Geron, Merck Sign Cancer Vaccine Deal

Biotech company Geron Corp. said Monday that it had signed a licensing deal with drug maker Merck & Co. to develop a cancer vaccine that targets an enzyme linked to tumor growth, sending Geron shares up 27%.

Under the terms of the agreement, Geron will receive an upfront payment, milestone payments upon achievement of certain development and regulatory events, and royalties. Specific terms were not disclosed.

Merck has a long history of making conventional vaccines, which prevent infection by viruses and bacteria. Cancer vaccines, by contrast, work by stimulating the immune system to attack tumor cells that are already present in the body.

The Geron vaccine targets telomerase, an enzyme that Geron said was active in most cancer cells and that allows them to grow and multiply over long periods.

“Telomerase is always found in tumor cells, so this is one of the most compelling targets against cancer,” said Steve Brozak, an analyst with WBB Securities in Westfield, N.J.

Merck, which is based in Whitehouse Station, N.J., and is one of the largest U.S. drug makers, also agreed to buy equity in tiny Geron at a future date as part of Geron’s next round of financing. Additional terms were not disclosed.

Merck also acquired the option to negotiate a separate deal for Geron’s dendritic cell-based telomerase vaccine. That vaccine is already in early-stage human trials. Dendritic cells are immune-system cells responsible for detecting and attacking foreign matter.

Geron, which is based in Menlo Park, Calif., will receive a payment from Merck in consideration for the option. The structure and terms of an agreement for the dendritic cell vaccine will be negotiated should Merck exercise its rights under the option.

Tumor cells are often overlooked by the immune system because they are not recognized as foreign. But cancer vaccines, by including specific proteins found in and on the surface of tumor cells, prod the immune system to go after the tumors they might otherwise ignore.

Shares of Geron closed up $2.29 at $10.89.