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(GERN) - Get Geron Corporation Report

CEO Tom Okarma says it's entirely appropriate for his company to claim ownership of its telomerase cancer vaccine for prostate cancer. But Okarma also acknowledges that Geron might not own the experimental product for much longer, raising questions about how the company has promoted the drug and profited from its potential.

In an exclusive interview Wednesday, Okarma insisted the vaccine -- known colloquially as TVAX and currently in a phase I clinical trial -- is a genuine Geron pipeline product, and investors should treat it as such.

But Okarma did not dispute a story here last month that reported Geron could

lose control of TVAX if its partner

Merix Bioscience

decides to exercise a first-rights option to take over development of the vaccine and advance it beyond phase II studies. (Executives at Merix, a small, privately held biotech firm based in Durham, N.C., declined to comment for this story.)

This means that if TVAX pans out, there's a possibility that it becomes Merix's drug to market and sell, leaving Geron with only a small slice of the proceeds. With a market cap already approaching $400 million, Geron

can't afford to lose control of TVAX, especially because it is the biotech firm's only product in human clinical trials.

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For now, Geron essentially "rents" TVAX. So is it really accurate for Okarma and Geron to continually refer to the vaccine as "our product?"

"Absolutely," says Okarma. "From the beginning we've said this

TVAX is a collaborative development deal and we mention Merix in every press release. It's true that we don't have the full sweep of technology required to market this vaccine, but the key ingredient is telomerase," which Geron does own.

But Geron doesn't always mention partner Merix in its TVAX press releases and public presentations. It fails to do, particularly, it seems, when it needs positive news about TVAX to help raise cash or boost its stock price. For example:

On March 18, Geron issued a press release reporting the publication in a medical journal of preclinical research that supported the use of telomerase as a target for cancer vaccines. The release talked about TVAX and the ongoing phase I clinical trial without mentioning Merix. The March 18 press release sent Geron's stock soaring nearly 2.5 times to $4.20 per share, on above-average volume of almost 18 million shares.

On April 7, Geron issued a press release and held a conference call to discuss "positive" preliminary findings from the TVAX phase I clinical trial. Again, there was no mention of Merix. The next day, Geron sold 4 million shares of stock at $4.60 per share in a private equity sale, raising gross proceeds of $18.4 million.

On Sept. 22, 2003, Okarma gave a presentation at the UBS Global Life Sciences Conference in New York, in which he provided additional -- and what he claimed were positive -- clinical data from TVAX's phase I study. Okarma never mentioned the role Merix plays in TVAX at the UBS presentation, according to a transcript of the event. Nor did he tell investors that Geron stands a chance of losing control of TVAX to Merix.

Three weeks later, on Oct. 15, Geron announced a common stock offering of 5 million shares, raising gross proceeds of $60 million; UBS was the lead underwriter. Okarma says that when he was making his presentation at UBS' conference, the company was not considering an equity offering. He also says the additional TVAX data he presented -- which are in dispute (see below) -- to investors at the conference were accurate.

The risk statement section in Geron's S-3 filing with the

Securities and Exchange Commission

points out that Merix holds the rights to the ex vivo dendritic cell technology used to produce the vaccine, while Geron owns the rights to the telomerase target. "If we were no longer able to use the Merix technology, we would need to develop or obtain rights to use a different technology and restart the trial using that different technology, or abandon entirely the development of an ex vivo telomerase vaccine, which would significantly and adversely affect our business," the S-3 states.

But the registration statement doesn't mention that under the existing agreement, Geron has rights to fund and do studies on TVAX only in phase I and II trials. After that, Merix has right to take over the drug, conduct phase III studies and push for Food and Drug Administration approval. (To do so, Merix would have to license the telomerase target from Geron, something Geron has already done with other companies.)

Data Dissention

Meanwhile, another aspect of Geron's TVAX story is in dispute. Dr. Johanness Vieweg, the principal investigator in charge of the TVAX phase I study, presented data culled from prostate cancer patients enrolled in the study Monday at the American Society of Hematology meeting in San Diego. The data presented by Dr. Vieweg, a Duke University professor, was early and encouraging. But in some notable instances, it was significantly less positive than the presentation made by Okarma at the Sept. 22 UBS conference.

Asked about the discrepancy between his presentation and that of Okarma's, Dr. Vieweg grew noticeably uncomfortable, saying that his goal was to present an accurate picture of the progress being made with TVAX. His assessment included a belief the vaccine requires a lot more work before definitive questions about its efficacy can be answered. Dr. Vieweg said he's had minimal contact with Geron, has no financial interest in the company and that Geron wasn't even funding his work in the phase I trial.

Said Okarma of Dr. Vieweg: "I was with him last week. Johanness and I are colleagues and friends. He was not upset at all."

Okarma also refuted Vieweg's statement that Geron wasn't funding the current TVAX study: "We have funded it, and the National Institutes of Health have funded it.

Dr. Vieweg is forgetting," Okarma said. "We paid for preclinical work, our own work and the beginning part of the clinical work. I don't know how

Duke utilized our money, but I have the check stubs sitting here."

Through Wednesday's close, Geron shares had fallen almost 17.5% since Friday, with much of the drop following Dr. Vieweg's presentation at the American Society of Hematology conference. Early Thursday afternoon, the stock was down 17 cents, or 1.7%, to $9.97.

Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

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