Geron signs tentative deal with BioTime on stem cell assets

A year after announcing its decision to exit stem cell therapy, the USA’s Geron Corp (Nasdaq: GERN) has entered into a non-binding letter of intent (LOI) with BioTime (NYSE: BTX) and its subsidiary, BioTime Acquisition Corp (BAC), regarding the stem cell program. The news pushed Geron’s share up 3.3% to $1.25 by close of trading on Friday.

The LOI contains broad terms of a potential transaction through which Geron would contribute to BAC its intellectual property and other assets related to Geron's discontinued human embryonic stem cell programs. BioTime would contribute to BAC $5 million in cash, $30 million of BioTime common shares, warrants to purchase 8 million shares of BioTime at a pre-specified price, rights to use certain human embryonic stem cell lines, and minority stakes in two of BioTime's subsidiaries.

Following consummation of the potential transaction, Geron stockholders would receive shares representing 21.4% of the common stock of BAC as well as warrants to purchase 8 million shares of BioTime common stock at a pre-specified price. BioTime would own around 71.6%, and a private investor would own about 7.0% of the outstanding BAC common stock for an additional $5 million investment. BioTime would also receive warrants that would enable it to increase its ownership in BAC by approximately 2%, which would dilute the Geron stockholders' ownership in BAC to 19.2%. BAC would also be committed to pay to Geron royalties on the sale of products that are commercialized in reliance upon Geron patents acquired by BAC.