NEW YORK (AP) -- Shares of Geron Corp. lost a quarter of their value Tuesday after the company ended development of a key drug candidate and said it will eliminate 40 percent of its staff positions to cut costs.
THE SPARK: Geron said Monday that it stopped testing of GRN1005, which was intended to treat cancers that have metastasized to the brain. The company said it will focus its efforts on another cancer drug, imetelstat, which has recently failed in some clinical trials.
The Menlo Park, Calif., company is slashing its staff to 64 people from 107, which it said will cut its annual spending by about half. It's also replacing its CFO.
THE BIG PICTURE: GRN1005 isn't Geron's first failure. The company ran the first human trials of treatments based on embryonic stem cells. But it stopped its stem cell programs last year, citing costs, manufacturing and regulatory complexities, and said that it would focus on GRN1005 and imetelstat.
Imetelsat, too, has problems. The company said earlier this year that the treatment would not meet its goals in studies involving patients with breast cancer and lung cancer. The company said Monday that it will study the drug as a treatment for blood cancers. It will report data from a small mid-stage trial of imetelstat on Dec. 9 and said the results were promising.
THE ANALYSIS: GRN1005 was Geron's "most compelling" drug candidate, said Stifel Nicolaus analyst Brian Klein, who has a "Hold" rating on the shares. "Given prior concerns on efficacy and safety, we do not have high hopes for Imetelstat."
Based on Geron's new spending plans, the company has enough cash on hand to continue its operations to mid-2015, he said. But he predicted that shares could fall to 70 to 80 cents per share.
SHARE ACTION: Down 37 cents, or 25 percent, to $1.11 in afternoon trading. The stock had been unchanged in 2012, but has lost a third of its value since Geron announced in November 2011 that it was discontinuing stem cell research.