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United States
Securities and Exchange Commission
Washington D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period Ended September 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From _______ to ________.
Commission File Number: 0-20859
GERON CORPORATION
Delaware 75-2287752
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
230 Constitution Drive, Menlo Park, CA 94025
(Address of principal executive offices)
Registrant's telephone number, including area code: (650) 473-7700
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $0.001 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Outstanding at
Common Stock $0.001 par value November 6, 1997: 10,773,845
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GERON CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
Condensed Balance Sheets as of September 30, 1997 and
December 31, 1996
Condensed Statements of Operations for the three and nine
months ended September 30, 1997 and 1996
Condensed Statements of Cash Flows for the nine months
ended September 30, 1997 and 1996
Notes to Financial Statements
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
Item 2: Changes In Securities
Item 3: Defaults upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
SIGNATURES
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GERON CORPORATION
CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,908 $ 12,357
Short-term investments 19,127 11,912
Other current assets 1,258 752
------- ---------
Total current assets 25,293 25,021
Property and equipment, net 2,540 2,968
Notes receivable from officers 341 624
Deposits and other assets 172 175
------- ---------
$28,346 $ 28,788
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 503 $ 794
Accrued compensation 385 790
Accrued liabilities 679 790
Deferred revenue 1,950 --
Current portion of capital lease obligations and
equipment loans 1,127 1,179
------- ---------
Total current liabilities 4,644 3,553
Noncurrent portion of capital lease obligations and
equipment loans 1,331 1,644
Stockholders' equity:
Common stock 11 10
Additional paid-in-capital 67,778 61,174
Notes receivable from stockholders -- (119)
Deferred compensation (786) (1,003)
Accumulated deficit (44,632) (36,471)
------- ---------
Total stockholders' equity 22,371 23,591
------- ---------
$28,346 $ 28,788
======= =========
</TABLE>
See accompanying notes.
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GERON CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1997 1996 1997 1996
------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues from collaborative agreements
with related parties $ 2,225 $ 1,511 $ 4,450 $ 4,373
License fees and royalties 14 3 63 53
------- -------- ------- -------
Total revenues 2,239 1,514 4,513 4,426
Operating expenses:
Research and development 3,734 3,756 11,319 10,461
General and administrative 818 808 2,401 2,345
------- -------- ------- -------
Total operating expenses 4,552 4,564 13,720 12,806
------- -------- ------- -------
Loss from operations (2,313) (3,050) (9,207) (8,380)
Interest and other income 452 483 1,336 1,116
Interest and other expense (98) (94) (299) (291)
------- -------- ------- -------
Net loss $(1,959) $ (2,661) $(8,170) $(7,555)
======= ======== ======= =======
Net loss per share: $ (0.18) $ (0.38) $ (0.78) $ (2.19)
======= ======== ======= ========
Shares used in calculation of
net loss per share: 10,711,391 7,046,618 10,475,524 3,446,358
========== ========= ========== =========
</TABLE>
See accompanying notes.
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GERON CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(8,170) $(7,555)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 968 688
Issuance of common and preferred stock in exchange
for services rendered 130 22
Deferred compensation 217 217
Changes in assets and liabilities:
Other current assets (506) (606)
Notes receivable from officers 283 145
Deposits and other assets 3 248
Accounts payable (291) 43
Accrued compensation (405) 67
Accrued liabilities (29) 506
Deferred revenue 1,950 (473)
------- --------
Net cash used in operating activities (5,850) (6,698)
Cash flows from investing activities:
Capital expenditures (540) (321)
Purchases of securities available-for-sale (21,044) (15,623)
Proceeds from maturities of securities
available-for-sale 13,838 7,700
------- -------
Net cash used in investing activities (7,746) (8,244)
Cash flows from financing activities:
Proceeds from equipment loans 498 313
Payments of obligations under capital leases and
equipment loans (863) (747)
Proceeds from issuance of common and preferred stock 6,512 19,843
------- -------
Net cash provided by financing activities 6,147 19,409
------- -------
Net decrease in cash and cash equivalents (7,449) 4,467
Cash and cash equivalents at the beginning of the period 12,357 12,542
------- -------
Cash and cash equivalents at the end of the period $ 4,908 $17,009
======= =======
</TABLE>
See accompanying notes.
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GERON CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed unaudited balance sheet as of September 30, 1997
and condensed statements of operations for the three and nine month periods
ended September 30, 1997 and 1996 of Geron Corporation ("Geron" or "the
Company") have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. These financial statements should be read in conjunction
with the financial statements for the year ended December 31, 1996, included
in the Company's Annual Report on Form 10-K. Unless otherwise indicated, all
information herein has been restated to reflect the Company's 1-for-3.4
reverse stock split effected in July 1996 and the conversion of all
outstanding Preferred Stock into Common Stock as of the closing of the
Company's initial public offering in August 1996.
Net Loss Per Share
Except as noted below, net loss per share is computed using the weighted
average number of shares of common stock outstanding. Common equivalent
shares from stock options and warrants are excluded from the computation as
their effect is antidilutive, except that, pursuant to the Securities and
Exchange Commission Staff Accounting Bulletins, common and common equivalent
shares issued at prices substantially below the public offering price during
the 12-month period prior to the initial filing of the initial public
offering have been included in the calculation as if they were outstanding
for all periods through July 30, 1996 (using the treasury stock method and
the initial public offering price of $8.00 per share).
The effect of common shares issued upon conversion of preferred stock is
included in the loss per share calculation for all periods subsequent to the
date of conversion. The following supplemental per share data is provided to
show the calculation on a consistent basis for all periods presented. It has
been computed as described above, including the retroactive effect from the
date of issuance to the conversion of convertible preferred stock which
automatically converted to common shares upon closing of the Company's
initial public offering.
Supplemental Net Loss Per Share Information
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Supplemental net loss per share $ (0.18) $ (0.29) $ (0.78) $ (0.96)
Shares used in computing
supplemental net loss per share 10,711,391 9,133,370 10,475,524 7,869,349
</TABLE>
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2. CHANGE IN METHOD OF ACCOUNTING FOR EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which is required to be adopted on December
31, 1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating earnings per share, the
dilutive effect of stock options will be excluded. There is expected to be no
impact on the net loss per share of the Company for the quarters ended
September 30, 1997 and 1996 as common equivalent shares from stock options
are already excluded from the Company's calculation as their effect is
antidilutive.
3. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The Company
places its cash and cash equivalents in interest-bearing money market funds,
commercial paper, corporate master notes, and repurchase agreements with
United States financial institutions. As of September 30, 1997, the Company's
short-term investments consisted primarily of corporate notes with maturities
ranging from 3 to 12 months.
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GERON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion contains certain forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from the results anticipated in these forward-looking statements as a
result of certain factors set forth under the heading "Risk Factors" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and in the section of this Item 2 titled "Additional Factors That May Affect
Future Results."
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I, Item 1 of this
Quarterly Report and with Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
Geron is a biopharmaceutical company focused on discovering and developing
therapeutic and diagnostic products based upon the common biological mechanisms
underlying cancer and other age-related diseases.
In July 1997, the Company announced the issuance of three U.S. patents relating
to the Company's telomerase therapeutic and diagnostic development programs. The
first patent relates to Geron's proprietary telomerase inhibitor screening assay
in which a test agent is incubated with telomerase, and a probe is used to
detect telomerase products. The second patent relates to Geron's novel assay for
telomerase activity, called Telomeric Repeat Amplification Protocol (TRAP) and
related assays. The third patent claims cancer prognostic methods in which the
level of telomerase activity in a cancer cell is correlated with the severity
and outcome of the disease.
The Company has entered into and intends to continue to enter into research
agreements selectively with leading academic and research institutions to
enhance its research and development activities. In July 1997, the Company
signed an agreement with Synteni, Inc. to utilize Synteni's Gene Expression
Micro-Array (GEM(TM)) technology in Geron's drug discovery programs targeting
age-related disorders. GEMs will be used to identify gene expression patterns in
a number of clinically relevant populations of senescent cells.
In August 1997, the Company signed licensing and sponsored research agreements
with The Johns Hopkins University School of Medicine and John D. Gearhart, M.D.,
Ph.D., Professor of Gynecology and Obstetrics to collaborate in the
identification and isolation of human primordial stem cells.
In August 1997, Company scientists with Dr. Thomas Cech at University of
Colorado announced the cloning of the human telomerase catalytic protein. This
gene is believed to play a key role in the regulation of cell lifespan
functioning with chromosome telomere as a molecular clock of cell aging, its
absence imparting mortality in normal somatic cells, its presence conveying
replicative immortality to cancer cells. The Company intends to use this
technology in drug screening for telomerase inhibitors, as a cancer diagnostic
marker and in its telomerase expression/activation program to extend cell
lifespan.
In September 1997, the Company announced the receipt of a Phase II Small
Business Innovative Research (SBIR) grant to support the development of
telomerase-based cancer diagnostic products. The two year $750,000 grant is
funded by the National Institutes of Health.
The Company's results of operations have fluctuated from period to period and
may continue to fluctuate in the future based upon the timing and composition of
funding under various collaborative agreements, as well as the progress of its
research and development efforts. Results of operations for any period may be
unrelated to results of operations for any other period. In addition, historical
results should not be viewed as indicative of future operating results. Geron is
subject to risks common to companies in its industry and at its stage of
development, including risks inherent in its research and development efforts,
reliance upon collaborative partners, enforcement of patent and proprietary
rights, need for future capital, potential competition and uncertainty of
regulatory approvals or clearances. In order for a therapeutic product to be
commercialized based on the Company's research, it will be
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necessary for Geron and its collaborators to conduct preclinical tests and
clinical trials, demonstrate efficacy and safety of the Company's product
candidates, obtain regulatory approvals or clearances and enter into
manufacturing, distribution and marketing arrangements, as well as obtain market
acceptance. The Company does not expect to receive revenues or royalties based
on therapeutic products for a period of years. See "Additional Factors That May
Affect Future Results."
RESULTS OF OPERATIONS
REVENUES
Contract revenues from collaborative agreements with related parties were $2.2
million and $4.5 million for the three and nine months ended September 30, 1997,
respectively, compared to $1.5 million and $4.4 million for the comparable
periods in 1996. The Company recognizes revenue as related research and
development costs are incurred under the collaborative agreements. The Company
signed a collaborative agreement with Pharmacia & Upjohn in March 1997 and
received research funding of $1.25 million from Pharmacia & Upjohn in April,
July and October 1997. The Company also recognized $975,000 and $2.0 million in
contract revenues from Kyowa Hakko during the three and nine month period in
1997. Contract revenues in 1996 were solely research support payments under the
Company's collaborative agreement with Kyowa Hakko and all of the funding
received from Kyowa Hakko in 1996 was recognized as contract revenue during
1996.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses were $3.7 million and $11.3 million for the
three and nine months ended September 30, 1997, respectively, compared to $3.8
million and $10.5 million for the comparable periods in 1996. The overall
increase in the nine month period was primarily due to expanded patent related
activities and an increase in support of key outside collaborators. The Company
expects research and development expenses to increase in the future as a result
of continued development of its research programs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $818,000 and $2.4 million for the three
and nine months ended September 30, 1997, respectively, compared to $808,000 and
$2.3 million for the comparable periods in 1996. The increases in expenses were
primarily due to higher legal, travel, and other expenses related to business
development and other costs of being a public company.
INTEREST AND OTHER INCOME
Interest income was $385,000 and $1.1 million for the three and nine months
ended September 30, 1997, respectively, compared to $361,000 and $888,000 for
the comparable periods in 1996. The increase was due to higher average cash and
investment balances as a result of the sale of equity to Pharmacia & Upjohn,
completion of the Company's initial public offering and research funding
received under collaborative agreements with Kyowa Hakko and Pharmacia & Upjohn.
Interest earned in the future will depend on the Company's funding cycles and
prevailing interest rates. The Company also received $67,000 and $278,000 in
research payments under government grants for the three and nine months ended
September 30, 1997, respectively, compared to $122,000 and $228,000 for the
comparable periods in 1996. The Company does not expect income from government
grants to be significant in the foreseeable future.
INTEREST AND OTHER EXPENSE
Interest and other expenses were $98,000 and $299,000 for the three and nine
months ended September 30, 1997, respectively, compared to $94,000 and $291,000
for the comparable periods in 1996. The increase for the quarter was primarily
due to overall lower outstanding lease balances during the quarter.
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NET LOSS
Net loss was $2.0 million and $8.2 million for the three and nine months ended
September 30, 1997, respectively, compared to $2.7 million and $7.6 million for
the comparable periods in 1996. The decrease in net loss for the quarter was a
result of greater revenue recognition in the current quarter from increased
research support payments from collaborative agreements which more than offset
an increase in operating expenses. The increase in net loss for the nine month
period was primarily the result of higher operating expenses in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments at September 30, 1997 were
$24.0 million compared to $24.3 million at December 31, 1996. The balances in
cash, cash equivalents and short-term investments were consistent primarily due
to the sale of equity to Pharmacia & Upjohn and the receipt of contract research
funding from Kyowa Hakko and Pharmacia & Upjohn which offset the increase in
operating expenses in 1997. It is the Company's policy to invest these funds in
liquid, investment-grade securities, such as interest-bearing money market
funds, corporate master notes, commercial paper, repurchase agreements with
United States financial institutions and federal agency notes.
Net cash used in operations was $5.9 million for the nine months ended September
30, 1997 compared to $6.7 million for the comparable period in 1996. The
decrease is due to an increase in deferred revenue which offset the increase in
net loss for the nine months ended September 30, 1997. Deferred revenue
increased as a result of additional research funding received from Pharmacia &
Upjohn during the second and third quarters of 1997.
For the nine months ended September 30, 1997, additions of equipment and
leasehold improvements totaled approximately $540,000 of which approximately
$498,000 were financed through equipment financing arrangements. At September
30, 1997, the Company had approximately $764,000 available for borrowing under
its current equipment financing facility.
The Company estimates that its existing capital resources, payments under the
Pharmacia & Upjohn and Kyowa Hakko Agreements, interest income, grant funding
and equipment financing will be sufficient to fund its current and planned
operations through 1998. There can be no assurance, however, that changes in the
Company's research and development plans or other changes affecting the
Company's operating expenses will not result in the expenditure of available
resources before such time, and in any event, the Company will need to raise
substantial additional capital to fund its operations in future periods. The
Company intends to seek additional funding through collaborative arrangements,
public or private equity financings, capital lease transactions or other
financing sources that may be available.
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ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Specifically, the Company
wishes to alert readers that, except for the historical information contained
herein, the matters discussed in this report constitute forward-looking
statements that are dependent on certain risks and uncertainties. These and
other factors that may cause actual results to differ materially from those
expressed in any forward-looking statements made by or on behalf of the Company
are described below.
TECHNOLOGICAL UNCERTAINTY
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, is a relatively new area of research,
and there can be no assurance that this research will lead to the discovery or
development of any therapeutic or diagnostic product. If and when potential lead
drug compounds or product candidates are identified through the Company's
research programs, they will require significant preclinical and clinical
testing prior to regulatory approval in the United States and elsewhere, and
there can be no assurance that any of these efforts will result in a product
that can be marketed. Because of the significant additional scientific,
regulatory and commercial milestones that must be reached for the Company's
research programs to be successful, there can be no assurance that any program
will not be abandoned after significant resources have been expended. The
abandonment of any research program could have a material adverse effect on the
Company.
As a result of its drug discovery efforts to date, the Company has identified
compounds in in vitro studies that demonstrate potential for inhibiting
telomerase in vivo. However, additional development efforts will be required
prior to the selection of a lead compound for preclinical development and
clinical trials as a telomerase inhibitor for cancer. If and when selected, a
lead compound may prove to have undesirable and unintended side effects or other
characteristics affecting its efficacy or safety that may prevent or limit its
commercial use. For example, telomerase is active in reproductive cells and
transiently expressed in certain hematopoietic (blood) and gastrointestinal
cells. There can be no assurance that any product based on the inhibition of
telomerase will not adversely affect such cells and result in unacceptable side
effects. In addition, it is expected that telomerase inhibition will have
delayed efficacy as telomeres resume normal shortening and, as a result, will in
most cases, be used in conjunction with other cancer therapies. There can be no
assurance that the delayed efficacy of a telomerase inhibitor will not have a
material adverse effect on the preclinical and clinical development, ability to
obtain regulatory approval or marketability of a telomerase inhibitor for the
treatment of cancer. The abandonment of the Telomerase Inhibition and Detection
program would have a material adverse effect on the Company.
With respect to the development and commercial application of the Company's
proprietary telomerase detection technology, there is, as yet, insufficient
clinical data to confirm its full utility to diagnose, prognose, monitor patient
status and screen for cancer. Although the Company's licensees, Oncor,
Pharmingen, Boehringer Mannheim and Kyowa Medex have commenced the sale of
diagnostic kits for research use, additional development work and regulatory
consents will be necessary prior to the introduction of tests for clinical use.
With respect to the Company's Genomics of Aging program, the Company has
identified certain genes that are expressed differentially in senescent cells
versus replicatively young cells. However, the Company has not identified any
lead compounds that have been demonstrated to modulate such gene expression, and
there can be no assurance that any such lead compound will be discovered or
developed. The part of the Company's Genomics of Aging program that is designed
to modulate telomere length is at an early stage of development. While telomere
length and replicative capacity have been extended in vitro, there can be no
assurance that the Company will discover a compound that will modulate telomere
length or increase replicative capacity effectively for clinical use. The
Company's Primordial Stem Cell program is also at an early stage. While primate
Primordial Stem ("PS") cells have been isolated and allowed to expand and
differentiate into numerous cell types, there can be no assurance that the
Company's efforts to isolate the human primordial stem cell and develop products
therefrom will result in any commercial applications.
The Company may become aware of technology controlled by third parties that is
advantageous to the Company's programs. There can be no assurance that the
Company will be able to acquire or license such technology on reasonable terms,
if at all. In the event that the Company is unable to acquire such technology,
the Company may be
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required to expend significant time and resources to develop similar technology,
and there can be no assurance that it will be successful in this regard. If the
Company cannot acquire or develop necessary technology, it may be prevented from
pursuing certain business objectives. Moreover, a competitor of the Company
could acquire or license such technology. Any such event could have a material
adverse effect on the Company.
EARLY STAGE OF DEVELOPMENT
Geron is at an early stage in the development of therapeutic and diagnostic
products. The Company has not yet selected a lead compound for any of its drug
development programs. In order to identify and select such a compound, it must
have access to sufficient numbers of chemical compounds and resources, of which
there can be no assurance. Products that may result from the Company's research
and development programs are not expected to be commercially available for a
number of years, if at all. The Company's program to identify a telomerase
inhibitor is currently at the drug discovery stage, while the Company's other
programs are currently focused on research efforts prior to drug discovery or
preclinical development. It is difficult to predict when, if ever, the Company
will select a lead compound for drug development as a telomerase inhibitor. In
addition, there can be no assurance that the Company's other programs will move
beyond their current stage. Assuming the Company's research advances and the
Company is able to identify and select a lead compound for telomerase
inhibition, certain preclinical development efforts will be necessary to
determine whether the potential product has sufficient safety to enter clinical
trials. If such a potential product receives authorization from the United
States Food and Drug Administration ("FDA") to enter clinical trials, then it
will most likely be subjected to a multiphase, multicenter clinical study to
determine its safety and efficacy. It is not possible to predict the length or
extent of clinical trials or the period of any required patient follow-up.
Assuming clinical trials of any potential product are successful and other data
are satisfactory, the Company will submit an application to the FDA and
appropriate regulatory bodies in other countries to seek permission to market
the product. The review process at the FDA is substantial and lengthy, and there
can be no assurance that the FDA will approve the Company's application or will
not require additional clinical trials or other data prior to approval.
Furthermore, even if such approval is ultimately obtained, delays in the
approval process could have a material adverse effect on the Company. In
addition, there can be no assurance that any potential product will be capable
of being produced in commercial quantities at a reasonable cost or that such
product will be successfully marketed. Based on the foregoing, the Company does
not anticipate being able to commence marketing of any therapeutic products for
a period of years, if at all. There can be no assurance that any of the
Company's product development efforts will be successfully completed, that
regulatory approvals will be obtained, or that the Company's products, if any,
will achieve market acceptance.
DEPENDENCE ON STRATEGIC AND RESEARCH COLLABORATIONS
The Company's strategy for the development, clinical testing and
commercialization of its products includes entering into collaborations with
corporate partners, licensors, licensees and others, and the Company is
dependent upon the subsequent success of these other parties in performing their
respective responsibilities. The success of any collaboration depends on the
continued cooperation of its partners, as to which there can be no assurance.
The amount and timing of resources to be devoted to activities by its
collaborators are not within the direct control of the Company. There can be no
assurance that such partners will perform their obligations as expected or that
the Company will derive any benefits from such arrangements. There can also be
no assurance that the Company's current collaborators or any future
collaborators will not pursue existing or alternative technologies in preference
to those being developed in collaboration with the Company.
The Company currently has no manufacturing infrastructure and no marketing or
sales organization, and intends to rely in substantial part on its current and
future strategic partners for the manufacture of any product and the principal
marketing and sales responsibilities for any such product. To the extent the
Company chooses not to or is unable to establish such arrangements, the Company
will require substantially greater capital to undertake its own manufacturing,
marketing and sales of any product.
In April 1995, the Company entered into a License and Research Collaboration
Agreement with Kyowa Hakko (the "Kyowa Hakko Agreement") for the development and
commercialization in certain Asian countries of a telomerase inhibitor for the
treatment of cancer. Under the collaboration, Kyowa Hakko provides certain
funding for the Company's research and development activities and is responsible
for all clinical, regulatory, manufacturing,
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marketing and sales efforts and expenses in the covered territory. The Kyowa
Hakko Agreement provides that Kyowa Hakko will not pursue research and
development independent of its collaboration with Geron with respect to
telomerase inhibition for the treatment of cancer in humans until April 7, 2000,
at the earliest. The Kyowa Hakko Agreement also provides in general that, while
Geron exercises significant influence during the research phase, Kyowa Hakko
exercises significant influence during the development and commercialization
phases of the collaboration. In March 1997, the Kyowa Hakko Agreement was
amended to extend its term until April 2000 and to make certain other changes in
connection with the signing of the Pharmacia & Upjohn Agreement (as defined
below).
On March 23, 1997 the Company signed a License and Research Collaboration
Agreement (the "Pharmacia & Upjohn Agreement") with Pharmacia & Upjohn, S.p.A.
to collaborate in the discovery, development and commercialization of a new
class of anticancer drugs that inhibit telomerase. Under the collaboration,
Pharmacia & Upjohn will provide certain funding of the Company's research and
development activities and will be primarily responsible for all clinical,
regulatory, manufacturing, marketing and sales efforts and expenses. Geron has
certain promotion rights with corresponding clinical expense obligations. As
with the Kyowa Hakko Agreement, the Company exercises significant influence
during the research phase of the collaboration while Pharmacia & Upjohn will
exercise significant influence during the development and commercialization
phases of the collaboration. Through the Pharmacia & Upjohn and Kyowa Hakko
Agreements, the Company has granted to Pharmacia & Upjohn and Kyowa Hakko
exclusive worldwide rights to its telomerase inhibition technology, with
exception to certain antisense, gene therapy and vaccine technologies outside
Asia, for the treatment of cancer in humans. If and when a telomerase inhibitor
is selected for development and commercialization under the Agreements, the
Company will be significantly dependent upon the activities of Pharmacia &
Upjohn and Kyowa Hakko for the successful commercialization of such product. Any
failure of Pharmacia & Upjohn and Kyowa Hakko to develop or commercialize a
telomerase inhibitor (if and when selected) will have a material adverse effect
on the Company.
The Company has also entered into licensing arrangements with several diagnostic
companies for the Company's telomerase detection technology. However, because
these licenses are limited to the research-use-only market, such arrangements
are not expected to generate significant commercial revenues.
There can be no assurance that the Company will be able to negotiate additional
strategic arrangements in the future on acceptable terms, if at all, or that
such strategic arrangements will be successful. In the absence of such
arrangements, the Company may encounter significant delays in introducing any
product or find that the research, development, manufacture, marketing or sale
of any product is adversely affected. In the event that the Company does not
enter into such arrangements, it may be materially adversely affected.
The Company has relationships with collaborators and scientific advisors at
academic and other institutions, some of whom conduct research at the Company's
request. These collaborators and scientific advisors are not employees of the
Company and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to the Company. The Company has
limited control over the activities of these collaborators and advisors and,
except as otherwise required by its collaboration and consulting agreements, can
expect only limited amounts of their time to be dedicated to the Company's
activities.
DEPENDENCE ON PROPRIETARY TECHNOLOGY AND UNCERTAINTY OF PATENT PROTECTION
Protection of the Company's proprietary compounds and technology is important to
the Company's business. The Company owns seven (7) issued United States patents
and over 44 United States patent applications and has licensed 12 issued United
States patents and over 39 United States patent applications, as well as
international filings under the Patent Cooperation Treaty and pending foreign
national patent applications corresponding to certain of these United States
applications. Geron's success will depend in part on its ability to obtain and
enforce its patents and maintain trade secrets, both in the United States and in
other countries. The patent positions of pharmaceutical and biopharmaceutical
companies, including the Company, are highly uncertain and involve complex legal
and technical questions for which legal principles are not firmly established.
There can be no assurance that the Company has developed or will continue to
develop products or processes that are patentable or that patents will issue
from any of the pending applications, including even allowed patent
applications. There can also be no assurance that the Company's current patents,
or patents that issue on pending applications, will not be
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<PAGE> 14
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide proprietary protection or competitive advantages to the Company.
Because (i) patent applications in the United States are maintained in secrecy
until patents issue, (ii) patent applications are not generally published until
many months or years after they are filed and (iii) publication of technological
developments in the scientific and patent literature often occurs long after the
date of such developments, the Company cannot be certain that the inventors on
its or its licensors' patents and patent applications were the first to invent
the inventions disclosed in the patent applications or patents or that it or its
licensors were the first to file patent applications for such inventions.
Litigation to establish the validity of patents, to defend against patent
infringement claims of others and to assert infringement claims against others
can be expensive and time consuming even if the outcome is favorable to the
Company. If the outcome of patent prosecution or litigation is unfavorable to
the Company, the Company could be materially adversely affected.
Patent law relating to the scope and enforceability of claims in the fields in
which the Company operates is still evolving. The degree of future protection
for the Company's proprietary rights, therefore, is highly uncertain. In this
regard, there can be no assurance that independent patents will issue from each
of the United States patent applications referenced above, which include many
interrelated applications directed to common or related subject matter. The
Company is aware of certain patent applications that have been filed by others
with respect to telomerase and telomere length modulation. In addition, there
are a number of issued patents and pending applications owned by others directed
to differential display, stem cell and other technologies relating to the
Company's research, development and commercialization efforts. There can be no
assurance that the Company's technology can be developed and commercialized
without a license to such patents or that such patent applications will not be
granted priority over patent applications filed by the Company or its licensors.
Furthermore, there can be no assurance that others will not independently
develop similar or alternative technologies to those of the Company, duplicate
any of the Company's technologies or design around the patented technologies
developed by the Company or its licensors, any of which may have a material
adverse effect on the Company.
The commercial success of the Company depends significantly on its ability to
operate without infringing patents and proprietary rights of others. There can
be no assurance that the Company's technologies do not and will not infringe the
patents or proprietary rights of others. In the event of such infringement, the
Company may be enjoined from pursuing research, development or commercialization
of its potential products or may be required to obtain licenses to these patents
or other proprietary rights or to develop or obtain alternative technologies.
There can be no assurance that the Company will be able to obtain alternative
technologies or any required license on commercially favorable terms, if at all,
and if any such license is or alternative technologies are not obtained, the
Company may be delayed or prevented from pursuing the development of certain of
its potential products. The Company's breach of an existing license or failure
to obtain or delay in obtaining alternative technologies or a license to any
technology that it may require to develop or commercialize its products may have
a material adverse effect on the Company. Also, the Company may be subject to
claims or litigation as a result of entering into a license. In this regard, the
Company signed a licensing and sponsored research agreement relating to its
Primordial Stem Cell program with The Johns Hopkins University School of
Medicine ("JHU") on August 1, 1997, after having been informed by a third party
that the Company and JHU would violate the rights of that third party and
another academic institution with which that third party claimed to be
affiliated by way of contract (collectively "Third Party") in doing so. After a
review of the correspondence with the Third Party and JHU as well as related
documents, including an issued U.S. patent, the Company believes that the Third
Party's claims, if asserted, would fall into three general categories: patent
infringement, misuse of confidential information and breach of contract. The
Company believes that it and JHU have substantial defenses to any claims that
might be asserted by such Third Party and has provided indemnification to JHU
relating to such potential claims. However, any litigation resulting from this
matter may divert significant resources, both financial and otherwise, from the
Company's research programs and there can be no assurance that the Company would
be successful in any such litigation. If the outcome of any such litigation is
unfavorable to the Company, the Company could be materially and adversely
affected.
Litigation may also be necessary to enforce any patents issued or licensed to
the Company or to determine the scope and validity of anothers' proprietary
rights. The Company could incur substantial costs if litigation is required to
defend itself in patent suits or other intellectual property litigation brought
by others or if Geron initiates such suits. There can be no assurance that the
Company's issued or licensed patents would be held valid or infringed in a court
of competent jurisdiction or that a patent held by another will be held invalid
or not infringed in such court. An
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<PAGE> 15
adverse outcome in litigation or an interference to determine priority or other
proceeding in a court or patent office could subject the Company to significant
liabilities to other parties, require disputed rights to be licensed from other
parties or require the Company to cease using such technology, any of which
could have a material adverse effect on the Company.
Geron also relies on trade secrets to protect its proprietary technology,
especially in circumstances in which patent protection is not believed to be
appropriate or obtainable. Geron attempts to protect its proprietary technology
in part by confidentiality agreements with its employees, consultants and
certain contractors. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors.
The Company is party to various license agreements which give it rights to use
certain technologies in its research, development and commercialization
activities. Disputes have arisen and may continue to arise as to the
inventorship and corresponding rights in know-how and inventions resulting from
the joint creation or use of intellectual property by the Company and its
licensors, research collaborators and consultants. There can be no assurance
that the Company will be able to continue to license such technologies on
commercially reasonable terms, if at all, or to maintain the exclusivity of its
exclusive licenses. The failure of the Company to maintain exclusive or other
rights to such technologies could have a material adverse effect on the Company.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial capital resources in order to conduct its
operations. The Company's future capital requirements will depend on many
factors, including, among others, continued scientific progress in its research
and development programs; the magnitude and scope of these activities; the
ability of the Company to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and marketing; progress
with preclinical and clinical trials; the time and costs involved in obtaining
regulatory approvals; the costs involved in preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims; or the potential for new
technologies and products. The Company intends to seek such additional funding
through strategic collaborations, public or private equity financings and
capital lease transactions; however, there can be no assurance that additional
financing will be available on acceptable terms, if at all. Additional equity
financings could result in significant dilution to stockholders. Further, in the
event that additional funds are obtained through arrangements with collaborative
partners, such arrangements may require the Company to relinquish rights to
certain of its technologies, product candidates or products that the Company
would otherwise seek to develop or commercialize itself. If sufficient capital
is not available, the Company may be required to delay, reduce the scope of or
eliminate one or more of its research or development programs, each of which
would have a material adverse effect on the Company. Based on current
projections, the Company estimates that its existing capital resources, payments
under the Pharmacia & Upjohn and Kyowa Hakko Agreements, interest income, grant
funding and equipment financing will be sufficient to fund its current and
planned operations through 1998. There can be no assurance that the assumptions
underlying such estimates are correct or that such funds will be sufficient to
meet the capital needs of the Company during such period.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
Geron has incurred net operating losses in every year of operation since its
inception in 1990. Losses have resulted principally from costs incurred in
connection with the Company's research and development activities and from
general and administrative costs associated with the Company's operations. The
Company expects to incur additional operating losses over the next several years
as the Company's research and development efforts and preclinical testing are
expanded. Substantially all of the Company's revenues to date have been research
support payments under the collaborative agreements with Kyowa Hakko and
Pharmacia & Upjohn. Research support payments under the Kyowa Hakko Agreement
expire in April 1998. Research payments under the Pharmacia & Upjohn Agreement
expire in January 2000. The Company is unable to estimate at this time the level
of revenue to be received from the sale of diagnostic products, but does not
expect to receive significant revenues from the sale of research-use-only kits.
The Company's ability to achieve profitability is dependent on its ability,
alone or with others, to select therapeutic compounds for development, obtain
the required regulatory approvals and manufacture
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<PAGE> 16
and market resulting products. There can be no assurance when or if the Company
will receive material revenues from product sales or achieve profitability.
Failure to generate significant additional revenues and achieve profitability
could impair the Company's ability to sustain operations.
SUBSTANTIAL COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE
The pharmaceutical and biopharmaceutical industries are intensely competitive.
The Company believes that certain pharmaceutical and biopharmaceutical companies
as well as certain research organizations currently engage in or have in the
past engaged in efforts related to the biological mechanisms of cell aging and
cell immortality, including the study of telomeres and telomerase. In addition,
other products and therapies that could compete directly with the products that
the Company is seeking to develop and market currently exist or are being
developed by pharmaceutical and biopharmaceutical companies, and by academic and
other research organizations. Many companies are also developing alternative
therapies to treat cancer and, in this regard, are competitive with the Company.
The pharmaceutical companies developing and marketing such competing products
have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical and clinical testing, obtaining
regulatory approvals and marketing than the Company. Smaller companies may also
prove to be significant competitors, particularly through collaborative
arrangements with large and established companies. Academic institutions,
government agencies and other public and private research organizations may also
conduct research, seek patent protection and establish collaborative
arrangements for research, clinical development and marketing of products
similar to those of the Company. These companies and institutions compete with
the Company in recruiting and retaining qualified scientific and management
personnel as well as in acquiring technologies complementary to the Company's
programs. There is also competition for access to libraries of compounds to use
for screening. Any inability of the Company to secure and maintain access to
sufficiently broad libraries of compounds for screening potential targets would
have a material adverse effect on the Company. In addition to the above factors,
Geron will face competition with respect to product efficacy and safety, the
timing and scope of regulatory consents, availability of resources,
reimbursement coverage, price and patent position, including potentially
dominant patent positions of others. There can be no assurance that competitors
will not develop more effective or more affordable products, or achieve earlier
patent protection or product commercialization than the Company or that such
products will not render the Company's products obsolete.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the principal members of its scientific and
management staff, the loss of whose services might significantly delay or
prevent the achievement of research, development or business objectives. In
addition, the Company relies on consultants and advisors, including the members
of its Scientific Advisory Board, to assist the Company in formulating its
research and development strategy. Retaining and attracting qualified scientific
and management personnel, consultants and advisors is critical to the Company's
success. The Company faces competition for qualified individuals from numerous
pharmaceutical, biopharmaceutical and biotechnology companies, as well as
academic and other research institutions. There can be no assurance that the
Company will be able to attract and retain such individuals on acceptable terms
and the failure to do so would have a material adverse effect on the Company.
ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF PRIMORDIAL STEM CELL PROGRAM
The Company's Primordial Stem Cell program may involve the use of PS cells that
would be derived from human embryonic tissue, and therefore may raise certain
ethical, legal and social issues regarding the appropriate utilization of this
tissue. The use of embryonic tissue in scientific research is an issue of
national interest. Many research institutions, including certain of the
Company's scientific collaborators, have adopted policies regarding the ethical
use of these types of human tissue. These policies may have the effect of
limiting the scope of research conducted in this area, resulting in reduced
scientific progress. The Company has established an Ethics Advisory Board
comprised of independent and recognized medical ethicists to provide advice to
the Company. In addition, the United States government and its agencies
currently do not fund research which involves the use of such tissue and may in
the future regulate or otherwise restrict its use. The inability of the Company
to conduct research on these cells due to such factors as government regulation
or otherwise could have a material adverse effect on the program.
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<PAGE> 17
In the event the Company's research related to PS cell therapies becomes the
subject of adverse commentary or publicity, the Company's name and goodwill
could be adversely affected.
GOVERNMENT REGULATION
The preclinical testing and clinical trials of any products developed by the
Company or its collaborative partners and the manufacturing, labeling, sale,
distribution, marketing, advertising and promotion of any new products resulting
therefrom are subject to regulation by federal, state and local governmental
authorities in the United States, the principal one of which is the FDA, and by
similar agencies in other countries in which products developed by the Company
or its collaborative partners may be tested and marketed (each of such federal,
state, local and other authorities and agencies is referred to herein as a
"Regulatory Agency"). Any product developed by the Company or its collaborative
partners must receive all relevant Regulatory Agency approvals or clearances, if
any, before it may be marketed in a particular country. The regulatory process,
which includes extensive preclinical testing and clinical trials of each product
in order to establish its safety and efficacy, is uncertain, can take many years
and requires the expenditure of substantial resources. Data obtained from
preclinical and clinical activities are susceptible to varying interpretations
which could delay, limit or prevent Regulatory Agency approval or clearance. In
addition, delays or rejections may be encountered based upon changes in
Regulatory Agency policy during the period of product development and/or the
period of review of any application for Regulatory Agency approval or clearance
for a product. Delays in obtaining Regulatory Agency approvals or clearances
could adversely affect the marketing of any products developed by the Company or
its collaborative partners, impose costly procedures upon the Company's and its
collaborative partners' activities, diminish any competitive advantages that the
Company or its collaborative partners may attain and adversely affect the
Company's ability to receive royalties and generate revenues and profits. There
can be no assurance that, even after such time and expenditures, any required
Regulatory Agency approvals or clearances will be obtained for any products
developed by or in collaboration with the Company. Moreover, if Regulatory
Agency approval or clearance for a new product is obtained, such approval or
clearance may entail limitations on the indicated uses for which it may be
marketed that could limit the potential market for any such product.
Furthermore, approved products and their manufacturers are subject to continual
review, and discovery of previously unknown problems with a product or its
manufacturer may result in restrictions on such product or manufacturer,
including withdrawal of the product from the market. In general, failure to
comply with FDA requirements can result in severe civil and criminal penalties,
including but not limited to recall or seizure of product, injunction against
manufacture, distribution, sales and marketing and criminal prosecution.
NO ASSURANCE OF MARKET ACCEPTANCE; UNCERTAINTY OF PHARMACEUTICAL PRICING; IMPACT
OF HEALTH CARE REFORM MEASURES
There can be no assurance that any products successfully developed by the
Company or its collaborative partners, if approved for marketing, will achieve
market acceptance. The products which the Company is attempting to develop will
compete with a number of traditional drugs and therapies manufactured and
marketed by major pharmaceutical companies, as well as new products currently
under development by such companies and others. The degree of market acceptance
of any products developed by the Company will depend on a number of factors,
including the establishment and demonstration in the medical community of the
clinical efficacy and safety of the Company's product candidates, their
potential advantage over alternative treatment methods and reimbursement
policies of government and third-party payors. There is no assurance that
physicians, patients or the medical community in general will accept and utilize
any products that may be developed by the Company or its collaborative partners.
In both domestic and foreign markets, sales of the Company's products, if any,
will depend in part on the availability of reimbursement from third-party payors
such as government health administration authorities, private health insurers,
health maintenance organizations, pharmacy benefit management companies and
other organizations. Both federal and state governments in the United States and
foreign governments continue to propose and pass legislation designed to contain
or reduce the cost of health care through various means. Legislation and
regulations affecting the pricing of pharmaceuticals and other medical products
may change or be adopted before any of the Company's potential products are
approved for marketing. Cost control initiatives could decrease the price that
the Company receives for any product it may develop in the future and have a
material adverse effect on the Company. In addition, third-party payors are
increasingly challenging the price and cost-effectiveness of medical products
and services. Significant uncertainty exists as to the reimbursement status of
newly approved
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<PAGE> 18
health care products, including pharmaceuticals. There can be no assurance that
the Company's potential products will be considered cost effective or that
adequate third-party reimbursement will be available to enable Geron to maintain
price levels sufficient to realize an appropriate return on its investment in
product development. In any such event, the Company may be materially adversely
affected.
REGULATIONS RELATING TO THE ENVIRONMENT AND HAZARDOUS MATERIALS
The Company's research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. As a
consequence, the Company is subject to numerous environmental and safety laws
and regulations. There can be no assurance that the Company will not be required
to incur significant costs to comply with current or future environmental laws
and regulations or that the Company will not be adversely affected by the cost
of compliance with such laws and regulations. Although the Company believes that
its safety procedures for using, handling, storing and disposing of such
materials comply with the standards prescribed by state and federal regulations,
the risk of accidental contamination or injury from these materials cannot be
eliminated. In the event of such an accident, the Company's use of these
materials could be curtailed by state or federal authorities, the Company could
be held liable for any damages that result and any such liability could have a
material adverse effect on the Company.
POTENTIAL PRODUCT LIABILITY CLAIMS; ABSENCE OF INSURANCE
Although the Company believes it does not currently have any exposure to product
liability claims, the Company's future business will expose it to potential
product liability risks that are inherent in the testing, manufacturing and
marketing of human therapeutic and diagnostic products. The Company currently
has no clinical trial liability insurance and there can be no assurance that it
will be able to obtain and maintain such insurance for any of its clinical
trials. In addition, there can be no assurance that the Company will be able to
obtain or maintain product liability insurance in the future on acceptable terms
or with adequate coverage against potential liabilities.
CONTROL BY MANAGEMENT AND CURRENT STOCKHOLDERS
Executive officers and directors of the Company, together with entities
affiliated with them, own or control approximately 14% of the outstanding shares
of Common Stock and may be able to influence significantly the election of the
Company's Board of Directors and other corporate actions requiring stockholder
approval, as well as significantly influence the direction and policies of the
Company.
POTENTIAL ADVERSE MARKET IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of the Common Stock in the public market could
adversely affect the market price of the Common Stock. The Company has
outstanding approximately 10,766,000 shares of Common Stock as of September 30,
1997. Pharmacia & Upjohn S.p.A. has agreed not to sell the 441,685 shares held
by it until April 2000, after which time such shares will be freely transferable
in accordance with Regulation S promulgated under the Securities Act of 1933, as
amended ("the Securities Act"). The SEC has adopted amendments to Rule 144 and
Rule 701 of the Securities Act to shorten the holding period required for shares
issued in reliance on exceptions from the Securities Act ("Restricted Shares"),
which amendments became effective on April 29, 1997. As a result of the
amendments, as of April 29, 1997, the Company's outstanding Restricted Shares
will be eligible for sale in the public market subject to Rule 144 and Rule 701
under the Securities Act, except for those shares sold to Pharmacia & Upjohn.
Certain holders of shares of Common Stock and securities convertible into or
exercisable for shares of Common Stock have certain registration rights under a
registration rights agreement among such holders and the Company.
POSSIBLE VOLATILITY OF STOCK PRICE
There has been a history of significant volatility in the market price for
shares of biopharmaceutical companies, and it is likely that the market price of
the Common Stock will be similarly volatile. Prices for the Common Stock may be
influenced by many factors, including the depth of the market for the Common
Stock, investor perception of the Company, fluctuations in the Company's
operating results and market conditions relating to the biopharmaceutical
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<PAGE> 19
and pharmaceutical industries. In addition, the market price of the Common Stock
may be influenced by announcements of technological innovations, new commercial
products or clinical progress or the lack thereof by the Company, its
collaborative partners or its competitors. In addition, announcements concerning
regulatory developments, developments with respect to proprietary rights and the
Company's collaborations as well as other factors could also have a significant
impact on the Company's business and the market price of the Common Stock.
EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS; CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority to issue up to 3,000,000
shares of undesignated Preferred Stock and to determine the rights, preferences,
privileges and restrictions of such shares without further vote or action by the
Company's stockholders. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. The issuance of Preferred
Stock could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company. In addition,
certain provisions of the Company's charter documents, including the inability
of stockholders to take actions by written consent and the staggered election of
the Company's Board of Directors, and certain provisions of Delaware law could
delay or make difficult a merger, tender offer or proxy contest involving the
Company.
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<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.35 License Agreement dated August 1,
1997 between Registrant and The
Johns Hopkins University
10.36 Research Agreement dated August 1,
1997 between Registrant and The
Johns Hopkins University
11.1 Computation of Net Loss Per Share
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No Reports on Form 8-K were filed during the
quarter ended September 30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GERON CORPORATION
By: /s/ David L. Greenwood
----------------------------------
David L. Greenwood
Chief Financial Officer, Treasurer and
Secretary
(Duly Authorized Signatory and Principal
Financial and Accounting Officer)
Date: November 14, 1997
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<PAGE> 21
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.35 License Agreement dated August 1,
1997 between Registrant and The
Johns Hopkins University
10.36 Research Agreement dated August 1,
1997 between Registrant and The
Johns Hopkins University
11.1 Computation of Net Loss Per Share
27.1 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.35
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is effective as of August
1st, 1997 (the "EFFECTIVE DATE"), by and between THE JOHNS HOPKINS UNIVERSITY,
a Maryland corporation having a principal place of business at 2024 E. Monument
Street, Suite 2-100, Baltimore, MD 21205 (hereinafter "JHU") and GERON
CORPORATION, a Delaware corporation having a principal place of business at 230
Constitution Drive, Menlo Park, California 94025 (hereinafter the "Company").
WITNESSETH
WHEREAS, as a center for research and education, JHU is interested in
licensing PATENT RIGHTS and LICENSED MATERIALS (hereinafter defined) in a
manner that will benefit the public by facilitating the distribution of useful
products and the utilization of new methods but is without capacity to
commercially develop, manufacture, and distribute any such products or methods;
and
WHEREAS, a valuable invention entitled [*] and valuable materials were
developed during the course of research conducted by Drs. John Gearhart and
Michael Shamblott (hereinafter "Inventors"); and
WHEREAS, JHU has acquired through assignment from the Inventors all
rights, title, and interest in said valuable invention; and
WHEREAS, Company desires to develop, manufacture, use, distribute for
commercial sale, and sell such products and processes throughout the world;
NOW, THEREFORE, in consideration of the foregoing premises and the
following mutual covenants, and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. "AFFILIATED COMPANY" or "AFFILIATED COMPANIES" shall mean any
corporation, company, partnership, joint venture, or other entity which
controls, is controlled by, or is under common control with the Company. For
purposes of this Paragraph 1.1, "control" shall mean (a) in the case of
corporate entities, the direct or indirect ownership of at least one-half of
the stock or participating shares entitled to vote for the election of
directors or the power to direct the management and policies of such
corporation, and (b) in the case of a partnership, the power to direct the
management and policies of such partnership.
1.2. "COMBINATION PRODUCT ADJUSTMENT" shall mean the following: in
the event a LICENSED PRODUCT(S) or LICENSED SERVICE(S) is sold in the form of a
combination product or combination service utilizing one or more active
components in addition to a LICENSED PRODUCT(S) or LICENSED SERVICE(S), NET
SALES or NET SERVICE REVENUES for such combination product or combination
service will be adjusted by multiplying actual NET SALES or NET SERVICE
REVENUES of such combination product or combination service by the fraction
A/(A + B), where A is the average invoice price of the LICENSED PRODUCT(S) or
LICENSED SERVICE(S), if sold separately, and B is the average invoice price of
any other active component(s) in the combination, if sold separately, in each
case during the applicable reporting period in the country in which the sale of
the combination product was made or the combination service was provided. If,
on a country-by-country basis, the other active component(s) in the combination
are not sold separately in said country, NET SALES or NET SERVICE REVENUES
shall be calculated by multiplying actual NET SALES or NET SERVICE REVENUES of
such combination product or combination service by the fraction A/C, where A is
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 17
<PAGE> 2
the average invoice price of the LICENSED PRODUCT(S) or LICENSED SERVICE(S), if
sold separately, and C is the average invoice price of the combination product
or combination service in each case during the applicable reporting period in
the country in which the sale of the combination product was made. If, on a
country-by-country basis, neither (i) the LICENSED PRODUCT(S) or the LICENSED
SERVICE(S), nor (ii) the other active component(s) of the combination product
or the combination service is sold separately in said country, NET SALES or NET
SERVICE REVENUES for such combination product or combination service shall be
determined by the parties in good faith based on the relative fair market
values of the active components as determined by mutual agreement of the
parties.
1.3. "EMBRYONIC GERM CELL" or "EG CELL" shall mean a human cell
isolated from the gonadal ridge of the embryo or in the process of migrating to
colonize the gonadal ridge which (i) possesses a normal karyotype, (ii) has
replicative immortality as demonstrated by stable telomeres over multiple
passages and expresses telomerase activity, (iii) has the capacity to
differentiate into endoderm, mesoderm, and ectoderm-derived tissues as
demonstrated by histological analysis of teratomas, and (iv) has appropriate
histochemical and molecular markers (including, but not limited to, alkaline
phosphatase and appropriate SSEA and/or TRA antigens).
1.4. "EMBRYONIC STEM CELL" or "ES CELL" shall mean a human cell
isolated from the inner cell mass of the blastocyst which (i) possesses a
normal karyotype, (ii) has replicative immortality as demonstrated by stable
telomeres over multiple passages and expresses telomerase activity, (iii) has
the capacity to differentiate into endoderm, mesoderm, and ectoderm-derived
tissues as demonstrated by histological analysis of teratomas, and (iv) has
appropriate histochemical and molecular markers (including, but not limited to,
alkaline phosphatase and appropriate SSEA and TRA antigens).
1.5. "EXCLUSIVE LICENSE" shall mean a grant by JHU to Company of
its entire right and interest in the PATENT RIGHTS, the LICENSED MATERIALS, and
the RETAINED MATERIALS, subject to (i) the retained right of JHU to make, have
made, provide, and use for its and The Johns Hopkins Health Systems' own
non-commercial educational and research purposes LICENSED PRODUCT(S) and
LICENSED SERVICES, and (ii) the right of JHU to distribute RETAINED MATERIALS
to other academic researchers for the sole purpose of non-commercial research.
JHU shall not distribute the RETAINED MATERIALS to other academic researchers
as permitted under the preceding sentence unless and until each such academic
researcher and the institution with which such researcher is affiliated has
agreed to grant Company: (i) at Company's sole option and discretion, either a
royalty-bearing exclusive license, such royalty not to exceed [*] percent
of sales under such license, or a royalty-free, non-exclusive license to make,
have made, use, sell, have sold, or import products and services under any
intellectual property or tangible materials arising from such academic research
utilizing the RETAINED MATERIALS; and (ii) the same rights with respect to any
publications of such academic researcher which describe the results of his or
her research using the RETAINED MATERIALS as Company has concerning the
publications of JHU and the Inventors under Paragraph 10.10. JHU shall be
deemed to have complied with this Paragraph 1.5 if JHU distributes the RETAINED
MATERIALS to other academic researchers under a materials transfer agreement in
substantially the form attached hereto as Exhibit 1.5 or as otherwise agreed in
writing by Company and JHU. JHU retains the right to use the RETAINED MATERIALS
to isolate genetic material solely for non-commercial educational and research
purposes. All academic researchers shall use the RETAINED MATERIALS or derived
cell lines in accord with the guidelines promulgated by the Ethics Advisory
Board established pursuant to Article 9.
1.6. "FDA" shall mean the United States Food and Drug
Administration.
1.7. "FD&C ACT" shall mean the United States Federal Food, Drug and
Cosmetic Act, as amended.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
1.8. "IND" shall mean an Investigational New Drug application, as
defined in the FD&C Act and FDA regulations, as amended from time to time.
1.9. "INTERESTED THIRD PARTY" shall have the meaning set forth in
Paragraph 4.10.
1.10. "LICENSED MATERIALS" shall mean (i) the human cell lines and
other biological materials developed by the Inventors and provided to the
Company under Article 6, and (ii) any materials or cell lines derived therefrom
by the Company or its AFFILIATED COMPANIES, assignee(s), or sublicensee(s). Any
RETAINED MATERIALS (i) actually transferred to Company, or (ii) used by a
PERMITTED ACADEMIC RECIPIENT to make an invention that is licensed by Company
pursuant to a materials transfer agreement in substantially the form attached
hereto as Exhibit 1.5, shall be deemed to be LICENSED MATERIALS.
1.11. "LICENSED PRODUCT(S)" shall mean any research, diagnostic, or
therapeutic product (i) covered by the PATENT RIGHTS or (ii) manufactured using
materials or methods claimed in the PATENT RIGHTS or derived from LICENSED
MATERIALS. For the purpose of illustration, a cell line used for a therapeutic
purpose that was in any way derived from an EG CELL or ES CELL that is a
LICENSED MATERIAL or is covered by a claim in the PATENT RIGHTS will be a
LICENSED PRODUCT.
1.12. "LICENSED SERVICE(S)" shall mean any research, diagnostic, or
therapeutic service or method (i) covered by the PATENT RIGHTS or (ii) uses
materials or methods claimed in the PATENT RIGHTS or derived from LICENSED
MATERIALS.
1.13. "NDA" shall mean a New Drug Application, as defined in the
FD&C Act and FDA regulations, as amended from time to time.
1.14. "NET SALES" shall mean gross amounts invoiced by Company,
AFFILIATED COMPANY, SPIN-OUT, assignee, sublicensee other than a distributor in
the ordinary course of business, and any Interested Third Party (each, a
"Seller") from the sale of LICENSED PRODUCT(S) to non- Seller third parties,
less (i) trade, cash, and quantity discounts or rebates actually given, (ii)
credits or allowances given or made for rejection or return of, and for
uncollectible amounts on, previously sold products or for retroactive price
reductions (including rebates for Medicaid and Medicare in the United States
and comparable foreign programs), (iii) taxes, duties, or other governmental
charges levied on or measured by the billing amount, as adjusted for rebates
and refunds, (iv) charges for freight and insurance directly related to the
distribution of LICENSED PRODUCT(S) (to the extent not paid by the third party
customer), and (v) credits or allowances given or made for wastage replacement
and indigent patient and similar programs. In the event that a Seller sells a
LICENSED PRODUCT(S) in combination with other ingredients or substances or as
part of a kit, the NET SALES for purposes of royalty payments shall be adjusted
by the COMBINATION PRODUCT ADJUSTMENT.
1.15. "NET SERVICE REVENUES" shall mean gross amounts invoiced by a
Seller from the sale of LICENSED SERVICE(S) to non-Seller third parties, less
(i) trade, cash, and quantity discounts or rebates actually given, (ii) credits
or allowances given or made for uncollectible amounts on previously sold
services or for retroactive price reductions (including rebates for Medicaid
and Medicare in the United States and comparable foreign programs), (iii)
taxes, duties, or other governmental charges levied on or measured by the
billing amount, as adjusted for rebates and refunds, and (iv) credits or
allowances given or made for indigent patient and similar programs, all as
adjusted by the COMBINATION PRODUCT ADJUSTMENT, if applicable.
1.16. "PATENT RIGHTS" shall mean [*] (ii) any United States patent
applications filed on inventions, new discoveries, or improvements made by Dr.
John
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
Gearhart and others in his laboratory pursuant to an agreement (the "Research
Agreement") more fully described in Article 5; (iii) any continuation,
divisional, or continuation-in-part applications associated with the United
States patent applications in (i) and (ii) above; (iv) any United States
patents, extensions, or reissues issuing from an application set forth in (i),
(ii), or (iii) above; and (v) all foreign patent applications and any foreign
patents corresponding to (i), (ii), (iii), or (iv) above.
1.17. "PERMITTED ACADEMIC RECIPIENT" shall mean any academic
researcher who is permitted to receive the Retained Materials pursuant to
Paragraph 1.5.
1.18. "RETAINED MATERIALS" shall mean:
(i) any cell lines and other biological materials that are
retained by JHU or provided by JHU to a PERMITTED ACADEMIC RECIPIENT and (a)
from which the LICENSED MATERIALS were derived, or (b) which are of the same
construction or type as the LICENSED MATERIALS; and
(ii) any cell lines derived from the materials described in clause
(i) by JHU or a PERMITTED ACADEMIC RECIPIENT.
1.19. "SPIN-OUT" shall mean any entity to which the Company has
transferred all of its rights and obligations with respect to the LICENSED
PRODUCT and the LICENSED SERVICE(S), as well as all of the Company's other
assets related to EG CELLS and ES CELLS.
ARTICLE 2
GRANTS
2.1. Subject to the terms and conditions of this Agreement, JHU
hereby grants to the Company, under the PATENT RIGHTS, the LICENSED MATERIALS,
and the RETAINED MATERIALS, a worldwide EXCLUSIVE LICENSE to make, have made,
use, import, sell, have sold, and offer for sale the LICENSED PRODUCT(S) and
the LICENSED SERVICE(S).
2.2. Company may sublicense to others the rights granted by JHU
under this Agreement and shall provide a redacted copy of each such sublicense
agreement to JHU promptly after it is executed. JHU shall treat the existence
and terms of such sublicense as Company's Confidential Information, and such
information shall therefore be subject to Article 7. Each sublicense shall be
consistent with the terms of this Agreement.
2.3. Company may extend this Agreement to its AFFILIATED COMPANIES
that agree in writing to comply with the terms of this Agreement.
ARTICLE 3
PATENT INFRINGEMENT
3.1. Each party will notify the other promptly in writing when any
infringement of the PATENT RIGHTS by another is uncovered or suspected.
3.2. Company shall have the first right to enforce any patent or
patent application within the PATENT RIGHTS against any infringement or alleged
infringement thereof and shall at all times keep JHU informed as to the status
thereof. Company may, in its sole judgment and at its own expense, institute
suit against any such infringer or alleged infringer and control, settle, and
defend such suit in a manner consistent with the terms and provisions hereof
and recover, for its account, any damages, awards, or settlements resulting
therefrom, subject to Paragraph 3.4. This right to sue for infringement shall
not be used in an arbitrary or capricious manner. JHU shall reasonably
cooperate in any such litigation, including, without limitation, being named as
a party in any such litigation, and Company shall reimburse JHU for its
out-of-pocket expenses incurred as a result of such cooperation.
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LICENSE AGREEMENT
3.3. If Company elects not to enforce any patent or patent
application within the PATENT RIGHTS, then it shall so notify JHU in writing
within six (6) months of receiving notice that an infringement exists, and JHU
may, in its sole judgment and at its own expense, take steps to enforce any
patent and control, settle, and defend such suit in a manner consistent with
the terms and provisions hereof, and recover, for its own account, any damages,
awards or settlements resulting therefrom. This right to sue for infringement
shall not be used in an arbitrary or capricious manner.
3.4. Any recovery by Company under Paragraph 3.2 or by JHU under
Paragraph 3.3 shall be deemed, unless specifically designated otherwise by the
court, to reflect loss of commercial sales. To the extent the recovery exceeds
all reasonable costs and expenses of the party bringing the suit, for the
recovery shall first be applied to such costs and expenses, the recovering party
shall pay to the other from such excess the amount that would have been due that
party hereunder had such sales been made by Company. If the costs and expenses
of a suit or obtaining a settlement under Paragraph 3.2 exceed the recovery,
then [*] of the excess shall be credited against royalties payable by Company to
JHU hereunder in connection with sales or services in the country of such legal
proceedings, provided, however, that any such credit under this Paragraph 3.4
shall not exceed [*] of the royalties otherwise payable to JHU with regard to
sales in the country of such action in any one calendar year, with any excess
credit being carried forward to future calendar years.
ARTICLE 4
PAYMENTS, ROYALTIES, AND EQUITY
4.1. As further provided in Paragraph 7.1, Company will reimburse
JHU for the reasonable costs of preparing, filing, maintaining, and prosecuting
PATENT RIGHTS. Company shall reimburse JHU within thirty (30) days of receipt
of invoice from JHU.
4.2. A. The Company shall pay to JHU within thirty (30) days
of the EFFECTIVE DATE of this Agreement, the nonrefundable processing fee of [*]
and the nonrefundable initial licensing fee of [*]. These payments are
nonrefundable and shall not be credited against royalties or other fees.
B. The Company shall also issue to JHU within thirty
(30) days of the EFFECTIVE DATE the following:
(a) [*] shares of the Company's publicly traded common stock,
pursuant to a written agreement (the "Stock Purchase Agreement"),attached
hereto as Exhibit 4.2(A), and
(b) a warrant for [*] shares of the Company's publicly traded
common stock at an exercise price equal to the closing price of the common stock
on the day prior to issuance of the warrant, with immediate vesting and with a
[*] year exercise date for JHU, pursuant to a warrant agreement (the "Warrant
Agreement") attached hereto as Exhibit 4.2(B).
The stock and warrant will be issued in the name of The Johns Hopkins
University. JHU agrees not to sell or transfer the stock for a period of [*]
years from the date of issue.
4.3. The Company shall pay to JHU a [*] annual maintenance fee
due within thirty (30) days of each anniversary of the EFFECTIVE DATE of this
Agreement. Such fees are nonrefundable and shall not be credited against
royalties or other fees.
4.4. The Company shall pay to JHU, for each LICENSED PRODUCT sold
and for each LICENSED SERVICE provided by the Company, its AFFILIATED
COMPANY(IES), assignees, and sublicensees, and any SPIN-OUT, a running royalty
negotiated by the parties that
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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<PAGE> 6
LICENSE AGREEMENT
falls within the ranges specified in the table below. The royalty rates shall
apply to the NET SALES and NET SERVICE REVENUES of the LICENSED PRODUCT or
LICENSED SERVICE respectively for the term of this Agreement. Such payments
shall be made quarterly as provided in Paragraph 4.9. For purposes of this
Paragraph 4.4, a Therapeutic Type product or service refers only to those
products or services provided to patients to treat human disease or medical
conditions in a manner requiring FDA approval; a Diagnostic product or service
refers only to those products or services that are sold or provided to assist
physicians in formulating diagnostic opinions and therapeutic stratagems in the
course of providing medical care to their patients in a manner requiring FDA
approval; and any other product or service shall be deemed to be a Research
Type of product or service.
<TABLE>
<CAPTION>
PRODUCT OR SERVICE TYPE ROYALTY
RANGE
<S> <C>
Research [*]
Diagnostic [*]
Therapeutic [*]
</TABLE>
Starting the earlier of a written request by Company or the date a particular
LICENSED PRODUCT or LICENSED SERVICE is first offered for commercial sale or
use, the Company and JHU shall enter into good faith negotiations for the
royalty rate to be applied to each LICENSED PRODUCT or LICENSED SERVICE within
the applicable range. The factors to be considered by the parties in setting
the applicable royalty rate shall include: the patent position of the LICENSED
PRODUCT or LICENSED SERVICE, the existence of competitive products or services,
the size of the market for the applicable product or service, and the amounts
spent by the Company in developing the product or service for market. If the
parties are unable to reach agreement within sixty (60) days of commencing such
negotiations, then the issue shall be brought to binding arbitration before
three arbitrators in accordance with the Rules of the American Arbitration
Association, with the arbitration occurring in Chicago, Illinois.
4.5. A. To the extent the Company, or its assignee,
AFFILIATED COMPANY, SPIN-OUT, or sublicensee is obligated to pay a royalty to a
third party to make, use, import, sell, have sold, or offer for sale a LICENSED
PRODUCT or LICENSED SERVICE, and if such obligation cannot be avoided by a
reasonable redesign of the LICENSED PRODUCT or LICENSED SERVICE, then the
Company may subtract [*] of such third party royalty from the royalty otherwise
owed to JHU under Paragraph 4.4 for such particular LICENSED PRODUCT or LICENSED
SERVICE, but in no event shall such reduction cause JHU to be paid less than [*]
of the royalty specified in Paragraph 4.4 for such LICENSED PRODUCT or LICENSED
SERVICE.
B. To the extent the Company, or its assignee,
AFFILIATED COMPANY, SPIN-OUT, or sublicensee uses LICENSED MATERIALS to
generate differentiated cells that are then incorporated into products or
services, such products or services will be LICENSED PRODUCTS and/or LICENSED
SERVICES.
C. Notwithstanding Paragraph 4.4, if the Company uses
the LICENSED MATERIALS or cell lines covered by PATENT RIGHTS in a research
collaboration, sublicense, or joint venture with a third party for the purpose
of gene discovery, JHU will be paid [*] of any consideration received by the
Company from such third party in connection with such gene discovery
undertaking, net of any Excludable Amounts. "Excludable Amounts" shall mean that
portion of amounts received by the Company in exchange for (i) research,
development, and manufacture services that have been or will be performed by or
on behalf of the Company (e.g., payments to fund Company research in connection
with the LICENSED
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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<PAGE> 7
LICENSE AGREEMENT
MATERIALS or PATENT RIGHTS) and milestone payments, (ii) things of value other
than rights in LICENSED MATERIALS or PATENT RIGHTS (e.g., equity excluding any
premium purchased by a corporate collaborator), or (iii) amounts loaned to the
Company or an AFFILIATED COMPANY. Where amounts (e.g., license fees) relate to
a LICENSED MATERIAL or PATENT RIGHT together with other biological materials or
patent rights, the amounts shall be allocated on a reasonable basis. In the
event that amounts are due under this Paragraph 4.5(C) with respect to sales of
a LICENSED PRODUCT or a LICENSED SERVICE, no amounts shall be due under
Paragraph 4.4 for the sale of such LICENSED PRODUCT or LICENSED SERVICE.
4.6. MILESTONE PAYMENTS. The following milestone payments (cash,
stock, and stock warrants) shall be paid as outlined below within thirty (30)
days from the occurrence of the events indicated below. Except as otherwise
specified in this Paragraph 4.6, these payments are not creditable against
running royalties or other payments specified in this Article. The stock and
stock warrants granted on the occurrence of each milestone shall be granted
pursuant to Stock Purchase Agreements and Warrant Agreements in substantially
the form attached hereto as Exhibits 4.6(A) and 4.6(B), respectively. The
exercise price for warrants granted in connection with the first three (3)
milestone events set forth in this Paragraph 4.6 shall be equal to the average
closing price of the common stock during the [*] business days immediately
preceding the EFFECTIVE DATE. The exercise price for warrants granted in
connection with milestone event four (4) and milestone event five (5) set forth
in this Paragraph 4.6 shall be equal to the average closing price of the common
stock during the [*] business days immediately preceding the date upon which the
milestone event in question occurred; the warrants for these milestones (4 and
5) shall be issued upon milestone achievement. The warrants shall vest
immediately and shall have, in each case, a [*] year exercise period in which
JHU may exercise the warrant.
<TABLE>
<CAPTION>
MILESTONE EVENT CASH($) EQUITY WARRANTS
(SHARES) (SHARES)
<S> <C> <C> <C> <C>
1 Successfully transfer to Company EG CELLS isolated [*] [*] [*]
by JHU*
2 Successfully transfer to Company ES CELLS isolated [*] [*] [*]
by JHU*
3 Issuance of first United States patent in PATENT
RIGHTS which prevents others from making, using, or [*] [*] [*]
selling the EG CELLS or ES CELLS
4 IND Filing for the first LICENSED PRODUCT or
comparable regulatory filing for first LICENSED [*] [*] [*]
PRODUCT or LICENSED SERVICE
5 NDA Approval for the first LICENSED PRODUCT or
comparable regulatory approval for first LICENSED [*] [*] [*]
PRODUCT or LICENSED SERVICE
</TABLE>
*To meet milestone one (1) or two (2) above, an ES CELL or an EG CELL,
respectively, must (i) be successfully isolated and transferred to the Company
by JHU before any third party has successfully transferred a similar human cell
(i.e., EG or ES) to the Company; and (ii) have been obtained with patient
consent and in compliance with U.S. law covering fetal tissue and FDA
regulations for human somatic therapy. In the event Company has awarded the
cash, stock, and stock warrants required above upon the achievement of
milestones one (1) and two (2) above, and it is established within two (2)
years of the transfer of the cells from JHU to Company that a third party
successfully isolated a similar human cell prior to the date JHU transferred
the ES or EG cells to Company, then JHU and the Company shall agree on adequate
recompense to Company in the
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 7 of 17
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LICENSE AGREEMENT
form of going-forward royalty reductions, royalty credits, and/or subsequent
milestone reductions. Such recompense shall not exceed the value of the
milestones awarded (including cash, equity, and warrants) and will be
determined by negotiation or binding arbitration, in either event taking into
account the benefit to Company from having the ES or EG cells transferred and
the impact on Company's ability to market LICENSED PRODUCTS or LICENSED
SERVICES and profit therefrom as a result of the third party's prior isolation
of the cells. In addition, should the failure to meet any one or all of
milestones one (1), two (2), or three (3) materially adversely impact Company's
ability to market LICENSED PRODUCTS or LICENSED SERVICES or to profit
therefrom, JHU agrees to negotiate in good faith or seek binding arbitration a
royalty reduction to ameliorate in part such adverse impact; such royalty
reduction shall not cause the royalty rate to go below the range specified in
Paragraph 4.4 unless JHU agrees that the adverse impact justifies the
reduction.
4.7. ISSUANCE OF ASSIGNEE SHARES. In the event the Company assigns
this Agreement to a permitted assignee under Paragraph 10.3, the parties will
discuss in good faith amending this Agreement to provide for such assignee to
issue its equity and warrants to JHU upon the achievement of the foregoing
milestones, in lieu of Company issuing its equity and warrants upon achievement
of the foregoing milestones. The value of the equity and warrants to be issued
by such assignee shall approximate, as closely as possible, the value of the
equity and warrants which would have been issued by Company in the absence of
the preceding sentence, with both such values measured at the time of the
assignment, based on the fair market value of each type of equity and warrants.
4.8. Within sixty (60) days of the end of each March, June,
September, and December after the first commercial sale of a LICENSED PRODUCT
or a LICENSED SERVICE, the Company shall provide a written report to JHU of the
amount of LICENSED PRODUCTS sold, the amount of LICENSED SERVICES sold, the
total NET SALES and NET SERVICE REVENUES of such LICENSED PRODUCTS and LICENSED
SERVICES, and the running royalties due to JHU as a result of NET SALES and NET
SERVICE REVENUES by Company, AFFILIATED COMPANIES, and sublicensees thereof.
Payment of any such royalties due shall accompany such report. Until the first
commercial sale of a LICENSED PRODUCT or a LICENSED SERVICE, the Company shall
submit a report at the end of every December after the achievement of milestone
one (1) or two (2) of Paragraph 4.6 of this Agreement that describes the
Company's and any AFFILIATED COMPANY's or sublicensee's technical efforts
towards meeting the milestones in Article 8.
4.9. The Company shall compile and retain, for a period of three
(3) years following the period of each report required by Paragraph 4.8, true
and accurate records, files, and books of account containing all the data
reasonably required for the full computation and verification of sales and
other information required in Paragraph 4.8. Such books and records shall be in
accordance with generally accepted accounting principles consistently applied.
The Company shall permit the inspection and copying of such records, files, and
books of account by JHU or its certified public accountant during regular
business hours upon ten (10) business days' prior written notice to the
Company, and all such records, files, and books of account shall be deemed to
be the Company's Confidential Information, subject to the protections afforded
therefor by Article 7. Such inspection shall not be made more than once each
calendar year. All costs of such inspection and copying shall be paid by JHU,
provided that if any such inspection shall reveal that an underpayment error
has been made in the amount equal to [*] or more of such payment,
such costs shall be borne by the Company. The Company shall include in any
agreement with its AFFILIATED COMPANIES or its sublicensees which permits such
party to make, use, or sell the LICENSED PRODUCT(S) or provide LICENSED
SERVICES, a provision requiring such party to retain records of sales of
LICENSED PRODUCT(S) and records of LICENSED SERVICES and other information as
required in Paragraph 4.8 and permit JHU to inspect such records as required by
this Paragraph 4.9.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
4.10. To ensure JHU the full royalty payments contemplated
hereunder, the Company agrees that, in the event (i) any LICENSED PRODUCT shall
be sold to an AFFILIATED COMPANY or sublicensee or to a corporation, firm, or
association with which Company shall have any agreement, understanding, or
arrangement with respect to Other Consideration (each, an "Interested Third
Party"), and (ii) such Interested Third Party does not resell such LICENSED
PRODUCT or use the same to manufacture a LICENSED PRODUCT that is sold to an
uninterested third party so that such sale is included as part of NET SALES, the
royalties to be paid hereunder for such LICENSED PRODUCTS shall be based upon
(x) units of LICENSED PRODUCT sold to such Interested Third Party multiplied by
(y) the average NET SALES per unit per year of LICENSED PRODUCT received by the
Company and its AFFILIATED COMPANIES, sublicensees, and Interested Third Parties
in arm-length transactions with uninterested third parties. For purposes of this
Paragraph, "Other Consideration" shall mean consideration for things other than
for LICENSED PRODUCT, such as, among other things, (a) an option to purchase
stock or actual stock ownership that would result in such third party owning at
least [*] of the outstanding stock of the Company or the Company owning at least
[*] of the outstanding stock of such third party, (b) an arrangement involving
division of profits between such third party and the Company, or (c) special
rebates or allowances not available to others.
4.11. All payments under this Agreement shall be made in U.S.
Dollars.
ARTICLE 5
RESEARCH SUPPORT
The Company is sponsoring research in the laboratory of Dr. John
Gearhart for a period of [*] years at JHU pursuant to a Research Agreement
between the Company and JHU, executed contemporaneously herewith. All patent
applications filed on inventions, new discoveries, or improvements made by Dr.
John Gearhart and others in his JHU laboratory pursuant to the Research
Agreement and any patents issuing thereon shall be included as part of the
PATENT RIGHTS.
ARTICLE 6
BIOLOGICAL MATERIAL TRANSFER
6.1. JHU, acting through Dr. John Gearhart, will, within thirty
(30) days of isolating cells which are ES CELLS or EG CELLS, provide the
Company with human ES CELLS and EG CELLS and related biological materials
developed in Dr. Gearhart's laboratory after October 1, 1996. In addition, JHU,
acting through Dr. John Gearhart, will provide the Company with ES CELLS and EG
CELLS and related biological materials subsequently developed in Dr. Gearhart's
laboratory through the term of the Research Agreement, within thirty (30) days
of the date upon which such cells and other biological materials are isolated.
Such cells and other biological materials delivered pursuant to this Paragraph
6.1 shall be considered to be LICENSED MATERIALS as defined by Paragraph 1.10.
6.2. The Company shall use the LICENSED MATERIALS or derived cell
lines in accord with the guidelines and policies established by the Ethics
Advisory Board established pursuant to Article 9. Access by PERMITTED ACADEMIC
RECIPIENTS and JHU to EG CELLS and ES CELLS and derivative or related cell
lines developed under the sponsored support specified in Article 5 shall be
controlled with material transfer agreements that prohibit further transfer of
the materials and derived materials and restrict the area of research to areas
approved by the Ethics Advisory Board and restricts the use of such materials
to uses in accord with the guidelines promulgated by the Ethics Advisory Board.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 9 of 17
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LICENSE AGREEMENT
6.3. Except as permitted under clause (ii) of Paragraph 1.5, in no
event shall JHU provide RETAINED MATERIALS, or any materials derived from
RETAINED MATERIALS, to any third party.
ARTICLE 7
PATENT RIGHTS AND CONFIDENTIAL INFORMATION
7.1. A. JHU shall have the first right to file, prosecute,
and maintain all patents and patent applications specified under PATENT RIGHTS.
Title to all such patents and patent applications shall reside in JHU. Subject
to Paragraph 7.1(B) and Article 3, JHU shall have full and complete control
over all patent matters in connection therewith under the PATENT RIGHTS. In the
event the Company provides prior authorization for such filing, prosecution, or
maintenance, the Company shall pay all reasonable out-of-pocket expenses
incurred by JHU in taking such action. JHU shall provide the Company with
notice of a filing, prosecution, or maintenance deadline with respect to any
patent application or patent specified under the PATENT RIGHTS at least ninety
(90) days prior to such deadline. The Company shall, within thirty (30) days of
receipt of such notice, indicate to JHU in writing whether it wishes to
authorize such filing, prosecution, or maintenance. In the event the Company
has not responded to JHU within such thirty (30) day period, the Company shall
be deemed to have authorized such action. In any country where the Company
provides written notice that it elects not to authorize such action, JHU may
file, prosecute, and/or maintain a patent application or patent at its own
expense and for its own exclusive benefit, and the Company thereafter shall not
be licensed under such patent or patent application.
B. In the event JHU elects not to file, prosecute or
maintain a patent or patent application specified under PATENT RIGHTS, it shall
notify the Company at least ninety (90) days in advance of the applicable
deadline for any action required to file, prosecute, or maintain such patent or
patent application; thereafter, the Company shall be free to file, prosecute,
or maintain such patent or patent application, at its own expense and in the
name of JHU, and the Company thereafter shall have full and complete control
over all patent matters in connection therewith. JHU shall provide reasonable
cooperation to the Company in connection with such filing, prosecution, and
maintenance.
7.2. Company agrees that all packaging containing individual
LICENSED PRODUCT(S) sold by Company, AFFILIATED COMPANIES, and sublicensees of
Company will be marked with the number of the applicable patent(s) licensed
hereunder in accordance with each country's patent laws.
7.3. Except as set forth below, all information disclosed by one
party to the other party shall be deemed to be the disclosing party's
"Confidential Information". The recipient of such information agrees to employ
all reasonable efforts to maintain the Confidential Information secret and
confidential and not to use such Confidential Information for any purpose other
than as permitted under this Agreement, such efforts to be no less than the
degree of care employed by the recipient to preserve and safeguard its own
confidential information and the confidential information of third parties
being held by the recipient. The Confidential Information shall not be
disclosed or revealed to anyone except employees, consultants, AFFILIATED
COMPANIES, or sublicensees of the recipient who have a need to know the
information and who have entered into a secrecy agreement with the recipient
under which such employees, consultants, AFFILIATED COMPANIES, and sublicensees
are required to maintain confidential the proprietary information of the
recipient, and such employees, consultants, AFFILIATED COMPANIES, and
sublicensees shall be advised by the recipient of the confidential nature of
the Confidential Information and that the Confidential Information shall be
treated accordingly, including the non-disclosure and non-use obligations set
forth above. The recipient's obligations under this Paragraph 7.3 shall not
extend to any part of the Confidential Information that:
(a) can be demonstrated to have been in the public domain or
publicly known and
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LICENSE AGREEMENT
readily available to the trade or the public prior to the date of the
disclosure; or
(b) can be demonstrated, from written records to have been in the
recipient's possession or readily available to the recipient from another
source not under obligation of secrecy to the disclosing party prior to the
disclosure; or
(c) becomes part of the public domain or publicly known by
publication or otherwise, not due to any unauthorized act by the recipient; or
(d) was lawfully disclosed to the recipient, other than under an
obligation of confidentiality, by a third party who had no obligation not to
disclose such information to others; or
(e) is demonstrated from written records to have been developed
by or for the receiving party without reference to confidential information
disclosed by the disclosing party.
The obligations of this Paragraph 7.3 shall also apply to consultants,
AFFILIATED COMPANIES, and/or sublicensees provided such information by Company.
JHU's, the Company's, AFFILIATED COMPANIES, and sublicensees' obligations under
this Paragraph 7.3 shall extend until five (5) years after the termination of
this Agreement.
ARTICLE 8
TERM, MILESTONES, AND TERMINATION
8.1. This Agreement shall expire, on a country-by-country basis, on
the date of expiration of the last to expire patent included within PATENT
RIGHTS in that country or, if no patents issue in such country, [*] years from
the EFFECTIVE DATE. Termination by Company at will for any reason other than
material breach by JHU of the Research Agreement shall automatically terminate
this Agreement.
8.2. Company shall exercise commercially reasonable efforts to
develop, obtain regulatory approval for, and commercialize the LICENSED
PRODUCT(S) and LICENSED SERVICE(S) using good scientific and commercial
judgment. Company shall also exercise commercially reasonable efforts to
develop LICENSED PRODUCTS suitable for different indications, so that the
PATENT RIGHTS and LICENSED MATERIALS can be commercialized as broadly and as
speedily as good scientific and business judgment would deem possible.
8.3. After an NDA or equivalent has been approved by the FDA for a
given LICENSED PRODUCT, Company shall exercise commercially reasonable efforts
to market such LICENSED PRODUCTS in the U.S. and worldwide to the extent
consistent with good business judgment, conditioned upon obtaining regulatory
approval in each particular foreign nation or region.
8.4. JHU may, at any time, notify the Company in writing of
clinical or other evidence developed or made available to JHU that demonstrates
the scientific and commercial practicality of a particular therapeutic
opportunity which is covered by the PATENT RIGHTS but which is not currently
being developed or commercialized by Company (the "Suggested Opportunity").
Company shall consider such evidence in good faith and, if Company concurs that
such evidence demonstrates the scientific and commercial practicality of the
Suggested Opportunity, Company shall either (i) provide JHU with a reasonable
development plan for the Suggested Opportunity and thereafter start development
of such Suggested Opportunity, or (ii) attempt to sublicense the relevant
technology to a third party, on commercially reasonable terms, for purposes of
developing and commercializing the Suggested Opportunity. If Company concurs
that such evidence demonstrates the scientific and commercial practicality of
the Suggested Opportunity and (i) within six (6) months of such notification by
JHU, Company has not initiated such development efforts, or (ii) within six (6)
months of such notification by JHU, Company has not commenced negotiations with
a potential sublicensee for developing and commercializing the Suggested
Opportunity and within eighteen (18) months of such notification by JHU,
Company has not entered into an agreement with such sublicensee for developing
and commercializing the Suggested Opportunity, JHU may terminate the license
contained in Article 2 for the Suggested Opportunity only. This Paragraph 8.4
shall not be applicable if Company reasonably demonstrates to JHU that
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
(i) developing and commercializing such Suggested Opportunity or granting such
a sublicense would have a potentially adverse commercial effect upon marketing
or sales of the LICENSED PRODUCTS or LICENSED SERVICE(S) developed and/or being
sold by Company, any AFFILIATED COMPANY, or any sublicensee of Company, or (ii)
that the evidence presented by JHU under the first sentence of this Paragraph
does not convincingly demonstrate the scientific and commercial practicality of
the Suggested Opportunity.
8.5. Upon material breach of any of the terms and conditions of
this Agreement, the breaching party shall be given a period of the earlier of
sixty (60) days after (i) becoming aware of such breach, or (ii) receiving
written notice of the same to correct the material breach. If the material
breach is not corrected within said sixty (60) day period, the party not in
breach shall have the right to terminate this Agreement upon written notice to
the breaching party. In the event of a material, uncured breach by JHU, Company
shall have the right either to terminate this Agreement or to elect to take
recompense for the breach and maintain its exclusive license, such recompense
to be determined by agreement between JHU and the Company or by binding
arbitration and to be in the form of royalty reductions, royalty credits,
and/or subsequent milestone reductions, taking into account the harm to Company
suffered as a result of such breach, including the impact on Company's ability
to market LICENSED PRODUCTS or LICENSED SERVICES and profit therefrom.
8.6. Company may terminate this Agreement and the license granted
herein, for any reason, upon giving JHU [*] days written notice.
8.7. A. Termination for Company's breach under Paragraph 8.5
or under 8.6 shall not affect JHU's right to recover unpaid royalties or fees
or stock or stock warrants or reimbursement for patent expenses incurred or due
prior to termination.
B. Upon termination of this Agreement under Paragraph
8.5 for Company's breach or 8.6, (i) all rights in and to the PATENT RIGHTS,
the LICENSED MATERIALS, and the RETAINED MATERIALS shall revert to JHU at no
cost to JHU, (ii) all LICENSED MATERIALS delivered to the Company pursuant to
Paragraph 6.1 shall immediately be returned to JHU, and (iii) any cell lines
made or derived by the Company or its AFFILIATES, assignee(s), or
sublicensee(s) using LICENSED MATERIALS or using other cell lines covered by
PATENT RIGHTS shall remain subject to a continuing royalty payment as provided
in Paragraph 4.4 even after termination of this Agreement. Upon termination by
Company of this Agreement under Paragraph 8.5 for JHU's material and uncured
breach, Company's obligation of indemnification under Paragraph 10.8.B shall
terminate, but if Company elects to take recompense for a material, uncured
breach by JHU and continue its exclusive license, then Company's obligation of
indemnification under Paragraph 10.8.B shall continue.
ARTICLE 9
ETHICS BOARD
The parties agree that the research in the area of human EG and ES
cells and derivative and related cells, and the development and provision of
any LICENSED PRODUCT(S) or LICENSED SERVICE(S) related thereto, shall be
conducted with the highest ethical considerations. The Company will appoint an
Ethics Advisory Board comprising five (5) independent members (i.e., not having
an equity interest in the Company) and selected from national experts in
medical ethics. The Ethics Advisory Board shall be responsible for promulgating
ethical guidelines concerning the research conducted by the Company and its
assignee(s), AFFILIATE(S), SPIN-OUT, and sublicensee(s), and by JHU and any
person receiving ES CELLS and/or EG CELLS from JHU and development activities
relating to the use of LICENSED MATERIALS, cell lines covered by PATENT RIGHTS
and cell lines derived therefrom, which shall in any event comply with all
applicable state and federal laws and regulations. The Ethics Advisory Board
shall review the areas of research to be conducted and products to be developed
by the Company or any third party using
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
the LICENSED MATERIALS or cell lines covered by PATENT RIGHTS. The Company, to
the extent consistent to its fiduciary duties to its shareholders, and such
third parties shall also follow the ethical guidelines and policies established
by the Ethics Advisory Board and in any event shall comply with all Federal and
State laws and regulations. Failure to adhere to this Article 9 shall be deemed
to be a material breach of this Agreement. A list of all board members and
minutes of the meetings of the Ethics Board will be provided to JHU in writing.
Such list and minutes will be deemed to be the Company's Confidential
Information; however, the Ethics Advisory Board shall be encouraged to publish
its guidelines, provided such guidelines do not reveal Confidential Information
of either party.
ARTICLE 10
MISCELLANEOUS
10.1. All notices pertaining to this Agreement shall be in writing
and sent certified mail, return receipt requested, to the parties at the
following addresses or such other address as such party shall have furnished in
writing to the other party in accordance with this Paragraph 10.1:
FOR JHU: Mr. Howard W. Califano, Esq.
Assistant Dean for Technology Licensing
The Johns Hopkins University
School of Medicine
2024 E. Monument St., Suite. 2-100
Baltimore, MD 21205
FOR Company: Mr. Ronald W. Eastman
President and CEO
Geron Corporation
230 Constitution Drive
Menlo Park, CA 94025
10.2. All written progress reports, royalty and other payments, and
any other related correspondence shall be in writing and sent to:
FOR JHU: Mr. Howard W. Califano, Esq.
Assistant Dean and Director for Technology Licensing
The Johns Hopkins University
School of Medicine
2024 E. Monument St., Suite. 2-100
Baltimore, MD 21205
or such other addressee that JHU may designate in writing from time to time.
Checks are to be made payable to "The Johns Hopkins University".
10.3. This Agreement is binding upon and shall inure to the benefit
of JHU, its successors, and permitted assignees. This Agreement shall not be
assignable by JHU to another party without the written consent of the Company,
which consent shall not be unreasonably withheld. This Agreement is binding
upon and shall inure to the benefit of Company, its successors and permitted
assignees. This Agreement shall not be assignable by the Company to another
party without the written consent of JHU, which consent shall not be
unreasonably withheld, except that the Company shall have the right to assign
this Agreement without the consent of JHU to (i) an AFFILIATED COMPANY, (ii) a
SPIN-OUT, or (iii) a third party in the case of the sale or transfer, whether
by merger or otherwise, by the Company of all, or substantially all, of its
assets relating to the LICENSED PRODUCT or LICENSED SERVICE, to such third
party.
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LICENSE AGREEMENT
10.4. In the event that any one or more of the provisions of this
Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement, or over any of the parties hereto to be
invalid, illegal, or unenforceable, such provision or provisions shall be
reformed to approximate as nearly as possible the intent of the parties, and if
unreformable, shall be divisible and deleted in such jurisdictions; elsewhere,
this Agreement shall not be affected.
10.5. The construction, performance, and execution of this Agreement
shall be governed by the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
10.6. Except as required by law, the Company shall not use the name
of THE JOHNS HOPKINS UNIVERSITY or THE JOHNS HOPKINS HEALTH SYSTEM or any of
its constituent parts, such as the Johns Hopkins Hospital or any contraction
thereof or the name of Inventors of PATENT RIGHTS in any advertising,
promotional, sales literature, fundraising documents, or other such
publications without prior written consent from an officer of JHU. In the case
of disclosure required by law, Company shall give JHU the opportunity to review
and comment on such disclosure. Company shall allow at least seven (7)
business days notice of any proposed public disclosure for JHU's review and
comment or to provide written consent. Notwithstanding the foregoing, the
Company shall have the right to state "Geron is sponsoring research relating to
primordial germ cell lines and primordial stem cell lines in the laboratory of
Dr. John Gearhart at The Johns Hopkins University."
10.7. JHU warrants that it is the sole owner and has sole right,
title, and interest in the inventions claimed under PATENT RIGHTS and in the
LICENSED MATERIALS and the RETAINED MATERIALS. JHU does not warrant the
validity of any patents or that practice under such patents shall be free of
infringement. EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 10.7, COMPANY
AGREES THAT THE PATENT RIGHTS ARE PROVIDED "AS IS", AND THAT JHU MAKES NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE PERFORMANCE OF LICENSED
PRODUCT(S) AND LICENSED SERVICES INCLUDING THEIR SAFETY, EFFECTIVENESS, OR
COMMERCIAL VIABILITY. JHU DISCLAIMS ALL WARRANTIES WITH REGARD TO PRODUCT(S)
AND SERVICES LICENSED UNDER THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ALL
WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY AND FITNESS FOR ANY
PARTICULAR PURPOSE. . EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 10.7,
JHU ADDITIONALLY DISCLAIMS ALL OBLIGATIONS AND LIABILITIES ON THE PART OF JHU
AND INVENTORS, FOR DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT,
SPECIAL, AND CONSEQUENTIAL DAMAGES, ATTORNEYS' AND EXPERTS' FEES, AND COURT
COSTS (EVEN IF JHU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, FEES,
OR COSTS), ARISING OUT OF OR IN CONNECTION WITH THE MANUFACTURE, USE, OR SALE
OF THE PRODUCT(S) AND SERVICES LICENSED UNDER THIS AGREEMENT. COMPANY,
AFFILIATED COMPANIES, AND SUBLICENSEES ASSUME ALL RESPONSIBILITY AND LIABILITY
FOR LOSS OR DAMAGE CAUSED BY A PRODUCT AND SERVICE MANUFACTURED, USED, OR SOLD
BY COMPANY, ITS SUBLICENSEES, AND AFFILIATED COMPANIES THAT IS A LICENSED
PRODUCT OR LICENSED SERVICE AS DEFINED IN THIS AGREEMENT.
10.8. A. JHU and the Inventors will not, under the provisions
of this Agreement or otherwise, have control over the manner in which Company,
its AFFILIATED COMPANIES, its sublicensees, those operating for its account, or
third parties who purchase LICENSED PRODUCT(S) or LICENSED SERVICES from any of
the foregoing entities (collectively, the "Users"), practice the inventions
claimed under the PATENT RIGHTS or derived from the LICENSED MATERIALS (the
"Inventions"). The Company shall defend and hold JHU, The Johns Hopkins Health
Systems, their present and former regents, trustees, officers, inventors of
PATENT RIGHTS, agents, faculty, employees, and students harmless as against any
judgments, fees, expenses, or other costs arising from or incidental to any
product liability or other lawsuit,
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LICENSE AGREEMENT
claim, demand or other action brought as a consequence of the practice of said
Inventions by any of the Users, whether or not JHU or said Inventors, either
jointly or severally, is named as a party defendant in any such lawsuit.
Practice of the Inventions by any of the Users shall be considered the
Company's practice of said inventions for purposes of this Paragraph 10.8(A).
The obligation of the Company to defend and indemnify as set out in this
Paragraph 10.8(A) shall survive the termination of this Agreement.
B. In addition, the Company agrees to defend, indemnify,
and hold harmless JHU and JHU's officers, agents, servants, and employees,
including but not limited to Dr. John Gearhart, for any and all claims or
lawsuits which are made or filed by a Potential Claimant and arise directly or
indirectly out of JHU's and Dr. Gearhart's research and work on ES CELLS and EG
CELLS prior to the EFFECTIVE DATE (the "Gearhart Research"), to the extent such
claims or lawsuits arise out of:
(1) any discussions and negotiations that (i) occurred prior to the
EFFECTIVE DATE between (a) JHU and Dr. Gearhart, on the one hand, and
(b) [*] and its representatives, on the other hand, regarding the
Gearhart Research, and (ii) are described in the Written Documentation
(as such term is defined below) and;
(2) any alleged agreements that (i) were entered into prior to the
EFFECTIVE DATE between (a) JHU and/or Dr. Gearhart, on the one hand,
and (b) [*], on the other hand, regarding the Gearhart Research, and
(ii) are described, or implied from the course of conduct described,
in the Written Documentation;
(3) JHU's and/or Dr. Gearhart's agreements with the Company regarding
the results of the Gearhart Research; and
(4) any alleged infringements or other violation of the United States
patent laws with respect to U.S. Patent No. 5,453,357 or any related
patents prior to the EFFECTIVE DATE by JHU and/or Dr. Gearhart in
performing the Gearhart Research.
"Potential Claimant" shall mean [*] or any person acting directly or indirectly
on their behalf, or any assignee of their interest, or any successor in
interest. The Company agrees to provide, at its cost, legal counsel to JHU in
the event of a lawsuit covered by this indemnity. The Company may select
counsel, and JHU will cooperate with the Company and its counsel in the defense
of any and all claims regarding the Gearhart Research. JHU agrees to provide the
Company adequate notice of any and all such claims and hereby grants the Company
the right to control any and all such litigation of such claims and any
settlement thereof. The Company agrees to pay the costs of any judgment entered
against JHU, JHU agents, servants, and employees on behalf of the Potential
Claimants, and any settlement of any claims with the Potential Claimants,
provided, however, that the Company has received adequate notice and the right
to control such litigation and/or settlement. JHU and Dr. Gearhart hereby
represent that, as of the EFFECTIVE DATE, they have provided to the Company
written documentation describing in detail the substance and date of all
communications and agreements, oral or written, between (i) JHU and/or JHU's
officers, agents, servants, and employees, including, but not limited to, Dr.
John Gearhart, and (ii) all Potential Claimants (the "Written Documentation").
In the event of a material breach of the foregoing representation, neither the
Company nor its permitted assignees shall have any obligations under this
Paragraph 10.8(B). In the event the Company assigns this Agreement to a
SPIN-OUT, as permitted by Paragraph 10.3, Company will continue to defend,
indemnify, and hold harmless JHU and JHU's officers, agents, servants, and
employees, including, but not limited to, Dr. John Gearhart, from the claims and
lawsuits covered by this Paragraph 10.8(B).
10.9. Prior to initial human testing or first commercial sale of any
LICENSED PRODUCT or LICENSED SERVICE, as the case may be, in any particular
country, the
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
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LICENSE AGREEMENT
Company, an AFFILIATED COMPANY, or any sublicensee shall establish and
maintain, in each country in which Company, an AFFILIATED COMPANY, or
sublicensee shall test or sell LICENSED PRODUCT(S) and LICENSED SERVICES,
commercially reasonable product liability or other appropriate insurance
coverage appropriate to the risks involved in testing or selling LICENSED
PRODUCT(S) and LICENSED SERVICES and will annually present evidence to JHU that
such coverage is being maintained. Upon JHU's request, the Company will furnish
JHU with a Certificate of Insurance of each product liability insurance policy
obtained. JHU shall be listed as an additional insured in Company's said
insurance policies.
10.10. JHU may publish manuscripts, abstracts, or the like describing
the PATENT RIGHTS and inventions contained therein provided Confidential
Information of Company (as defined in Paragraph 7.3) is not included in such
publication in accordance with this Paragraph, or, if JHU wishes to publish
Confidential Information of Company, JHU has obtained the prior written consent
of Company to do so. Otherwise, JHU and the Inventors shall be free to publish
manuscripts, abstracts, or the like directed to the work done at JHU related to
the PATENT RIGHTS and inventions contained therein without prior approval of
Company, provided that (i) no later than thirty (30) days prior to submission
of such manuscript, abstract, or the like, JHU provides a copy of such proposed
submission to Company, (ii) if Company believes that the proposed submission
contains subject matter for which a patent should be sought, then prior to the
expiration of the thirty (30) day period, the Company shall so notify JHU, and
(iii) JHU shall then delay submission for publication for an additional period
of up to ninety (90) days to permit the preparing and filing of a patent
application on the subject matter to be disclosed.
10.11. This Agreement and that certain Research Agreement entered
into by the parties contemporaneously herewith constitutes the entire
understanding between the parties with respect to the obligations of the
parties with respect to the subject matter hereof and supersedes and replaces
all prior agreements, understandings, writings, and discussions between the
parties relating to said subject matter.
10.12. This Agreement may be amended and any of its terms or
conditions may be waived only by a written instrument executed by the
authorized officials of the parties or, in the case of a waiver, by the party
waiving compliance. The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by either party of any condition or
term in any one or more instances shall be construed as a further or continuing
waiver of such condition or term or of any other condition or term.
10.13. Except as explicitly provided otherwise herein, upon
termination of this Agreement for any reason, Article 1 and Paragraphs 4.9,
7.3, 8.7, 10.5, 10.6, 10.7, and 10.8 shall survive termination of this
Agreement.
SIGNATURE PAGE FOLLOWS
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LICENSE AGREEMENT
IN WITNESS WHEREOF the respective parties hereto have executed this
Agreement by their duly authorized officers on the date appearing below their
signatures.
THE JOHNS HOPKINS UNIVERSITY GERON CORPORATION
/s/ N. FRANKLIN ADKINSON, JR. /s/ RONALD W. EASTMAN
- ------------------------------- --------------------------------------
N. Franklin Adkinson, Jr., M.D. Ronald W. Eastman
Interim Vice Dean for Research President and CEO
Dated: August 20, 1997 Dated: August 11, 1997
-------------------------- --------------------------------
I have read and agree to abide by the terms of this Agreement:
/s/ JOHN GEARHART /s/ MICHAEL SHAMBLOTT
- ------------------------------- --------------------------------------
Dr. John Gearhart : Dr. Michael Shamblott
Dated: Dated August 17, 1997 Dated: August 8, 1997
-------------------------- --------------------------------
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<PAGE> 18
EXHIBIT 1.5
FORM OF JHU MATERIALS TRANSFER AGREEMENT
Dear __________:
Johns Hopkins University (JHU) agrees to provide you the material(s) indicated
below, which you requested from __________ for your nonclinical research
studies. In order to protect JHU's proprietary rights in the material(s) or its
(their) progeny, portions, and derivatives thereof (hereinafter "Materials"), we
request that you and an authorized official of your institution sign, date, and
return this letter agreement to us.
Material(s) identification: ______________________________________
Acceptance of the Material(s) by your institution confirms your agreement to the
following conditions:
1. This agreement and the resulting transfer of the Materials(s)
constitute a nonexclusive license to use the Material(s) for nonprofit,
nonclinical research purposes only. The Material(s) will not be used in humans
and will be stored, used, and disposed of in accordance with applicable law and
regulations. The Material(s) will not be used for any commercial purpose. This
agreement is not assignable and the Material(s) may not be transferred to
another party.
2. You recognize that your work with these Material(s) shall not
diverge from the workplan attached hereto as Exhibit A without advance written
approval by JHU; any such approval shall not be unreasonably withheld but shall
be contingent upon a determination that the proposed work is consistent with the
guidelines and policies of an Ethics Advisory Board that has been established in
agreement with JHU relating to the Material(s).
3. You are free to publish your work involving this Material(s). You
agree to provide JHU with a manuscript describing the work you intend to publish
thirty (30) days in advance of submitting your work for publication or
presenting your work in public, so that JHU may determine that the work
described is consistent with the workplan attached hereto as Exhibit A and the
guidelines and policies of an Ethics Advisory Board. You further agree to
provide JHU with a copy of the material actually presented or published. In the
event JHU determines at any time that your work is inconsistent with the
workplan attached hereto as Exhibit A or the guidelines and policies of an
Ethics Advisory Board, then JHU shall have the right to terminate this Agreement
and the nonexclusive license granted hereby, and you shall, upon such
termination, cease all work with the Material(s) and return to JHU or destroy,
at JHU's option and request, all such Material(s) and any material derived
therefrom.
4. You agree that any patent application filed by you or the
institution at which you work that discloses or claims experiments conducted or
results generated using the Material(s) or that requires the use of the
Materials in performing an invention claimed therein and any patent issuing
thereon ("Derivative Patent") shall be subject to JHU's commercial licensee's
right:
(a) to review the application prior to filing under appropriate
obligation of confidentiality; and
(b) to take, at the Commercial licensee's sole option and
discretion, either:
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<PAGE> 19
EXHIBIT 1.5
FORM OF JHU MATERIALS TRANSFER AGREEMENT
(i) an exclusive, royalty-bearing license to make, have
made, use, sell, have sold, and import any product or service using any
invention disclosed or claimed in the Derivative Patent, such royalty not to
exceed [*] of net sales or revenues regarding such product or service, such
license to include no other payment terms but otherwise to include commercially
reasonable terms established by good faith negotiation for a period of no more
than [*] months or by binding arbitration thereafter; or
(ii) a royalty-free, non-exclusive license to make, have
made, use, sell, have sold, and import any product or service using any
invention disclosed or claimed in the Derivative Patent, such license to include
no payment terms but otherwise to include commercially reasonable terms
established by good faith negotiation for a period of no more than [*]
months or by binding arbitration thereafter.
5. JHU makes no representations whatsoever as to the Material(s).
The Material(s) are experimental in nature and are provided WITHOUT WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY,
EXPRESS OR IMPLIED. JHU MAKES NO REPRESENTATION OR WARRANTY THAT THE USE OF THE
MATERIAL(S) WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.
6. Except where precluded by Federal law and to the extent allowed
by applicable state law, you and your institution agree to defend, indemnify,
and hold harmless JHU, its trustees, officers, employees, and agents from any
loss, claim, damage, or liability, of any kind whatsoever, which may arise from
you or your institution's use, storage, or disposal of the Material(s) or any
other material that could not have been made but for the Material(s), except to
the extent such arise due to the gross negligence of JHU.
7. You shall not use the name of THE JOHNS HOPKINS UNIVERSITY or THE
JOHNS HOPKINS HEALTH SYSTEM or any of its constituent parts, such as the Johns
Hopkins Hospital or any contraction thereof or the name of its employees in any
advertising, promotional, sales literature, or fundraising documents without
prior written consent from an officer of JHU.
To indicate your and your institution's agreement to the conditions, you and an
authorized official should sign and date this letter in the spaces indicated
below and return it to me. If you have any questions concerning this agreement,
you may call me at 410-955-4666.
Sincerely,
Howard W. Califano, Esq.
Assistant Dean and Director
Office of Technology Licensing
AN AUTHORIZED SIGNATURE IS THAT OF AN INSTITUTIONAL OFFICIAL OR COMPANY OFFICER
SPECIFICALLY AUTHORIZED TO EXECUTE DOCUMENTS OF THIS TYPE ON BEHALF OF THE
INSTITUTION.
- ------------------------------ ------------------------------
Authorized Signature Recipient Investigator
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------
Date: Date:
------------------------- ------------------------
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 2 of 2
<PAGE> 20
EXHIBIT 4.2(A)
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
August 1, 1997, by and between Geron Corporation, a Delaware corporation ("the
Company"), and The Johns Hopkins University, a Maryland corporation ("JHU").
WHEREAS, JHU and the Company have entered into a License Agreement
(the "License Agreement") having an effective date of August 1, 1997.
WHEREAS, pursuant to Article 4, Paragraph 4.2B of the License
Agreement, the Company has agreed to issue to JHU [*] shares of the Company's
Common Stock (the "Shares") in consideration of the execution of License
Agreement and the rights granted to the Company thereunder.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and JHU hereby agree as
follows:
1. The Company agrees to issue to JHU the Shares. The issuance of
the Shares shall take place at such time and place upon which the Company and
JHU mutually agree, either orally or in writing, but, in no event later than
thirty (30) days after the Effective Date of the License Agreement (the
"Closing"). At the Closing, or within ten (10) business days thereafter, the
Company will deliver to JHU a certificate representing the Shares.
2. In connection with the issuance of the Shares, JHU represents to
the Company the following:
(a) JHU is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. JHU is acquiring the
Shares for investment for its own account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) JHU understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of JHU's
investment intent as expressed herein.
(c) JHU understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection, JHU represents that it is generally familiar
with SEC Rule 144, as presently in effect ("Rule 144"), and that JHU understands
the resale limitations imposed thereby and by the Act.
(d) JHU represents that JHU has consulted any tax consultants
JHU deems advisable in connection the acquisition or disposition of the Shares
and that JHU is not relying on the Company for any tax advice.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 2
<PAGE> 21
EXHIBIT 4.2(A)
COMMON STOCK PURCHASE AGREEMENT
(e) It is understood that the Common Stock, and any securities
issued in respect thereof or exchange therefor, will bear the following legend,
and may be resold only as set forth in the following legend:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY, STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(f) JHU is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act.
3. Without in any way limiting the representations set forth in
Paragraph 2 above, JHU agrees not to make any disposition of all or any portion
of the Shares unless and until the transferee has agreed in writing for the
benefit of the Company to be bound by the terms and conditions of this
Agreement, and
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement and any applicable state
securities laws; or
(b) (i) JHU shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if requested by
the Company, JHU shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such Shares under the Securities Act or any applicable state
securities laws. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144, except in unusual
circumstances.
4. This Agreement may be executed in one or more counterparts each
of which shall be deemed an original, but all of which together shall constitute
one and the same.
5. JHU acknowledges and agrees that these Shares issued pursuant to
Paragraph 4.2B of the License Agreement shall be subject to a [*] restriction
on transfer as set forth in that License Agreement.
IN WITNESS WHEREOF, the undersigned, by each of their respective
duly authorized officers and representatives, have set forth their hands hereto
to be effective as of the date first set forth above.
GERON CORPORATION THE JOHNS HOPKINS UNIVERSITY
/S/ Ronald W. Eastman /S/ Ronald W. Eastman
- ------------------------------- -------------------------------
Ronald W. Eastman Authorized Signature
President and Name:
Chief Executive Officer --------------------------
Title:
-------------------------
Dated: 8/11/97 Dated: August 20, 97
------------------------- -------------------------
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 2 of 2
<PAGE> 22
EXHIBIT 4.2(B)
WARRANT AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT.
Warrant No. JHU-1 Number of Shares: [*]
Date of Issuance: August 1, 1997 (subject to adjustment)
GERON CORPORATION
COMMON STOCK WARRANT AGREEMENT
Geron Corporation (the "Company"), for value received, hereby
certifies that The Johns Hopkins University ("JHU"), or its registered assigns
(in accordance with Section 3 below) (the "Registered Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company, at any time
after the date hereof and on or before the Expiration Date (as defined in
Section 6 below), up to [*] shares of Common Stock of the Company (as adjusted
from time to time pursuant to the terms of this Warrant) at a purchase price of
[*] per share. The shares purchasable upon exercise of this Warrant are
hereinafter referred to as the "Warrant Stock." The exercise price per share of
Warrant Stock is hereinafter referred to as the "Purchase Price."
1. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may be exercised by the
Registered Holder, in whole and not in part, by surrendering this Warrant, with
the purchase form appended hereto as Exhibit A duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney-in-fact, at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full by cash, check or wire
transfer of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise.
(b) EFFECTIVE TIME OF EXERCISE. The exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the day on which this Warrant shall have been surrendered to the Company,
with payment of the applicable Purchase Price, as provided in Section 1(a)
above. At such time, the person or persons in whose name or names any
certificates for Warrant Stock shall be issuable upon such exercise as provided
in Section 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.
(c) DELIVERY TO REGISTERED HOLDER. As soon as practicable after
the exercise of this Warrant, and in any event within ten (10) days thereafter,
the Company at its expense will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Registered Holder (upon payment by such
Registered Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of shares of Warrant Stock to which such Registered
Holder shall be entitled.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 6
<PAGE> 23
EXHIBIT 4.2(B)
WARRANT AGREEMENT
2. CERTAIN ADJUSTMENTS.
(a) MERGERS OR CONSOLIDATIONS. If at any time there shall be a
capital reorganization (other than a combination or subdivision of Warrant Stock
otherwise provided for herein), or a merger or consolidation of the Company with
another corporation, then, as a part of such reorganization, merger or
consolidation, lawful provision shall be made so that the Registered Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified in this Warrant and upon payment of the Purchase Price, the
number of shares of stock or other securities or property of the Company or the
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled under the provisions of the agreement
in such reorganization, merger or consolidation if this Warrant had been
exercised immediately before that reorganization, merger or consolidation. In
any such case, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the provisions
of this Warrant with respect to the rights and interests of the Registered
Holder after the reorganization, merger or consolidation to the end that the
provisions of this Warrant (including adjustment of the Purchase Price then in
effect and the number of shares of Warrant Stock) shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
(b) SPLITS AND SUBDIVISIONS; DIVIDENDS. In the event the Company
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such distribution, split or subdivision if no record date is fixed), the per
share Purchase Price shall be appropriately decreased and the number of shares
of Warrant Stock shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.
(c) COMBINATION OF SHARES. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share purchase
price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) ADJUSTMENT CERTIFICATE. When any adjustment is required to
be made in the securities issuable upon exercise of this Warrant, the Company
shall mail to the Registered Holder a certificate setting forth a statement of
the facts requiring such adjustment. Such certificate shall also set forth the
kind and amount of stock or other securities or property into which this Warrant
shall be exercisable following the occurrence of any of the events specified in
this Section 2.
3. TRANSFER RESTRICTIONS; REPRESENTATIONS.
(a) The Registered Holder of this Warrant acknowledges that this
Warrant and the Warrant Stock have not been registered under the Securities Act,
and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise
in the absence of (i) an effective registration statement under the Securities
Act as to this Warrant or such
Page 2 of 6
<PAGE> 24
EXHIBIT 4.2(B)
WARRANT AGREEMENT
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock or (ii) an opinion of counsel, reasonably satisfactory to the Company,
that such registration and qualification are not required. This Warrant is not
transferable without the prior written consent of the Company. It is understood
and agreed that the preceding sentence does not apply to, or limit the sale,
pledge, distribution, offers for sale, transfer or other disposition of, Warrant
Stock.
(b) The Registered Holder hereby further represents and warrants
to the Company with respect to the issuance of the Warrant and the purchase of
the Warrant Stock as follows:
(i) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Warrant is
issued to the Registered Holder in reliance upon such Registered Holder's
representation to the Company, which by such Registered Holder's execution of
this Warrant such Registered Holder hereby confirms, that the Warrant and the
Warrant Stock will be acquired for investment for such Registered Holder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Registered Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
(ii) KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC
RISKS. The Registered Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment contemplated by this Warrant and such party is able to bear the
economic risk of its investment in the Company (including a complete loss of its
investment).
(iii) RESALE. The Registered Holder understands that the
Warrant being issued hereunder and the Warrant Stock to be purchased hereunder
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations,
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Securities Act") only in certain circumstances. In this
regard, the Registered Holder represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(iv) LEGENDS. The Registered Holder acknowledges that all
stock certificates representing shares of stock issued to the Registered Holder
upon exercise of this Warrant may, if such Warrant Stock is not registered under
the Securities Act, have affixed thereto a legend substantially in the following
form:
(x) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH SECURITIES ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH SECURITIES ACT."
(y) Any legend required by the laws of any state in
which the securities will be issued.
(c) Subject to the provisions of Section 3(a) hereof, this
Warrant and all rights hereunder are transferable in whole but not in part upon
surrender of the Warrant with a properly executed assignment (in the form of
Exhibit B hereto) at the principal office of the Company.
Page 3 of 6
<PAGE> 25
EXHIBIT 4.2(B)
WARRANT AGREEMENT
(d) The Company may treat the Registered Holder of this Warrant
as the absolute owner hereof for all purposes; provided, however, that if and
when this Warrant is properly assigned in blank, the Company may (but shall not
be required to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
(e) The Company will maintain a register containing the names
and addresses of the Registered Holders of this Warrant. Any Registered Holder
may change such Registered Holder's address as shown on the warrant register by
written notice to the Company requesting such change.
(f) The Company hereby represents and warrants to the Registered
Holder as follows:
(i) The Company is a corporation validly existing and in
good standing under the laws of the State of Delaware.
(ii) The Company has full corporate right, power and
authority (including the due authorization by all necessary corporate action) to
enter into this Warrant and to perform its obligations hereunder without the
need for the consent of any other person; and this Warrant has been duly
authorized, executed and delivered and constitutes legal, valid and binding
obligations of the Company enforceable against it in accordance with the terms
hereof and thereof. The execution, delivery and performance of this Warrant by
the Company does not contravene or violate any laws, rules or regulations
applicable to it.
(iii) The Company has taken such corporate action as is
necessary or appropriate to enable it to perform its obligations hereunder,
including, but not limited to, the issuance, sale and delivery of the Warrant.
(iv) The Warrant Stock, when issued and paid for in
compliance with the provisions of this Warrant, will be validly issued, fully
paid and non-assessable.
(v) JHU acknowledges and agrees that the warrant stock
shall be subject to a [*] restriction on transfer as set forth in the
License Agreement between JHU and the Company having an effective date of August
1, 1997.
4. NO IMPAIRMENT. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
5. TERMINATION. This Warrant (and the right to purchase securities
upon exercise hereof) shall terminate upon the tenth anniversary of the Date of
Issuance (the "Expiration Date").
6. NOTICES OF CERTAIN TRANSACTIONS. In case:
(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 4 of 6
<PAGE> 26
EXHIBIT 4.2(B)
WARRANT AGREEMENT
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, and (ii) the effective date
on which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is expected to take place, and the record
date for determining shareholders entitled to vote thereon. Such notice shall be
mailed at least ten (10) calendar days prior to the record date or effective
date for the event specified in such notice.
7. RESERVATION OF STOCK. The Company will at all times reserve and
keep available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock or other stock or securities, as from time
to time shall be issuable upon the exercise of this Warrant.
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder
of any Warrant, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 3(a) hereof,
issue and deliver to or upon the order of such Registered Holder, at the
Company's expense, a new Warrant of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant so surrendered.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. MAILING OF NOTICES. Any notice required or permitted by this
Warrant shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by a nationally-recognized delivery service (such as
Federal Express or UPS) or confirmed facsimile, or forty-eight (48) hours after
being deposited in the U.S. mail as certified or registered mail with postage
prepaid, if such notice is addressed to the party to be notified at such party's
address or facsimile number as set forth below or as subsequently modified by
written notice.
11. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant,
the Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company (including without limitation the
right to notification of stockholder meetings or the right to receive any notice
or other communication concerning the business or affairs of the Company).
12. NO FRACTIONAL SHARES. No fractional shares of Common Stock will
be issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair
Page 5 of 6
<PAGE> 27
EXHIBIT 4.2(B)
WARRANT AGREEMENT
market value of one share of Common Stock on the date of exercise, as determined
in good faith by the Company's Board of Directors.
13. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or
waived only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought.
14. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
15. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company and the
Registered Holder and their respective permitted successors and assigns (in the
case of the Registered Holder, in accordance with Section 3).
16. GOVERNING LAW. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.
GERON CORPORATION THE JOHNS HOPKINS UNIVERSITY
[SIG] [SIG]
- ----------------------------- -----------------------------------
Signature Signature
Name: Ronald W. Eastman Name: John D. Stobo, M.D.
------------------------ ------------------------------
Title: President and CEO Title: Vice Dean for Research and
----------------------- Technology
-----------------------------
Address: 230 Constitution Dr. Address:
--------------------- ---------------------------
Menlo Park, CA 94025
--------------------- ---------------------------
Facsimile: 650-473-7701 Facsimile:
--------------------- --------------------------
Dated: 8/11/97 Dated: August 20, 1997
--------------------- ----------------------------
Page 6 of 6
<PAGE> 28
EXHIBIT A
PURCHASE FORM
To: GERON CORPORATION Date:
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby irrevocably elects to purchase ___________ shares of
the Common Stock covered by such Warrant and herewith makes payment of
$___________, representing the full purchase price for such shares at the price
per share provided for in such Warrant.
The undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 4 of the Warrant and accepts such
shares subject to the restrictions of the Warrant, copies of which are available
from the Secretary of the Company.
- ---------------------------------
Signature
Name:
----------------------------
Title:
---------------------------
Address:
-------------------------
-------------------------
<PAGE> 29
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby set
forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ------------------------- -------------------------
Signature Dated:
Witness:
-----------------
-----------------
<PAGE> 30
EXHIBIT 4.6(A)
FORM OF COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
__________, 1997, by and between Geron Corporation, a Delaware corporation ("the
Company"), and The Johns Hopkins University, a Maryland corporation ("JHU").
WHEREAS, JHU and the Company have entered into a License Agreement
(the "License Agreement") having an effective date of August 1st, 1997.
WHEREAS, pursuant to Article 4, Paragraph 4.6 of the License
Agreement, the Company has agreed to issue to JHU __________ (__________) shares
of the Company's Common Stock (the "Shares") in consideration of the achievement
of certain milestones set forth in the License Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and JHU hereby agree as
follows:
1. The Company agrees to issue to JHU the Shares. The issuance of
the Shares shall take place at such time and place upon which the Company and
JHU mutually agree, either orally or in writing, but, in no event later than
thirty (30) days after the achievement of the applicable milestone set forth in
Section 4.6 of the License Agreement (the "Closing"). At the Closing, or within
ten (10) business days thereafter, the Company will deliver to JHU a certificate
representing the Shares.
2. In connection with the issuance of the Shares, JHU represents to
the Company the following:
(a) JHU is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. JHU is acquiring the
Shares for investment for its own account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) JHU understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of JHU's
investment intent as expressed herein.
(c) JHU understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection, JHU represents that it is generally familiar
with SEC Rule 144, as presently in effect ("Rule 144"), and that JHU understands
the resale limitations imposed thereby and by the Act.
(d) JHU represents that JHU has consulted any tax consultants
JHU deems advisable in connection the acquisition or disposition of the Shares
and that JHU is not relying on the Company for any tax advice.
(e) It is understood that the Common Stock, and any securities
issued in respect thereof or exchange therefor, will bear the following legend,
and may be resold only as set forth in the following legend:
Page 1 of 2
<PAGE> 31
EXHIBIT 4.6(A)
FORM OF COMMON STOCK PURCHASE AGREEMENT
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY, STATING
THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
(f) JHU is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act.
3. Without in anyway limiting the representations set forth in
Paragraph 2 above, JHU agrees not to make any disposition of all or any portion
of the Shares unless and until the transferee has agreed in writing for the
benefit of the Company to be bound by the terms and conditions of this
Agreement, and
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement and any applicable state
securities laws; or
(b) (i) JHU shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if requested by
the Company, JHU shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such Shares under the Securities Act or any applicable state
securities laws. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144, except in unusual
circumstances.
4. This Agreement may be executed in one or more counterparts each
of which shall be deemed an original, but all of which together shall constitute
one and the same.
IN WITNESS WHEREOF, the undersigned, by each of their respective
duly authorized officers and representatives, have set forth their hands hereto
to be effective as of the date first set forth above.
GERON CORPORATION THE JOHNS HOPKINS UNIVERSITY
- ------------------------- -------------------------
Ronald W. Eastman Authorized Signature
President and Name:
Chief Executive Officer --------------------
Title:
-------------------
Dated: Dated:
------------------- -------------------
Page 2 of 2
<PAGE> 32
EXHIBIT 4.6(B)
FORM OF WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT.
Warrant No. JHU-______________ Number of Shares: _________
Date of Issuance: ___________ (subject to adjustment)
GERON CORPORATION
COMMON STOCK WARRANT AGREEMENT
Geron Corporation (the "Company"), for value received, hereby
certifies that The Johns Hopkins University ("JHU"), or its registered assigns
(in accordance with Section 3 below) (the "Registered Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company, at any time
after the date hereof and on or before the Expiration Date (as defined in
Section 6 below), up to ________ shares of Common Stock of the Company (as
adjusted from time to time pursuant to the terms of this Warrant) at a purchase
price of $_______ per share. The shares purchasable upon exercise of this
Warrant are hereinafter referred to as the "Warrant Stock." The exercise price
per share of Warrant Stock is hereinafter referred to as the "Purchase Price."
1. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may be exercised by the
Registered Holder, in whole and not in part, by surrendering this Warrant, with
the purchase form appended hereto as Exhibit A duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney-in-fact, at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full by cash, check or wire
transfer of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise.
(b) EFFECTIVE TIME OF EXERCISE. The exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the day on which this Warrant shall have been surrendered to the Company,
with payment of the applicable Purchase Price, as provided in Section 1(a)
above. At such time, the person or persons in whose name or names any
certificates for Warrant Stock shall be issuable upon such exercise as provided
in Section 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.
(c) DELIVERY TO REGISTERED HOLDER. As soon as practicable after
the exercise of this Warrant, and in any event within ten (10) days thereafter,
the Company at its expense will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Registered Holder (upon payment by such
Registered Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of shares of Warrant Stock to which such Registered
Holder shall be entitled.
Page 1 of 6
<PAGE> 33
EXHIBIT 4.6(B)
FORM OF WARRANT
2. CERTAIN ADJUSTMENTS.
(a) MERGERS OR CONSOLIDATIONS. If at any time there shall be a
capital reorganization (other than a combination or subdivision of Warrant Stock
otherwise provided for herein), or a merger or consolidation of the Company with
another corporation, then, as a part of such reorganization, merger or
consolidation, lawful provision shall be made so that the Registered Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified in this Warrant and upon payment of the Purchase Price, the
number of shares of stock or other securities or property of the Company or the
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled under the provisions of the agreement
in such reorganization, merger or consolidation if this Warrant had been
exercised immediately before that reorganization, merger or consolidation. In
any such case, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the provisions
of this Warrant with respect to the rights and interests of the Registered
Holder after the reorganization, merger or consolidation to the end that the
provisions of this Warrant (including adjustment of the Purchase Price then in
effect and the number of shares of Warrant Stock) shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
(b) SPLITS AND SUBDIVISIONS; DIVIDENDS. In the event the Company
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such distribution, split or subdivision if no record date is fixed), the per
share Purchase Price shall be appropriately decreased and the number of shares
of Warrant Stock shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.
(c) COMBINATION OF SHARES. If the number of shares of Common
Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock, the per share purchase
price shall be appropriately increased and the number of shares of Warrant Stock
shall be appropriately decreased in proportion to such decrease in outstanding
shares.
(d) ADJUSTMENT CERTIFICATE. When any adjustment is required to be
made in the securities issuable upon exercise of this Warrant, the Company shall
mail to the Registered Holder a certificate setting forth a statement of the
facts requiring such adjustment. Such certificate shall also set forth the kind
and amount of stock or other securities or property into which this Warrant
shall be exercisable following the occurrence of any of the events specified in
this Section 2.
3. TRANSFER RESTRICTIONS; REPRESENTATIONS.
(a) The Registered Holder of this Warrant acknowledges that this
Warrant and the Warrant Stock have not been registered under the Securities Act,
and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise
in the absence of (i) an effective registration statement under the Securities
Act as to this Warrant or such
Page 2 of 6
<PAGE> 34
EXHIBIT 4.6(B)
FORM OF WARRANT
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock or (ii) an opinion of counsel, reasonably satisfactory to the Company,
that such registration and qualification are not required. This Warrant is not
transferable without the prior written consent of the Company. It is understood
and agreed that the preceding sentence does not apply to, or limit the sale,
pledge, distribution, offers for sale, transfer or other disposition of, Warrant
Stock.
(b) The Registered Holder hereby further represents and warrants
to the Company with respect to the issuance of the Warrant and the purchase of
the Warrant Stock as follows:
(i) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Warrant is
issued to the Registered Holder in reliance upon such Registered Holder's
representation to the Company, which by such Registered Holder's execution of
this Warrant such Registered Holder hereby confirms, that the Warrant and the
Warrant Stock will be acquired for investment for such Registered Holder's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Registered Holder has no present
intention of selling, granting any participation in, or otherwise distributing
the same.
(ii) KNOWLEDGE AND EXPERIENCE; ABILITY TO BEAR ECONOMIC
RISKS. The Registered Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment contemplated by this Warrant and such party is able to bear the
economic risk of its investment in the Company (including a complete loss of its
investment).
(iii) RESALE. The Registered Holder understands that the
Warrant being issued hereunder and the Warrant Stock to be purchased hereunder
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations,
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Securities Act") only in certain circumstances. In this
regard, the Registered Holder represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act.
(iv) LEGENDS. The Registered Holder acknowledges that all
stock certificates representing shares of stock issued to the Registered Holder
upon exercise of this Warrant may, if such Warrant Stock is not registered under
the Securities Act, have affixed thereto a legend substantially in the following
form:
(x) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH SECURITIES ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH SECURITIES ACT."
(y) Any legend required by the laws of any state in
which the securities will be issued.
(c) Subject to the provisions of Section 3(a) hereof, this
Warrant and all rights hereunder are transferable in whole but not in part upon
surrender of the Warrant with a properly executed assignment (in the form of
Exhibit B hereto) at the principal office of the Company.
Page 3 of 6
<PAGE> 35
EXHIBIT 4.6(B)
FORM OF WARRANT
(d) The Company may treat the Registered Holder of this Warrant
as the absolute owner hereof for all purposes; provided, however, that if and
when this Warrant is properly assigned in blank, the Company may (but shall not
be required to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
(e) The Company will maintain a register containing the names
and addresses of the Registered Holders of this Warrant. Any Registered Holder
may change such Registered Holder's address as shown on the warrant register by
written notice to the Company requesting such change.
(f) The Company hereby represents and warrants to the Registered
Holder as follows:
(i) The Company is a corporation validly existing and in
good standing under the laws of the State of Delaware.
(ii) The Company has full corporate right, power and
authority (including the due authorization by all necessary corporate action) to
enter into this Warrant and to perform its obligations hereunder without the
need for the consent of any other person; and this Warrant has been duly
authorized, executed and delivered and constitutes legal, valid and binding
obligations of the Company enforceable against it in accordance with the terms
hereof and thereof. The execution, delivery and performance of this Warrant by
the Company does not contravene or violate any laws, rules or regulations
applicable to it.
(iii) The Company has taken such corporate action as is
necessary or appropriate to enable it to perform its obligations hereunder,
including, but not limited to, the issuance, sale and delivery of the Warrant.
(iv) The Warrant Stock, when issued and paid for in
compliance with the provisions of this Warrant, will be validly issued, fully
paid and non-assessable.
4. NO IMPAIRMENT. The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
5. TERMINATION. This Warrant (and the right to purchase securities
upon exercise hereof) shall terminate upon the tenth anniversary of the Date of
Issuance (the "Expiration Date").
6. NOTICES OF CERTAIN TRANSACTIONS. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company, or
Page 4 of 6
<PAGE> 36
EXHIBIT 4.6(B)
FORM OF WARRANT
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to the Registered Holder of this Warrant a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, and (ii) the effective date
on which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is expected to take place, and the record
date for determining shareholders entitled to vote thereon. Such notice shall be
mailed at least ten (10) calendar days prior to the record date or effective
date for the event specified in such notice.
7. RESERVATION OF STOCK. The Company will at all times reserve and
keep available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock or other stock or securities, as from time
to time shall be issuable upon the exercise of this Warrant.
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder
of any Warrant, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 3(a) hereof,
issue and deliver to or upon the order of such Registered Holder, at the
Company's expense, a new Warrant of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant so surrendered.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
10. MAILING OF NOTICES. Any notice required or permitted by this
Warrant shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by a nationally-recognized delivery service (such as
Federal Express or UPS) or confirmed facsimile, or forty-eight (48) hours after
being deposited in the U.S. mail as certified or registered mail with postage
prepaid, if such notice is addressed to the party to be notified at such party's
address or facsimile number as set forth below or as subsequently modified by
written notice.
11. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant,
the Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company (including without limitation the
right to notification of stockholder meetings or the right to receive any notice
or other communication concerning the business or affairs of the Company).
12. NO FRACTIONAL SHARES. No fractional shares of Common Stock will
be issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Common Stock on the date of exercise, as determined in good faith by the
Company's Board of Directors.
13. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or
waived only by an instrument in writing signed by the party against which
enforcement of the amendment or waiver is sought.
Page 5 of 6
<PAGE> 37
EXHIBIT 4.6(B)
FORM OF WARRANT
14. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
15. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon, the Company and the
Registered Holder and their respective permitted successors and assigns (in the
case of the Registered Holder, in accordance with Section 3).
16. GOVERNING LAW. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.
GERON CORPORATION REGISTERED HOLDER
- -------------------------- --------------------------
Signature Signature
Name: Name:
--------------------- ---------------------
Title: Title:
-------------------- --------------------
Address: Address:
------------------ -------------------
Facsimile: Facsimile:
---------------- -----------------
Dated: Dated:
-------------------- --------------------
Page 6 of 6
<PAGE> 38
EXHIBIT A
PURCHASE FORM
To: GERON CORPORATION Dated:__________________
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby irrevocably elects to purchase ___________ shares of
the Common Stock covered by such Warrant and herewith makes payment of
$___________, representing the full purchase price for such shares at the price
per share provided for in such Warrant.
The undersigned hereby confirms and acknowledges the investment
representations and warranties made in Section 4 of the Warrant and accepts such
shares subject to the restrictions of the Warrant, copies of which are available
from the Secretary of the Company.
- -------------------------------
Signature
Name:
--------------------------
Title:
-------------------------
Address:
-----------------------
-----------------------
<PAGE> 39
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby set
forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ------------------------------- -----------------------
Signature Dated:
Witness:
-----------------------
-----------------------
<PAGE> 1
EXHIBIT 10.36
RESEARCH AGREEMENT
THIS RESEARCH AGREEMENT("Agreement"), effective as of August 1st, 1997
(the "Effective Date") is made between GERON CORPORATION, a Delaware
corporation with principal offices at 230 Constitution Drive, Menlo Park, CA
94025 ("SPONSOR") and THE JOHNS HOPKINS UNIVERSITY, having an address at 720
Rutland Avenue, Baltimore, MD 21211-2196 ("University") through its School of
Medicine.
John Gearhart, M.D. ("Principal Investigator"), a leading authority in
embryonic germ cell ("EGC") and embryonic stem cell ("ESC") research will
conduct research funded by SPONSOR, which has agreed to support such a program
of research that all parties believe will be of benefit to the University and
will benefit the research, teaching, education, and public service goals of the
University.
SPONSOR wants to obtain certain rights and licenses to inventions and
technology arising out of or in connection with such a program of research, and
the University and Principal Investigator are willing to grant to SPONSOR
certain rights and licenses under terms and conditions set forth in this
Agreement and the License Agreement (as such term is defined below).
As of the Effective Date, the parties are also entering into a License
Agreement (the "License Agreement") that shall govern the use of, and rights
in, the intellectual property and biological materials developed pursuant to
this Agreement.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Field" shall mean methods of isolating, producing, and using
EGC, ESC, cells differentiated or otherwise derived therefrom, and biological
materials derived from or used with any of the foregoing for all purposes.
1.2 "Research Program" shall mean that program of research
described in the attached Exhibit A and made a part of this Agreement.
1.3 "Budget" shall mean that level of funding provided for the
Research Program, as described in the attached Exhibit B and in Paragraph 4.1.
1.4 "Party" shall mean either SPONSOR or University, collectively
referred to as "Parties".
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 12
<PAGE> 2
ARTICLE 2
PRINCIPAL INVESTIGATOR
2.1 For the purpose of this Agreement and pursuant to University
policy, the Principal Investigator shall be responsible for the administration,
direction, and content of the Research Program, including budgeting and any
revisions to the Budget (the direct and indirect costs of the Research Program
as set forth in the attached Exhibit B), as agreed to in writing by SPONSOR,
necessary to accomplish the Research Program. Should the Principal Investigator
leave the University or otherwise become unavailable during the term of this
Agreement, the University may nominate a replacement acceptable to SPONSOR. If
SPONSOR does not accept the proposed replacement, the Research Program and
Budget may be modified to reflect a reduced scope of work or terminated on
thirty (30) days' notice, at the option of SPONSOR and pursuant to Paragraph
10.3, except that University shall not have the right to terminate the License
Agreement. If an arrangement acceptable to SPONSOR can be made to subcontract
with the departed Principal Investigator and/or his new university to continue
the work of the Research Program, then the Parties agree to amend this
Agreement accordingly to allow the Research Program to be completed.
ARTICLE 3
RESEARCH PROGRAM
3.1 GENERAL. Principal Investigator will conduct the
Research Program in strict accordance with Exhibit A and all applicable laws
and regulations. Modifications to the Research Program may be made from time to
time, as mutually agreed upon in writing by the Parties.
3.2 RECORDS. Principal Investigator and other personnel
assisting Principal Investigator in the Research Program will keep complete and
accurate scientific records relating to the Research Program and will make such
records available to SPONSOR during normal business hours upon reasonable
notice. It is understood that such records shall include detailed, witnessed
laboratory notebooks sufficient to document any patentable inventions made in
the course of the Research Program. Upon request by SPONSOR and at SPONSOR's
expense, Principal Investigator agrees promptly to provide copies of all such
materials to SPONSOR. It is understood by the Parties that University owns
Principal Investigator's records and laboratory notebooks and the data
contained therein.
ARTICLE 4
FUNDING AND RECORDS
4.1 FUNDING. As consideration for the conduct of the Research
Program, SPONSOR agrees to provide a grant to fund Principal Investigator's
activities under the Research Program. The level of funding, which includes all
direct and indirect costs as set forth in the attached Exhibit B, is based on
direct costs of [*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 2 of 12
<PAGE> 3
[*] in the [*] year following the Effective Date and [*] in the [*] year
following the Effective Date. In addition to the foregoing direct costs,
indirect costs shall be prorated in accordance with the University's negotiated,
on-campus rates of [*] of direct costs until July 1, 1998, and [*] of direct
costs thereafter during the [*] year of research, provided, however, at such
time that the Principal Investigator moves into an off-campus building, and once
such move is complete, a revised budget will be submitted, and the indirect
costs recovery rate will be lowered to [*]. In the event a relocation does not
take place during the first year of research, the parties will negotiate
regarding the indirect costs rate to be applied to the second year of research.
All funds shall be paid in quarterly, advance installments. Each such payment
shall be made within fifteen (15) days after the date corresponding to a payment
amount, as set forth in Exhibit C. Checks shall be made payable to THE JOHNS
HOPKINS UNIVERSITY, tax ID 520595110, and sent to the attention of the Principal
Investigator c/o Ms. Barbara Chase, The Johns Hopkins University School of
Medicine, Department of Gyn/Ob, 720 Rutland Avenue, Houck Building 254C,
Baltimore, MD 21205-2196.
4.2 FINANCIAL RECORDS. The University and Principal
Investigator shall maintain all Research Program funds in a separate account
and shall expend such funds for wages and supplies and such other operating
expenses as incurred directly in the performance of the Research Program. The
University and Principal Investigator shall keep and maintain adequate books
and records to furnish complete and accurate information to SPONSOR regarding
funds provided by SPONSOR for conducting the Research Program. SPONSOR shall be
permitted to examine such books and records during normal business hours and
upon reasonable prior written note to the University and Principal
Investigator.
4.3 EQUIPMENT. Title to supplies or equipment purchased under
the Budget shall vest in the University.
ARTICLE 5
MEETING AND REPORTS
5.1 MEETINGS. Joint scientific meetings between the Principal
Investigator and SPONSOR shall occur on a regular basis during the term of this
Agreement to discuss the results generated under the Research Program and to
consider modifications to the Research Program based upon such results. Such
meetings shall occur, at SPONSOR's expense, on a quarterly basis and shall be
attended by Principal Investigator and designated members of his research group
and representatives of SPONSOR. Frequency and mode of meetings may be amended
at the mutual agreement of SPONSOR and Principal Investigator.
5.2 REPORTS. During the term of this Agreement, as part of the
regular quarterly meetings described in Paragraph 5.1, Principal Investigator
shall submit a
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 3 of 12
<PAGE> 4
written technical report to SPONSOR summarizing the research results and
know-how obtained during the just-ended calendar quarter in connection with the
Research Program. Principal Investigator shall also submit to SPONSOR a
comprehensive final report within ninety (90) days after expiration or
termination of this Agreement. In addition, the University shall provide
SPONSOR a written report of expenses incurred in the Research Program. Such
reports of expenses shall be submitted on an annual basis.
ARTICLE 6
INTELLECTUAL PROPERTY RIGHTS
6.1 "New Invention" shall mean any invention made solely by
University's employees or jointly by University's employees with one or more
employees of SPONSOR, as a result of the research performed by University under
the Research Program. New Invention shall not include University Invention
Disclosure DM-3127 or any patent application filed thereon or any patents
issuing thereon, such inventions having already been licensed to SPONSOR under
the License Agreement.
6.2 All rights to New Inventions made solely by University's
employees shall belong to the University and shall be disposed of in accordance
with the License Agreement, this Agreement, and University policy. All rights
to New Inventions made jointly by University's employees with one or more
employees of SPONSOR shall belong jointly to the University and the SPONSOR,
and University's interest shall be disposed of in accordance with the License
Agreement, this Agreement, and University policy. All patent applications filed
on such New Inventions, any patents issuing thereon, and all related
continuations, divisionals, continuations-in-part, extensions, or reissues
shall be deemed to be Patent Rights as defined in and for purposes of the
License Agreement.
6.3 University shall promptly disclose to SPONSOR any New
Inventions in the Field arising under this Agreement. SPONSOR agrees to hold
such disclosure on a confidential basis. SPONSOR shall advise the University in
writing within ninety (90) days of disclosure to SPONSOR whether it elects to
have such New Inventions included in the Patent Rights under the License
Agreement, as provided under Paragraph 6.2 of this Agreement and Article 5 of
the License Agreement. If SPONSOR elects not to accept such rights for
inclusion under the License Agreement, then rights to such New Inventions
disclosed hereunder shall be disposed of in accordance with University policy
with no further obligations to SPONSOR. University agrees to file, prosecute,
and maintain patent applications and patents on all New Inventions in the Field
in accordance with Paragraph 7.1 of the License Agreement.
6.4 Except as provided in Paragraph 7.1 of this Agreement, any New
Invention, information, or data resulting from the research funded under this
Research Agreement that is not patented due to its failure to qualify for
patent
Page 4 of 12
<PAGE> 5
protection or due to mutual determination by SPONSOR and University not to have
University submit a patent application shall be considered know-how. University
agrees that SPONSOR may use any such know-how for SPONSOR's own purposes.
University may use such know-how solely for its own noncommercial educational
and research purposes.
6.5 Except as set forth in this Agreement and in the License
Agreement, neither party shall be deemed to have granted the other party,
either directly or by implication, estoppel, or otherwise, any license under
any patents, patent applications, or other proprietary interests of any other
invention, discovery, or improvement of such party.
ARTICLE 7
CLINICAL SAMPLES
7.1 CLINICAL SAMPLES. Clinical samples or derivatives of
clinical samples, including blood, plasma, cell lines, tissues, DNA, and RNA
collected in the course of the Research Program by Principal Investigator or
his collaborators shall be maintained in the laboratory of Principal
Investigator. Principal Investigator shall provide SPONSOR samples of
biological or other materials generated in the Research Program in accordance
with Paragraph 6.1 of the License Agreement. All such materials shall be deemed
to be LICENSED MATERIALS for purposes of the License Agreement.
7.2 CONSENT.
(a) Principal Investigator and University agree that
materials and research samples to be obtained from human subjects after the
Effective Date for purposes of conducting research under this Agreement or
otherwise complying with Principal Investigator's and the University's
obligations hereunder or under the License Agreement shall be obtained only
after all necessary review and final approvals by the appropriate University
Institutional Review Board (IRB), said process specifically to include review
and final approval of the consent form(s) to be used to document that the human
subject has had an opportunity to be informed about the nature of and the
potential risks and benefits associated with the research and has decided to
provide biological materials knowing that cells derived from such biological
materials will be analyzed and retained by Principal Investigator and
ultimately may be provided to SPONSOR. SPONSOR shall be entitled to receive, at
SPONSOR's request, copies of IRB approvals and consent forms from University.
(b) Principal Investigator and the University agree that
Principal Investigator or any appropriately designated collaborator or
assistant will enroll an individual as a human subject only after Principal
Investigator has provided said individual full and complete disclosure of: (i)
any and all risks known or anticipated to be associated with participation,
(ii) any benefits that might be realized by the individual as a consequence of
his or her participation, and (iii) any other information required pursuant to
the research protocol that is finally approved by
Page 5 of 12
<PAGE> 6
the University's Institutional Review Board, human experimentation committee,
or similar body.
(c) Principal Investigator and the University agree that
no human subject will be enrolled until he or she has consented in writing to
his or her participation.
ARTICLE 8
CONFIDENTIAL INFORMATION
8.1 CONFIDENTIALITY. Either Party, from time to time and in
connection with the Research Program, may disclose Confidential Information to
the other Party. For purposes of this Agreement, "Confidential Information"
shall mean confidential and proprietary information and materials that are
designated as confidential in writing by the providing Party, whether by letter
or by use of an appropriate stamp or legend, prior to or at the same time any
such information or materials are disclosed. Notwithstanding the foregoing to
the contrary, materials and other information which are orally, visually, or
electronically disclosed, or are disclosed in writing without an appropriate
letter, stamp, or legend, shall constitute Confidential Information if the
providing Party, within thirty (30) days after such disclosure, delivers to the
other Party a written document or documents describing the materials and
identifying the Confidential Information. The Parties agree, to the extent
permitted by law, that Confidential Information shall remain the property of
the providing Party. The Parties further agree to use best efforts to insure
that Confidential Information shall not be disclosed, divulged, or otherwise
communicated to third parties or used for any purpose other than to conduct the
Research Program and for purposes of the License Agreement, provided that the
obligations under this Article 8 shall not apply to information that:
(a) is in possession of the recipient at the time of disclosure
thereof as demonstrated by written records;
(b) is or later becomes part of the public domain through no fault
of the recipient;
(c) is received by the recipient from a third party having no
obligation of confidentiality to the providing Party;
(d) is developed independently by the recipient without use of
Confidential Information; or
(e) is required by law or regulation to be disclosed; provided,
however, that recipient has provided written notice to providing Party promptly
to enable providing Party to seek a protective order or otherwise prevent
disclosure of such information.
8.2 TERM. The obligations of the parties under this Article 8
shall continue for a period of [*] years after the expiration or termination
of this Agreement.
8.3 RETURN OF MATERIALS. Upon expiration or termination of this
Agreement, recipient Party, if requested by the providing Party, shall return
all
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 6 of 12
<PAGE> 7
copies of Confidential Information disclosed, and all other materials provided
by the providing Party to the recipient Party under this Agreement; provided
that the recipient Party may retain one copy of such Confidential Information
and such materials for archival purposes only. SPONSOR shall not be obligated
to return or cease use of Confidential Information to the extent the same is
necessary or useful in the practice of any invention to which SPONSOR has
obtained a license under the License Agreement or this Agreement.
ARTICLE 9
PUBLICATION AND ACADEMIC RIGHTS
9.1 USE OF INFORMATION.
(a) Subject to the rights granted to SPONSOR pursuant to
this Agreement, including without limitation, Paragraph 9.2, Principal
Investigator shall have the right to publish or otherwise disclose all
technical reports, information, and/or data developed by Principal Investigator
under this Agreement. In connection with any publication or disclosure by
Principal Investigator of such reports, information, and/or data, Principal
Investigator shall include an appropriate acknowledgement of SPONSOR's
sponsorship of the Research Program in such publication or disclosure. SPONSOR
shall have the right to use, disclose, and exploit such reports, data, and
information for any purpose.
(b) Notwithstanding Paragraph 9.1(a) above, the identity
of individuals from whom samples were obtained for research in the Research
Program shall be maintained in confidence by Principal Investigator and will be
not provided to SPONSOR hereunder. In the event SPONSOR, during a review of
records pursuant to Paragraph 3.2, learns the identity of individuals from whom
samples were obtained for the Research Program, SPONSOR shall maintain such
individuals' identities in confidence.
9.2 PUBLICATION OF INFORMATION.
(a) To avoid loss of patent rights as a result of premature public
disclosure of patentable information, Principal Investigator and the University
agree to submit to SPONSOR, at least thirty (30) days prior to submission for
publication or disclosure, any and all materials intended for publication or
disclosure relating to technical reports, data, or information developed by
Principal Investigator under this Agreement. In the event SPONSOR believes
patentable subject matter is disclosed in such materials, it shall, within
thirty (30) days of its receipt thereof, notify the University, and publication
or disclosure will thereupon be withheld for a period of ninety (90) days from
the date of receipt by SPONSOR of the proposed publication or other disclosure
so that a patent application covering such invention may be prepared and filed
as provided in Paragraph 6.3. Further, if SPONSOR believes that such materials
contain Confidential Information of SPONSOR, Principal Investigator and the
University agree to remove such Confidential Information from the proposed
publication or disclosure.
Page 7 of 12
<PAGE> 8
(b) SPONSOR agrees that, during the term of this Agreement and
after, SPONSOR will appropriately acknowledge the contributions of Principal
Investigator and the University in any publication or disclosure by SPONSOR of
research results and data based upon Program Technology. In addition, SPONSOR
agrees to provide Principal Investigator a copy of any such publication or
disclosure in confidence for information purposes at least thirty (30) days
before public release of such publication or disclosure.
ARTICLE 10
TERM AND TERMINATION
10.1 TERM. The term of this Agreement ("Term") shall commence on
the Effective Date and continue in full force and effect until the [*]
anniversary of the Effective Date, unless earlier terminated in accordance with
this Article 10. This Agreement may be renewed or extended by mutual written
consent of the Parties within thirty (30) days prior to expiration.
Notwithstanding the foregoing, the University's obligation to disclose
inventions to SPONSOR, and the SPONSOR's right to license such inventions,
shall continue until all such inventions have been disclosed and the periods
for exercising rights relating to such inventions have expired.
10.2 TERMINATION FOR BREACH. If either Party materially breaches
any material warranty, term or condition of this Agreement and fails to remedy
such material breach within the earlier of sixty (60) days after (i) becoming
aware of such breach, or (ii) receiving notice in writing of such material
breach from the other Party, the non-breaching Party, at such Party's option
and in addition to any other remedies that such Party may have in law or in
equity, may terminate this Agreement by sending written notice of termination
with immediate effect to the other Party.
10.3 TERMINATION AT WILL. This Agreement may be terminated by
SPONSOR at any time upon thirty (30) days prior written notice to the
University if SPONSOR makes a good faith determination that the Research
Program is no longer technically or commercially feasible. This Agreement may
be terminated by the University at any time upon thirty (30) days prior written
notice to SPONSOR if the University makes a good faith determination that the
Research Program is no longer academically feasible. Upon receipt of such
notice of termination by SPONSOR, the University shall (i) limit or terminate
any outstanding financial commitments for which the University is to be liable
to the maximum extent permitted by law and University policies; and (ii) have
the right to terminate the License Agreement.
10.4 EFFECT OF TERMINATION. Any funds paid to Principal
Investigator or the University by SPONSOR which have not been expended or
committed upon the effective date of termination pursuant to Paragraph 10.2 or
Paragraph 10.3 shall be refunded to SPONSOR within thirty (30) days after the
effective date of termination.
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 8 of 12
<PAGE> 9
In the event that the total of funds paid to the Principal Investigator and the
University by SPONSOR as of the effective date of such termination due to
SPONSOR'S breach or at the will of SPONSOR is not sufficient to cover
reasonable costs and reasonable non-cancelable commitments actually incurred by
Principal Investigator and the University in performance of the Research
Program as of such date, SPONSOR shall reimburse Principal Investigator and the
University the difference between such costs and commitments, and the total of
funds paid by SPONSOR, such reimbursement to be made within thirty (30) days
after receiving written notice from the University that such insufficiency
exists, which notice by University must be received by SPONSOR within ninety
(90) days of termination of this Agreement. Notwithstanding the above, SPONSOR
shall not be obligated or liable for payment of funds in excess of an amount
equal to one (1) installment payment following the effective date of
termination of this Agreement.
10.5 SURVIVAL. In addition to provisions of this Agreement that
survive termination in accordance with their terms, the following Paragraphs
and Articles of this Agreement shall survive expiration or termination of this
Agreement for any reason by either SPONSOR, Principal Investigator, and/or the
University: Paragraphs 4.2 and 4.3 and Articles 1, 6, 7, 8, 9, 10, 11, and 12.
ARTICLE 11
INDEMNIFICATION
11.1 SPONSOR agrees to defend, indemnify, and hold harmless
University and its affiliated hospitals, its employees, students, trustees, and
agents from and against all complaints, causes of action, claims, losses,
costs, damages, liabilities, or expenses by reason of any liability sought to
be imposed upon University resulting from injuries to persons or damages to
property, provided such injuries to persons or damage to property are due or
claimed to be due as a result of acts or omissions of acts of SPONSOR, its
employees, or agents.
11.2 University agrees to defend, indemnify, and hold harmless
SPONSOR, its partners, employees, and agents from and against all complaints,
causes of actions, claims, losses, costs, damages, liabilities, or expenses by
reason of any liability sought to be imposed upon SPONSOR resulting from
injuries to persons or damages to property, provided such injuries to persons
or damages to property are due or claimed to be due as a result of acts or
omission of acts of University, its employees, or agents.
ARTICLE 12
GENERAL PROVISIONS
12.1 GOVERNING LAW. This Agreement shall be governed by,
construed, and interpreted in accordance with the laws of the State of
California, without reference to principles of conflict of laws.
Page 9 of 12
<PAGE> 10
12.2 INDEPENDENT CONTRACTORS. The relationship of SPONSOR and the
University established by this Agreement is that of independent contractors,
and nothing contained in this Agreement shall be construed to (i) give any of
the Parties hereto the power to direct or control the day-to-day activities of
another Party hereto, (ii) constitute the Parties as partners, joint venturers,
co-owners, or otherwise as participants in a joint or common undertaking, or
(iii) allow any of the Parties hereto to create or assume any obligation on
behalf of another Party hereto for any purpose whatsoever.
12.3 PARTIES BOUND. This Agreement, including the indemnification
provisions, shall be binding upon and inure to the benefit of the Parties
hereto, their respective successors, assigns, legal representatives, and heirs.
SPONSOR may assign or transfer SPONSOR's rights and obligations under this
Agreement to an affiliate of SPONSOR, a SPIN-OUT (as defined in the License
Agreement), or a successor to all or substantially all of SPONSOR'S assets or
business relating to this Agreement, whether by sale, merger, operation of law,
or otherwise. This Agreement shall not otherwise be assignable by either Party
without the prior written consent of the other Party.
12.4 ENTIRE AGREEMENT. This Agreement and the License Agreement
by and between the University and SPONSOR constitute the entire and only
agreements between the Parties relating to the subject matter hereof, and all
prior negotiations, representations, agreements, and understandings are
superseded by this Agreement and License Agreement.
12.5 FURTHER ASSURANCES. At any time or from time to time on and
after the Effective Date, Principal Investigator and the University shall at
the request of SPONSOR (i) deliver to SPONSOR such records, data, or other
documents consistent with the provisions of this Agreement, (ii) execute and
deliver, or cause to be delivered, all such assignments, consents, documents,
or further instruments of transfer or license, and (iii) take or cause to be
taken all such other actions as SPONSOR may reasonably deem necessary or
desirable for SPONSOR to obtain the full benefits of this Agreement and the
transactions contemplated hereby.
12.6 RIGHT TO DEVELOP INDEPENDENTLY. Nothing in this Agreement
will impair SPONSOR's right independently to acquire, license, develop, or have
developed, utilize, or otherwise exploit similar information and technology
performing the same or similar functions as the information and technology
provided by Principal Investigator and/or the University. In addition, nothing
in this Agreement is intended to prohibit Principal Investigator, as a member
of the faculty of the University, from independently collaborating with
academic, non-commercial parties on the Research Program provided such parties
first enter into research agreements with SPONSOR.
12.7 NOTICES. Except for the remittance of payments, which are
governed by Paragraph 4.1, any notice or other communication required or
permitted under this
Page 10 of 12
<PAGE> 11
Agreement shall be in writing and will be deemed received, if delivered by
courier on a business day, on the day delivered, or on the second business day
following mailing, if sent by first-class certified or registered mail, postage
prepaid, to the following addresses:
For the University:
The Johns Hopkins University, School of Medicine
720 Rutland Avenue
Baltimore, MD 21205
Michael B. Amey, Assistant Dean for Research Administration
For SPONSOR:
Geron Corporation
230 Constitution Drive
Menlo Park, CA 94025
Attn: President & CEO, Ronald Eastman
12.8 USE OF NAMES. Except as required by law, neither Party will
use the name of the other Party or its employees in any advertisement, press
release, or other publicity without the prior written approval of the other
Party, such approval not to be unreasonably withheld. The University shall have
the right to acknowledge SPONSOR's support of the research performed under this
Agreement in scientific publications and other scientific communications.
SPONSOR shall have the right to state "Geron is sponsoring research relating to
embryonic germ cell lines and embryonic stem cell lines in the laboratory of
Dr. John Gearhart at Johns Hopkins University."
12.9 NO ORAL MODIFICATION. No change, modification, extension, or
termination of this Agreement, or any of the provisions hereof shall be
effective unless assented to in writing by the Party to be charged.
12.10 WAIVER. No waiver of any rights shall be effective unless
assented to in writing by the Party to be charged, and the waiver of any breach
or default shall not constitute a waiver of any other right hereunder or any
subsequent breach or default.
12.11 ARTICLE AND PARAGRAPH HEADINGS. The headings of the Articles
and Paragraphs of this Agreement are intended for convenience of reference only
and are not intended to affect in any way the meaning or interpretation of this
Agreement.
12.12 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable, or void, this Agreement shall continue in full force
and effect without said provision; provided that, no such severability shall be
effective and this Agreement may be terminated pursuant to Paragraph 10.3, if
the result of such
Page 11 of 12
<PAGE> 12
action materially changes the economic benefit of this Agreement to SPONSOR,
Principal Investigator, or the University.
12.13 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.14 FORCE MAJEURE. The Parties to this Agreement shall be excused
from any performance required hereunder if such performance is rendered
impossible or unfeasible due to any catastrophes or other major events beyond
their reasonable control, including, without limitation, war, riot, and
insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes,
lock-outs, or other serious labor disputes; and earthquakes, floods, fires,
explosions, or other natural disasters. When such events have abated, the
Parties' respective obligations hereunder shall resume as agreed.
ACCEPTED BY:
GERON CORPORATION THE JOHNS HOPKINS UNIVERSITY
/s/ RONALD W. EASTMAN /s/ JOHN D. STOBO
________________________ ________________________
Ronald W. Eastman John D. Stobo, M.D.
President and CEO Vice Dean for Research & Technology
Date: August 11, 1997 Date: August 20, 1997
I have read and agree to abide by the terms and conditions of this Agreement.
/s/ JOHN GEARHART
________________________
John Gearhart, M.D.
Principal Investigator
Date: August 17, 1997
Page 12 of 12
<PAGE> 13
EXHIBIT A
RESEARCH PROGRAM
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 3
<PAGE> 14
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 2 of 3
<PAGE> 15
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 3 of 3
<PAGE> 16
Exhibit B
Budget for Research Program
Title of Program: Cell Lines from Human Primordial Germ Cells
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 1 of 4
<PAGE> 17
Cell Lines from Human Primordial Germ Cells
Personnel
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 2 of 4
<PAGE> 18
Cell Lines from Human Primordial Germ Cells
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 3 of 4
<PAGE> 19
Budget Justification and Explanations
[*]
* Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.
Page 4 of 4
<PAGE> 1
EXHIBIT 11.1
GERON CORPORATION
STATEMENT REGARDING COMPUTATION OF NET LOSS PER SHARE
(UNAUDITED)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------
1997 1996 1997 1996
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net loss $ (1,959) $ (2,661) $ (8,170) $ (7,555)
========== ========= ========== =========
Shares used in calculation of net loss per share:
Weighted Average Common Shares outstanding 10,711,931 7,046,618 10,475,524 2,964,061
Shares related to SAB Nos. 55, 64 and 83 -- -- -- 482,297
---------- --------- ---------- ---------
Shares used in computing net loss per share 10,711,931 7,046,618 10,475,524 3,446,358
========== ========= ========== =========
Net loss per share $ (0.18) $ (0.38) $ (0.78) $ (2.19)
========== ========= ========== =========
Calculation of shares outstanding for computing
supplemental net loss per share:
Shares used in computing net loss per share 10,711,931 7,046,618 10,475,524 2,964,061
Adjusted to reflect effect of assumed
conversion of preferred stock from date
of issuance -- 2,086,752 -- 4,905,288
---------- --------- ---------- ---------
Shares used in computing supplemental net loss
per share 10,711,931 9,133,370 10,475,524 7,869,349
========== ========= ========== =========
Supplemental net loss per share $ (0.18) $ (0.29) $ (0.78) $ (0.96)
========== ========= ========== =========
</TABLE>
22
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,908
<SECURITIES> 19,127
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,293
<PP&E> 5,949
<DEPRECIATION> 3,409
<TOTAL-ASSETS> 28,346
<CURRENT-LIABILITIES> 4,644
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> 22,360
<TOTAL-LIABILITY-AND-EQUITY> 28,346
<SALES> 0
<TOTAL-REVENUES> 4,513
<CGS> 0
<TOTAL-COSTS> 13,720
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 299
<INCOME-PRETAX> (8,170)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,170)
<EPS-PRIMARY> (0.78)
<EPS-DILUTED> (0.78)
</TABLE>
