Wednesday, November 23, 2011

A Look Inside the CIRM-Geron Loan Documents

The $25 million loan that the California stem cell agency awarded to Geron was the largest ever made by the research enterprise.

Directors approved the loan last May during a hearing that was a major departure from its usual procedures. The loan agreement was signed Aug. 1., about three months before Geron announced that it was abandoning the hESC business.

Geron last week repaid the $6.42 million that it had received from CIRM up to that point. Geron also paid the agency $36,732.33 in interest. CIRM additionally received 537,893 warrants to buy Geron stock at $3.98, CIRM told the California Stem Cell Report. Geron closed at $1.50 yesterday. The warrants expire in 10 years.

Last summer the California Stem Cell Report requested copies of the loan documents, which can be found at the end of this item, although the agency blacked out much of the information.

In a note accompanying the documents, Ian Sweedler, deputy legal counsel to CIRM, said,
"Geron requested and justified redactions to the milestone document, to those parts that describe specific activities, plans and data within the overall project.  Geron asserted and justified a claim that these details meet the legal standard for trade secrets that are exempt from production.  For the milestones, Geron agreed to leave enough unredacted to give a sense of the intent, at a level of detail that is not confidential.  For example, it will be possible to see that a milestone refers to enrolling a certain number of patients, but not what that number is, or other specifics about that stage of the project.  There are also accompanying comments with technical details and alternative approaches considered.  For these comments, we were unable to find a way to leave any meaningful text that would not disclose trade secret information.  The comments have therefore been completely redacted.

"Geron similarly justified redaction of information about how it will divide funds among different aspects of the project.  They explained that their internal costs, processes, and sequences are confidential, competitive trade secret information.  The redacted versions therefore show the amount of funding CIRM will provide, but not when and how Geron will allocate that to different activities."
Here are the loan documents.
CIRM-Geron 8-1-11 Loan Agreement

CIRM 7-28-11 Geron Loan Term Letter

Geron-CIRM Loan Agreement Appendix B

Geron-CIRM Loan Timetable Appendix C

1 comment:

  1. Jim Fossett7:31 AM

    Thanks for taking the time and effort to run this down. One could make a pretty good case that CIRM's increasing focus on therapies that are closer to market means it should act more like a venture capitalist than a research funder and make deals that give the state a share in the upside as well as a share of the financing risk. This may mean that some deals go bust, but most venture capital deals go bust as well. Doing loans rather than grants is one way to do this, so is taking an equity position in the company, if CIRM can do that.


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