Patent News Sends Geron Stock Up 15%

Shares in Geron Corp. rose nearly 15% on Tuesday after the small biotech company said it received a patent that could give it an advantage in the race to produce medicines from human embryonic stem cells.

The Menlo Park-based firm’s shares closed at $7.98, up $1.02, on Nasdaq, after hitting a 52-week high of $9.75 earlier in the day.

Embryonic stem cells are formed in the earliest weeks of pregnancy and are capable of turning into any of the 300 cell types in the body. Geron and its competitors are working to turn embryonic stem cells into nerve, heart and blood cells to cure diseases.

Analysts say the stem cell companies are many years from producing therapies from the cells, and the work is controversial because the cells must be harvested from embryos.

Many of the companies also have had financial difficulty. Geron, which does not have any drugs approved for sale, reduced its workforce to 50 people from 112 in 2001 through a series of layoffs and discontinued some projects.

The fear among researchers is that some embryonic stem cells will grow into unwanted cell types or become cancerous.

Geron said its new patent allows it to purify a batch of stem cells to separate useful cells from potentially harmful ones. The company said the patent covers a method of inserting a “suicide gene” into a cell that becomes activated only when the cell does not develop properly.

Patent attorney Stephen B. Maebius of Foley & Larder said the Geron patent was broadly applicable to human embryonic stem cells, but its commercial value was difficult to assess.

“It is important to eliminate undifferentiated stem cells, but I am not aware of the underlying need for the technology,” he said.

Geron Chief Executive Thomas B. Okarma, in a statement, called the method “a backup safety technology.”

The company may not need the technology because it is becoming proficient at producing batches of purified stem cells, David J. Earp, vice president of intellectual property, said in an interview.

However, many in the field think the Food and Drug Administration might insist on a purification step because the risks are so high.

“You may be able to get 99.999% purity, but it only takes one cell to cause a problem,” said Robert Lanza, vice president of rival Advanced Cell Technology Inc. of Worcester, Mass.

Lanza said Geron’s technique was “very clever” and helpful because it would help move the field forward. But there are other potential ways to purify batches of embryonic stem cells, he said.

Geron has no plans to license its patent to competitors, Earp said.

“Is it conceivable there are other methods? Yes,” he said. But if a purification step becomes necessary, “we believe this could give us quite an advantage.”