Shorts Show Doubt, Too
A surefire way to ensure some measure of public enmity is make a public recommendation to short a stem-cell stock. That's what I did on Jan. 26, when I added Geron ( GERN) as a short to the model portfolio I manage as part of TheStreet.com's Biotech Select investment newsletter. As I told my subscribers at that time, I'm not against stem-cell medicine, and I certainly hope one day that the field provides medical breakthroughs. I simply don't believe Geron is going to be the company to deliver on the promise of stem cells, based on its ignominious track record of drug development so far. In fact, the only thing Geron has done exceedingly well in its 13 years as a public company is surf the waves of stem-cell hype and use that momentum to raise lots of money.
Geron reverted to this well-worn tactic again Thursday night, when it quickly sold 7.25 million shares at a price of $6.60, a 14% discount to the stock's Thursday closing price of $7.77. The spot-financing deal grossed Geron about $43 million. I was the first to report Geron's stock sale Thursday night on RealMoney.com. Geron confirmed the financing in a press release Friday morning but did not disclose the sale price. Geron said the financing will close on Feb. 19. Geron shares were falling 14% to $6.68 in early Friday trading. Geron's stock price has moved quickly from $5 to more than $8 in the past few weeks, culminating in the company's Jan. 23 announcement that the Food and Drug Administration had granted the company approval to start a phase I safety study of a human stem-cell therapy in patients with complete spinal cord injury.