Geron shares recover after drop on study delay

The stock rose 3 cents to close at $3.97, after earlier rising as high as $4.49. On Wednesday, shares fell nearly 20 percent to close at $3.94 after hitting a 52-week low of $3.76.

The FDA told the company it needs more time to review the clinical trial plans for GRNOPC1, a stem-cell based therapy candidate for spinal cord injuries. Geron does not yet know the reason for the delay and is awaiting the FDA's explanation.

"Once we have the letter and have had a discussion with the agency, we will communicate our finding and our thinking to shareholders," said Thomas Okarma, Geron's president and chief executive, in a statement.

Lazard Capital Markets analyst Joel Sendek voiced concern over the FDA's move, saying the clinical hold was unexpected.

"We expected the FDA to take longer than the allotted 30 days to review the large quantity of data within the IND (application), especially with the committee's inexperience in reviewing a stem cell-related IND and other potential regulatory hurdles, but we did not anticipate the clinical hold," he said, in a note to investors.

Sendek reaffirmed a "Hold" rating and said his outlook for the beginning of the study in mid-2008 now seems aggressive. Still, once the study plan is approved, the company is ready to move forward.

The FDA is still grappling with how clinical trials involving stem cell-based therapies should be monitored. It held a meeting with expert advisers in April to address the issue, but no decision on additional requirements have been made. One of the key goals of stem cell-based therapy is to use a young cell, with potential for developing into any form of tissue, in order to regenerate healthy tissue.

Menlo Park, Calif.-based Geron is one of several companies preparing to move stem-cell therapies into development, along with others already conducting early-stage studies. Palo Alto, Calif.-based StemCells Inc. is in the early stages of development for its treatment of Batten's disease, a rare neurodegenerative condition. Columbia, Md.-based Osiris Therapeutics Inc. is working on the stem cell treatment Prochymal as a possible way to prevent the rejection of transplanted bone marrow and to treat the digestive tract condition called Crohn's disease.

Large drug developers including Genzyme Corp. and Merck & Co. have already invested in smaller companies working on the technology. Other companies working on stem cell-based therapies include San Diego-based Cytori Therapeutics Inc.