology is critically
important to our business. Our success will depend in part on our ability to
obtain and enforce our patents and maintain trade secrets, both in the United
States and in other countries. The patent positions of
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pharmaceutical and biopharmaceutical companies, including ours, are highly
uncertain and involve complex legal and technical questions. We may not continue
to develop products or processes that are patentable, and it is possible that
patents will not issue from any of our pending applications, including allowed
patent applications. Further, our current patents, or patents that issue on
pending applications, may be challenged, invalidated or circumvented, and our
current or future patent rights may not provide proprietary protection or
competitive advantages to us. In the event that we are unsuccessful in obtaining
and enforcing patents, our business would be negatively impacted.
Patent applications in the United States are maintained in secrecy until
patents issue. Publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by at least several months and sometimes
several years. Therefore, the persons or entities that we or our licensors name
as inventors in our patents and patent applications may not have been the first
to invent the inventions disclosed in the patent applications or patents, or
file patent applications for these inventions. As a result, we may not be able
to obtain patents from discoveries that we otherwise would consider patentable
and that we consider to be extremely significant to our future success.
Patent prosecution or litigation may also be necessary to obtain
patents, enforce any patents issued or licensed to us or to determine the scope
and validity of our proprietary rights or the proprietary rights of another. We
may not be successful in any patent prosecution or litigation. Patent
prosecution and litigation in general can be extremely expensive and time
consuming, even if the outcome is favorable to us. An adverse outcome in a
patent prosecution, litigation or any other proceeding in a court or patent
office could subject our business to significant liabilities to other parties,
require disputed rights to be licensed from other parties or require us to cease
using the disputed technology.
IF WE FAIL TO MEET OUR OBLIGATIONS UNDER LICENSE AGREEMENTS, WE MAY FACE LOSS OF
OUR RIGHTS TO KEY TECHNOLOGIES ON WHICH OUR BUSINESS DEPENDS.
Our business depends on our three core technologies, each of which is
based in part on patents licensed from third parties. 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 would most likely lead to costly and time-consuming
litigation. 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 ultimately
lost, our ability to carry on our business based on the affected technology
platform would be severely affected.
For example, as we stated in our Form 8-K filed on November 5, 2001 and
our Form 10-Q for the fiscal period ended September 30, 2001, the Wisconsin
Alumni Research Foundation (WARF) has expressed dissatisfaction with the
development plans we submitted to WARF under our 1999 license agreement and
about our progress in commercializing therapeutic products based on the WARF
patents on human embryonic stem cells. We believe that our development of the
technology has been diligent and that our development plans are both
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reasonable and consistent with our obligations under the license agreement. We
are committed to resolving our differences with WARF amicably, but we may be
unable to do so. If we do not reach a settlement and WARF seeks to reduce or
terminate our rights, our ability to carry out the development and
commercialization of products based on human embryonic stem cells would be
severely affected until and unless the resulting litigation is concluded
successfully.
WE ARE AND IN THE FUTURE MAY BE SUBJECT TO LITIGATION THAT WILL BE COSTLY TO
DEFEND OR PURSUE AND UNCERTAIN IN ITS OUTCOME.
Our business may bring us into conflict with our licensees, licensors,
or others with whom we have contractual or other business relationships, or with
our competitors or others whose interests differ from ours. If we are unable to
resolve those conflicts on terms that are satisfactory to all parties, we may
become involved in litigation brought by or against us. That litigation is
likely to be expensive and may require a significant amount of management's time
and attention, at the expense of other aspects of our business. The outcome of
litigation is always uncertain, and in some cases could include judgments
against us that require us to pay damages, enjoin us from certain activities, or
otherwise affect our legal or contractual rights, which could have a significant
effect on our business.
For example, the Wisconsin Alumni Research Foundation, or WARF, has
brought a lawsuit against our company seeking a declaratory judgment concerning
our rights and WARF's obligations under a 1999 license agreement between us and
WARF. The license agreement covers the commercialization of six cell types made
from human embryonic stem cells. This lawsuit addresses our option to obtain an
exclusive license to cell types in addition to the six cell types already
licensed to us and the scope of our exclusive license to commercialize research
products based on those six cell types. We have had and expect to continue to
have discussions with WARF about settling the lawsuit. If we do not reach a
settlement, however, and our defense of the case is unsuccessful, our ability to
commercialize research products could be significantly affected.
WE MAY BE SUBJECT TO INFRINGEMENT CLAIMS THAT ARE COSTLY TO DEFEND, AND WHICH
MAY LIMIT OUR ABILITY TO USE DISPUTED TECHNOLOGIES AND PREVENT US FROM PURSUING
RESEARCH AND DEVELOPMENT OR COMMERCIALIZATION OF POTENTIAL PRODUCTS.
Our commercial success depends significantly on our ability to operate
without infringing patents and proprietary rights of others. Our technologies
may infringe the patents or proprietary rights of others. In addition, we may
become aware of discoveries and technology controlled by third parties that are
advantageous to our research programs. In the event our technologies do infringe
on the rights of others or we require the use of discoveries and technology
controlled by third parties, we may be prevented from pursuing research,
development or commercialization of potential products or may be required to
obtain licenses to these patents or other proprietary rights or develop or
obtain alternative technologies. We may not be able to obtain alternative
technologies or any required license on commercially favorable terms, if at all.
If we do not obtain the necessary licenses or alternative technologies, we may
be delayed or prevented from pursuing the development of some potential
products. Our failure to obtain alternative technologies or a license to any
technology that we may require to develop or commercialize our products will
significantly and negatively affect our business.
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Patent law relating to the scope and enforceability of claims in the
technology fields in which we operate is still evolving, and the degree of
future protection for any of our proprietary rights is highly uncertain. In this
regard, patents may not issue from any of our patent applications or our
existing patents may be found to be invalid by a court. In addition, our success
may become dependent on our ability to obtain licenses for using the patented
discoveries of others. We are aware of patent applications and patents that have
been filed by others with respect to our technologies and we may have to obtain
licenses to use these technologies. Moreover, other patent applications may be
granted priority over patent applications that we or any of our licensors have
filed. Furthermore, others may independently develop similar or alternative
technologies, duplicate our technologies or design around the patented
technologies we have developed. In the event that we are unable to acquire
licenses to critical technologies that we cannot patent ourselves, we may be
required to expend significant time and resources to develop alternative
technology, and we may not be successful in this regard. If we cannot acquire or
develop the necessary technology, we may be prevented from pursuing some of our
business objectives. Moreover, one or more of our competitors could acquire or
license the necessary technology. Any of these events could materially harm our
business.
MUCH OF THE INFORMATION AND KNOW-HOW THAT IS CRITICAL TO OUR BUSINESS IS NOT
PATENTABLE AND WE MAY NOT BE ABLE TO PREVENT OTHERS FROM OBTAINING THIS
INFORMATION AND ESTABLISHING COMPETITIVE ENTERPRISES.
We sometimes rely on trade secrets to protect our proprietary
technology, especially in circumstances in which patent protection is not
believed to be appropriate or obtainable. 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.
WE DEPEND ON OUR COLLABORATORS TO HELP US COMPLETE THE PROCESS OF DEVELOPING AND
TESTING OUR PRODUCTS AND OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS MAY
BE IMPAIRED OR DELAYED IF OUR COLLABORATIVE PARTNERSHIPS ARE UNSUCCESSFUL.
Our strategy for the development, clinical testing and commercialization
of our products requires entering 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. 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 our research 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.
Our ability to successfully develop and commercialize a telomerase
inhibitor in Asia depends on our corporate alliance with Kyowa Hakko. Our
ability to successfully develop and commercialize telomerase diagnostic products
depends on our corporate alliance with Roche
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Diagnostics. Under our collaborative agreements with these collaborators, we
rely significantly on them, among other activities, to:
- design and conduct advanced clinical trials in the event that we
reach clinical trials;
- fund research and development activities with us;
- pay us fees upon the achievement of milestones; and
- market with us any commercial products that result from our
collaborations.
The development and commercialization of products from these
collaborations will be delayed if Kyowa Hakko or Roche Diagnostics fail to
conduct these collaborative activities in a timely manner or at all. In
addition, Kyowa Hakko or Roche Diagnostics 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 Kyowa Hakko or Roche
Diagnostics or any of our future collaborators breach or terminate collaborative
agreements with us, our business may be materially harmed.
OUR RELIANCE ON THE RESEARCH ACTIVITIES OF OUR NON-EMPLOYEE SCIENTIFIC ADVISORS
AND OTHER RESEARCH INSTITUTIONS, WHOSE ACTIVITIES ARE NOT WHOLLY WITHIN OUR
CONTROL, MAY LEAD TO DELAYS IN TECHNOLOGICAL DEVELOPMENTS.
We rely extensively and have relationships with scientific advisors at
academic and other institutions, some of whom conduct research at our request.
These scientific advisors are not our employees and may have commitments to, or
consulting or advisory contracts with, other entities that may limit their
availability to us. We have limited control over the activities of these
advisors and, except as otherwise required by our collaboration and consulting
agreements, can expect only limited amounts of their time to be dedicated to our
activities. If our scientific advisors are unable or refuse to contribute to the
development of any of our potential discoveries, our ability to generate
significant advances in our technologies will be significantly harmed.
In addition, we have formed research collaborations with many academic
and other research institutions throughout the world, including the Roslin
Institute. These research facilities may have commitments to other commercial
and non-commercial entities. We have limited control over the operations of
these laboratories and can expect only limited amounts of time to be dedicated
to our research goals.
THE LOSS OF KEY PERSONNEL COULD SLOW OUR ABILITY TO CONDUCT RESEARCH AND DEVELOP
PRODUCTS.
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. Competition for personnel is intense and we may be unable to
retain our current personnel or attract or assimilate other highly qualified
management and scientific personnel in the future. 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.
We also rely on consultants and advisors, including the members of our
Scientific Advisory Board, who assist us in formulating our research and
development strategy. We face
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intense competition for qualified individuals from numerous pharmaceutical,
biopharmaceutical and biotechnology companies, as well as academic and other
research institutions. We may not be able to attract and retain these
individuals on acceptable terms. Failure to do so would materially harm our
business.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN SUFFICIENT INSURANCE ON COMMERCIALLY
REASONABLE TERMS OR WITH ADEQUATE COVERAGE AGAINST POTENTIAL LIABILITIES IN
ORDER TO PROTECT OURSELVES AGAINST PRODUCT LIABILITY CLAIMS.
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of human therapeutic and
diagnostic products. We may become subject to product liability claims if the
use of our products is alleged to have injured subjects or patients. This risk
exists for products tested in human clinical trials as well as products that are
sold commercially. We currently have no clinical trial liability insurance and
we may not be able to obtain and maintain this type of insurance for any of our
clinical trials. In addition, product liability insurance is becoming
increasingly expensive. As a result, we may not be able to obtain or maintain
product liability insurance in the future on acceptable terms or with adequate
coverage against potential liabilities which could have a material adverse
effect on us.
BECAUSE WE OR OUR COLLABORATORS MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR
PRODUCTS IN THE UNITED STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT
WHETHER OR WHEN WE WILL BE PERMITTED TO COMMERCIALIZE OUR PRODUCTS.
Federal, state and local governments in the United States and
governments in other countries have significant regulations in place that govern
many of our activities. The preclinical testing and clinical trials of the
products that we develop ourselves or that our collaborators develop are subject
to extensive government regulation and may prevent us from creating commercially
viable products from our discoveries. In addition, the sale by us or our
collaborators of any commercially viable product will be subject to government
regulation from several standpoints, including the processes of:
- manufacturing;
- advertising and promoting;
- selling and marketing;
- labeling; and
- distributing.
We may not obtain regulatory approval for the products we develop and
our collaborators may not obtain regulatory approval for the products they
develop. Regulatory approval may also entail limitations on the indicated uses
of a proposed product. Because certain of our product candidates involve the
application of new technologies and may be based upon a new therapeutic
approach, such products may be subject to substantial additional review by
various government regulatory authorities, and, as a result, we may obtain
regulatory approvals for such products more slowly than for products based upon
more conventional technologies. If, and to the extent
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that, we are unable to comply with these regulations, our ability to earn
revenues will be materially and negatively impacted.
The regulatory process, particularly for biopharmaceutical products like
ours, is uncertain, can take many years and requires the expenditure of
substantial resources. Any product that we or our collaborative partners develop
must receive all relevant regulatory agency approvals or clearances, if any,
before it may be marketed in the United States or other countries. Generally,
biological drugs and non-biological drugs are regulated more rigorously than
medical devices. In particular, human pharmaceutical therapeutic products are
subject to rigorous preclinical and clinical testing and other requirements by
the Food and Drug Administration in the United States and similar health
authorities in foreign countries. The regulatory process, which includes
extensive preclinical testing and clinical trials of each product in order to
establish its safety and efficacy, is uncertain, can take many years and
requires the expenditure of substantial resources.
Data obtained from preclinical and clinical activities is susceptible to
varying interpretations that could delay, limit or prevent regulatory agency
approvals or clearances. In addition, delays or rejections may be encountered as
a result of changes in regulatory agency policy during the period of product
development and/or the period of review of any application for regulatory agency
approval or clearance for a product. Delays in obtaining regulatory agency
approvals or clearances could:
- significantly harm the marketing of any products that we or our
collaborators develop;
- impose costly procedures upon our activities or the activities
of our collaborators;
- diminish any competitive advantages that we or our collaborative
partners may attain; or
- adversely affect our ability to receive royalties and generate
revenues and profits.
Even if we commit the necessary time and resources, economic and
otherwise, the required regulatory agency approvals or clearances may not be
obtained for any products developed by or in collaboration with us. If
regulatory agency approval or clearance for a new product is obtained, this
approval or clearance may entail limitations on the indicated uses for which it
may be marketed that could limit the potential commercial use of the product.
Furthermore, approved products and their manufacturers are subject to continual
review, and discovery of previously unknown problems with a product or its
manufacturer may result in restrictions on the product or manufacturer,
including withdrawal of the product from the market. Failure to comply with
regulatory requirements can result in severe civil and criminal penalties,
including but not limited to:
- recall or seizure of products;
- injunction against manufacture, distribution, sales and
marketing; and
- criminal prosecution.
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The imposition of any of these penalties could significantly impair our
business, financial condition and results of operations.
TO BE SUCCESSFUL, OUR PRODUCTS MUST BE ACCEPTED BY THE HEALTH CARE COMMUNITY,
WHICH CAN BE VERY SLOW TO ADOPT OR UNRECEPTIVE TO NEW TECHNOLOGIES AND PRODUCTS.
Our products and those developed by our collaborative partners, if
approved for marketing, may not achieve market acceptance since physicians,
patients or the medical community in general may decide to not accept and
utilize these products. The products that we are attempting to develop may
represent substantial departures from established treatment methods and will
compete with a number of traditional drugs and therapies manufactured and
marketed by major pharmaceutical companies. The degree of market acceptance of
any of our developed products will depend on a number of factors, including:
- our establishment and demonstration to the medical community of
the clinical efficacy and safety of our product candidates;
- our ability to create products that are superior to alternatives
currently on the market;
- our ability to establish in the medical community the potential
advantage of our treatments over alternative treatment methods;
and
- reimbursement policies of government and third-party payors.
If the health care community does not accept our products for any of the
foregoing reasons, or for any other reason, our business would be materially
harmed.
THE REIMBURSEMENT STATUS OF NEWLY-APPROVED HEALTH CARE PRODUCTS IS UNCERTAIN AND
FAILURE TO OBTAIN REIMBURSEMENT APPROVAL COULD SEVERELY LIMIT THE USE OF OUR
PRODUCTS.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products, including pharmaceuticals. 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 in product development.
In both domestic and foreign markets, sales of our products, if any,
will depend in part on the availability of reimbursement from third-party
payors, examples of which include:
- government health administration authorities;
- private health insurers;
- health maintenance organizations; and
- pharmacy benefit management companies.
Both federal and state governments in the United States and foreign
governments continue to propose and pass legislation designed to contain or
reduce the cost of health care through various means. Legislation and
regulations affecting the pricing of pharmaceuticals and other medical products
may change or be adopted before any of our potential products are
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approved for marketing. Cost control initiatives could decrease the price that
we receive for any product we may develop in the future. In addition,
third-party payors are increasingly challenging the price and cost-effectiveness
of medical products and services and any of our potential products and
treatments may ultimately not be considered cost effective by these third
parties. Any of these initiatives or developments could materially harm our
business.
OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE
MATERIALS BY OUR EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT LEGAL AND
FINANCIAL PENALTIES.
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. As a
consequence, we are subject to numerous environmental and safety laws and
regulations, including those governing laboratory procedures, exposure to
blood-borne pathogens and the handling of biohazardous materials. We may be
required to incur significant costs to comply with current or future
environmental laws and regulations and may be adversely affected by the cost of
compliance with these laws and regulations.
Although we believe that our safety procedures for using, handling,
storing and disposing of hazardous materials comply with the standards
prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated. In the event
of such an accident, state or federal authorities could curtail our use of these
materials and we could be liable for any civil damages that result, the cost of
which could be substantial. Further, any failure by us to control the use,
disposal, removal or storage of, or to adequately restrict the discharge of, or
assist in the cleanup of, hazardous chemicals or hazardous, infectious or toxic
substances could subject us to significant liabilities, including joint and
several liability under certain statutes, and any liability could exceed our
resources and could have a material adverse effect on our business, financial
condition and results of operations. Additionally, an accident could damage our
research and manufacturing facilities and operations.
Additional federal, state and local laws and regulations affecting us
may be adopted in the future. We may incur substantial costs to comply with and
substantial fines or penalties if we violate any of these laws or regulations.
OUR STOCK PRICE HAS HISTORICALLY BEEN VERY VOLATILE.
Stock prices and trading volumes for many biopharmaceutical companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations such as media coverage,
legislation and regulatory measures and the activities of various interest
groups or organizations. This market volatility, as well as general domestic or
international economic, market and political conditions, could materially and
adversely affect the market price of our common stock and the return on your
investment.
Historically, our stock price has been extremely volatile. Between
January 1998 and September 30, 2001, our stock has traded as high as $75.88 per
share and as low as $3.50 per share. The significant market price fluctuations
of our common stock are due to a variety of factors, including:
- depth of the market for the common stock;
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- the experimental nature of our prospective products;
- fluctuations in our operating results;
- market conditions relating to the biopharmaceutical and
pharmaceutical industries;
- any announcements of technological innovations, new commercial
products or clinical progress or lack thereof by us, our
collaborative partners or our competitors; or
- announcements concerning regulatory developments, developments
with respect to proprietary rights and our collaborations.
In addition, the stock market is subject to other factors outside our
control that can cause extreme price and volume fluctuations. Securities class
action litigation has often been brought against companies, including many
biotechnology companies, which then 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.
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES, INCLUDING SHARES THAT WILL BECOME
ELIGIBLE FOR SALE IN THE NEAR FUTURE, MAY ADVERSELY AFFECT THE MARKET PRICE FOR
OUR COMMON STOCK.
Sales of substantial number of shares of our common stock in the public
market could significantly and negatively affect the market price for our common
stock. As of September 30, 2001, we had approximately 22,024,257 shares of
common stock outstanding. Of these shares, approximately 10,529,534 shares were
issued (including shares issuable upon conversion or exercise of convertible
notes or warrants) since December 1998 pursuant to private placements. Of these
shares, approximately 9,623,463 shares have been registered pursuant to shelf
registration statements and therefore may be resold (if not sold prior to the
date hereof) in the public market and approximately 906,071 of the remaining
shares may be resold pursuant to Rule 144 into the public markets as early as
March 9, 2002 upon the expiration of a lockup agreement with us.
OUR UNDESIGNATED PREFERRED STOCK MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS
MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND THE VOTING RIGHTS
OF THE HOLDERS OF COMMON STOCK.
Our certificate of incorporation provides our Board of Directors with
the authority to issue up to 3,000,000 shares of undesignated preferred stock
and to determine the rights, preferences, privileges and restrictions of these
shares without further vote or action by the stockholders. As of the date of
this Form S-3, the Board of Directors still has authority to designate and issue
up to 2,950,000 shares of preferred stock. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
shares of preferred stock may delay or prevent a change in control transaction
without further action by our stockholders. As a result, the market price of our
common stock may be adversely affected. The issuance of preferred stock may also
result in the loss of voting control by others.
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PROVISIONS IN OUR SHARE PURCHASE RIGHTS PLAN, CHARTER AND BYLAWS, AND PROVISIONS
OF DELAWARE LAW, MAY INHIBIT POTENTIAL ACQUISITION BIDS FOR US, WHICH MAY
PREVENT HOLDERS OF OUR COMMON STOCK FROM BENEFITING FROM WHAT THEY BELIEVE MAY
BE THE POSITIVE ASPECTS OF ACQUISITIONS AND TAKEOVERS.
Our Board of Directors has adopted a share purchase rights plan,
commonly referred to as a "poison pill". This plan entitles existing
stockholders to rights, including the right to purchase shares of common stock,
in the event of an acquisition of 15% or more of our outstanding common stock.
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 Geron 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, to fix the rights and preferences of,
and to issue authorized but undesignated shares 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:
- prevent stockholders from taking actions by written consent;
- divide the Board of Directors into separate classes with terms
of office that are structured to prevent all of the directors
from being elected in any one year; and
- set forth procedures for nominating directors and submitting
proposals for consideration at stockholders' meetings.
Provisions of Delaware law may also inhibit potential acquisition bids
for us or prevent us from engaging in business combinations. 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.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. The risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room located at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. You may also inspect copies of these
materials and other information about us at the offices of the Nasdaq Stock
Market, Inc., National Market System, 1735 K Street, N.W., Washington, D.C.
20006-1500.
The SEC allows us to "incorporate by reference" the information we file
with them, which means we can disclose important information by referring you to
those documents instead of having to repeat the information in this prospectus.
The information incorporated by reference is considered to be part of this
prospectus, and later information that we file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until the selling
stockholder sells all the shares:
Our Annual Report on Form 10-K for the fiscal year ended December 31,
2000;
Our definitive proxy statement filed pursuant to Section 14 of the
Exchange Act in connection with our 2001 Annual Meeting of Stockholders;
Our current reports on Form 8-K, filed July 23, 2001, August 22, 2001,
November 5, 2001 and November 14, 2001;
Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2001, June 30, 2001 and September 30, 2001; and
The description of our common stock set forth in our registration
statement on Form 8-A, filed with the SEC on June 13, 1996 (File No. 0-20859).
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act. This prospectus supplement and the accompanying prospectus
do not contain all of the information in the registration statement. We have
omitted certain parts of the registration statement from the prospectus, as
permitted by the rules and regulations of the SEC. You may inspect and copy the
registration statement, including exhibits, at the SEC's public reference room
or internet site. Our statements in this prospectus about the contents of any
contract or other document are not necessarily complete. You should refer to the
copy of each contract or other document we have filed as an exhibit to the
registration statement for complete information.
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, including
exhibits to these documents. You should direct any requests for documents to
David L. Greenwood, Chief Financial Officer, Geron Corporation, 230 Constitution
Drive, Menlo Park, California 94025, telephone: (650) 473-7700.
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SELLING STOCKHOLDER
The following table sets forth the name of the selling stockholder, the
number of shares of common stock owned beneficially by the selling stockholder
as of November 9, 2001, the number of shares which may be offered pursuant to
this prospectus and the number of shares to be owned by the selling stockholder
after this offering. This information is based upon information provided by the
selling stockholder. Because the selling stockholder may offer all, some or none
of its common stock, no definitive estimate as to the number of shares thereof
that will be held by the selling stockholder after the offering can be provided.
To our knowledge, the stockholder named in the table has sole voting and
investment power with respect to all shares of common stock beneficially owned.
Percent of beneficial ownership is calculated assuming the sale of all shares
offered and 22,024,257 shares of common stock outstanding as of September 30,
2001.
The number of shares set forth in the table represents an estimate of
the number of shares of common stock to be offered by the selling stockholder.
The selling stockholder will acquire, or has acquired, such shares upon
conversion of the Series D debentures and exercise of the Series D warrants. The
actual number of shares of common stock potentially issuable upon conversion of
debentures and exercise of warrants is indeterminate, is subject to adjustment
and could be materially less or more than such estimated number depending on
factors which are not known at this time. The actual number of shares of common
stock offered hereby, and included in the registration statement of which this
prospectus is a part, includes such additional number of shares of common stock
as may be issued or issuable upon conversion of the debentures and exercise of
the warrants by reason of any stock split, stock dividend or similar
transaction, in accordance with Rule 416 under the Securities Act.
This prospectus covers the sale of 2,666,062 of the shares that we
expect to be issuable to the selling stockholder based on the current conversion
and exercise prices. This table assumes no price adjustment to the conversion
price of the debentures or exercise price of the warrants. The selling
stockholder may sell all, some or none of the shares that it may acquire upon
its exercise of the Series D warrants or conversion of the Series D debentures.
The terms of the Series D debentures and the Series D warrants provide
that the debentures are convertible and the warrants are exercisable by a holder
only to the extent that the number of shares of common stock issuable upon such
conversion or exercise, together with the number of shares of common stock
beneficially owned by that holder and its affiliates, determined in accordance
with Section 13(d) of the Exchange Act, would not exceed 9.9% of our
then-outstanding common stock. Accordingly, the number of shares of common stock
set forth in the table as beneficially owned by the selling stockholder exceeds
the number of shares of common stock that it could own beneficially at any given
time as a result of its ownership of the debentures and warrants. In that
regard, beneficial ownership of the selling stockholder set forth in the table
is not determined in accordance with Rule 13d-3 under the Exchange Act.
The number of shares beneficially owned prior to this offering includes
(i) 635,516 shares issued upon conversion of Series C debentures, which have
been registered for sale by the selling stockholder under another prospectus,
(ii) 1,011,122 shares issued upon conversion of Series D debentures, which have
been registered for sale by the selling stockholder under this prospectus
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and (iii) 1,584,836 shares currently issuable upon conversion of Series D
debentures and exercise of the Series D warrants.
SHARES OWNED AFTER OFFERING
SHARES BENEFICIALLY SHARES ----------------------------
SELLING STOCKHOLDER OWNED PRIOR TO OFFERING BEING OFFERED NUMBER PERCENTAGE
------------------- ----------------------- ------------- ------ ----------
RGC International 3,231,474 2,666,062 635,516 2.5%
Investors, LDC
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