Now concentrates on the clinical development of imetelstat
On 4/25/13, the BOD of Geron will discontinue its R&D and companion diagnostics programs and close its research laboratory facility located in Menlo Park, Cal. GERN will now concentrate its resources on the clinical development of imetelstat, its telomerase inhibitor, in hematologic myeloid malignancies, including myelofibrosis. In connection with this strategic focus, GERN will no longer be pursuing further development of imetelstat in solid tumors with short telomeres or essential thrombocythemia.
GERN restructures to reduce its workforce from 64 positions to 44 full-time positions, representing a reduction of approximately 31% of the workforce. GERN expects the majority of the reduction in its workforce to be completed by the end of Q2/13.
In connection with the foregoing changes to the business, GERN anticipates it will incur aggregate restructuring charges of approximately $1.9 M, of which $1.3 M will be paid in cash during 2013. The aggregate projected restructuring charges consist of approximately $640 K related to 1 X <time> termination benefits, comprised principally of severance, benefit continuation costs, outplacement services and non-cash stock-based compensation expense associated with the elimination of 20 positions; and approximately $650 K for facility-related charges and approximately $570 K for non-cash charges related to write-downs of laboratory equipment and leasehold improvements in connection with the discontinuation of GERN's discovery research and companion diagnostics programs and the closure of its research laboratory facility. The majority of these charges are expected to be recognized in Q2/13. GERN may incur other charges and will record these expenses in the appropriate period as they are determined. GERN plans to sell any excess equipment, the net proceeds of which, if any, may offset some of these future charges.
The Bottom Line: Nobody wants to kick a dead horse but get the fork lift to move the R&D legacy out of the stable! Restructuring charges to be incurred will negatively affect their cash expenditures and actual results may differ materially from those originally anticipated. But, is saving R&D dollars by the retrenchment and switching tracks to let their telomerase inhibitor thoroughbred breakaway!
GERN closed at $1.117 and is down $0.02 to $1.12 on volume of only 36.1 K, so far … expect more attrition to this event as it settles around $1.10. SELL on news event, until it settles!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.