10-Q

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 JUNE 30, 2003

OR

o 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

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE	75-2287752
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)	(I.R.S. EMPLOYER IDENTIFICATION NO.)

230 CONSTITUTION DRIVE, MENLO PARK, CA 94025
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (650) 473-7700

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

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 o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class:	Common Stock $0.001 par value	Outstanding at July 28, 2003:
		33,149,914 shares

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	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
SIGNATURE
EXHIBIT INDEX
EXHIBIT 10.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

GERON CORPORATION

INDEX

		Page
	PART I. FINANCIAL INFORMATION
Item 1:	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002	3
	Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2003 and 2002	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4:	Controls and Procedures	31
	PART II. OTHER INFORMATION
Item 1:	Legal Proceedings	32
Item 2:	Changes In Securities and Use of Proceeds	32
Item 3:	Defaults upon Senior Securities	32
Item 4:	Submission of Matters to a Vote of Security Holders	32
Item 5:	Other Information	32
Item 6:	Exhibits and Reports on Form 8-K	33
SIGNATURE		34

2

PART I. FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GERON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

					JUNE 30,			DECEMBER 31,
					2003			2002
					(UNAUDITED)			(SEE NOTE 1)
				ASSETS
Current assets:
	Cash and cash equivalents				$	10,956		$	4,604
	Restricted cash					530			530
	Marketable securities					42,330			42,383
	Interest and other receivables					665			704
	Notes receivable from related parties					208			433
	Prepaid assets					969			2,115
			Total current assets			55,658			50,769
Equity investments in licensees						367			365
Notes receivable from related parties						174			162
Property and equipment, net						1,983			2,444
Deposits and other assets						227			245
Intangible assets						5,251			6,684
					$	63,660		$	60,669
		LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	1,259		$	1,594
	Accrued compensation					462			789
	Accrued liabilities					1,082			949
	Current portion of deferred revenue					367			543
	Current portion of equipment loans					220			367
	Current portion of research funding obligation					4,525			5,141
			Total current liabilities			7,915			9,383
Noncurrent portion of deferred revenue						923			1,030
Noncurrent portion of equipment loans						285			377
Noncurrent portion of research funding obligation						2,394			3,822
Convertible debentures						—			16,316
Commitments
Stockholders’ equity:
	Common stock					33			25
	Additional paid-in-capital					295,739			256,097
	Deferred compensation					(151	)		(209	)
	Accumulated deficit					(243,003	)		(225,783	)
	Accumulated other comprehensive loss					(475	)		(389	)
			Total stockholders’ equity			52,143			29,741
					$	63,660		$	60,669

See accompanying notes.

3

GERON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

			THREE MONTHS ENDED						SIX MONTHS ENDED
			JUNE 30,						JUNE 30,
			2003			2002			2003			2002
Revenues from collaborative agreements			$	36		$	15		$	72		$	530
License fees and royalties				249			96			475			207
		Total revenues		285			111			547			737
Operating expenses:
	Research and development			7,772			8,146			14,736			18,310
	General and administrative			1,166			1,453			2,508			3,049
		Total operating expenses		8,938			9,599			17,244			21,359
Loss from operations				(8,653	)		(9,488	)		(16,697	)		(20,622	)
Interest and other income				394			665			670			1,536
Debenture conversion expense				(779	)		—			(779	)		—
Interest and other expense				(250	)		(185	)		(414	)		(397	)
Net loss			$	(9,288	)	$	(9,008	)	$	(17,220	)	$	(19,483	)
Basic and diluted net loss per share			$	(0.32	)	$	(0.37	)	$	(0.63	)	$	(0.79	)
Weighted average shares used in computing basic and diluted net loss per share				29,452,031			24,674,456			27,193,803			24,582,423

See accompanying notes.

4

GERON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CHANGE IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)

			SIX MONTHS ENDED
			JUNE 30,
			2003			2002
Cash flows from operating activities:
	Net loss		$	(17,220	)	$	(19,483	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization		602			747
		Accretion and amortization on investments		520			517
		Interest for convertible debentures		(1	)		10
		Conversion expense related to modification of Series D convertible debentures and warrants		779			—
		Issuance of redeemable common stock in exchange for acquired research technology		—			1,585
		Stock-based compensation		47			—
		Accretion of interest on research funding obligation		245			245
		Deferred compensation		58			120
		Realized (gain)/loss on equity investments in licensees		(1	)		94
		Amortization of intangible assets, principally research related		1,432			1,432
	Changes in assets and liabilities:
		Other current and noncurrent assets		1,474			328
		Other current and noncurrent liabilities		597			(969	)
		Accrued research funding obligation		(2,289	)		(1,216	)
		Translation adjustment		(21	)		(70	)
Net cash used in operating activities				(13,778	)		(16,660	)
Cash flows from investing activities:
	Capital expenditures			(157	)		(274	)
	Purchases of marketable securities			(29,195	)		(4,112	)
	Proceeds from maturities of marketable securities			28,704			30,276
Net cash (used in) provided by investing activities				(648	)		25,890
Cash flows from financing activities:
	Proceeds from equipment loans			—			498
	Payments of obligations under equipment loans			(239	)		(437	)
	Proceeds from issuances of common stock, net of issuance costs			21,017			181
Net cash provided by financing activities				20,778			242
Net increase in cash and cash equivalents				6,352			9,472
Cash and cash equivalents at the beginning of the period				4,604			18,773
Cash and cash equivalents at the end of the period			$	10,956		$	28,245

See accompanying notes.

5

GERON CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The terms “Geron”, the “Company”, “we” and “us” as used in this report refer to Geron Corporation. The accompanying condensed consolidated unaudited balance sheet as of June 30, 2003 and condensed consolidated statements of operations for the three and six month periods ended June 30, 2003 and 2002 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 the management of Geron Corporation, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2002, included in the Company’s Annual Report on Form 10-K. The accompanying condensed consolidated balance sheet as of December 31, 2002 has been derived from audited financial statements at that date.

Principles of Consolidation

     The consolidated financial statements include the accounts of Geron Corporation and its wholly owned subsidiary, Geron Bio-Med Ltd., a United Kingdom company. Intercompany accounts and transactions have been eliminated. The financial statements of the Company’s subsidiary outside the United States are measured using the local currency as the functional currency. Assets and liabilities of this subsidiary are translated at rates of exchange at the balance sheet date. The resultant translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Income and expense items are translated at average monthly foreign exchange rates.

Net Loss Per Share

     Basic earnings (loss) per share is based on weighted average shares outstanding and excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings (loss) per share includes any dilutive effect of options, warrants and convertible securities.

     A reconciliation of shares used in calculation of basic and diluted net loss per share follows:

	Six Months Ended June 30,
	2003			2002
	(In thousands, except share and per
	share amounts)
Net loss	$	(17,220	)	$	(19,483	)
Basic and Diluted Net Loss Per Share:
Basic and diluted net loss per common share	$	(0.63	)	$	(0.79	)
Weighted average shares of common stock outstanding used in computing basic and diluted net loss per common share		27,193,803			24,582,423

     Because the Company is in a net loss position, diluted earnings per share is also calculated using the weighted average number of common shares outstanding and excludes the effects of options, warrants and convertible securities which are antidilutive. Had the Company been in a net income position, diluted earnings per share would have included the shares used in the computation of basic net loss per share as well as an additional 171,713 shares and 504,014 shares for 2003 and 2002, respectively related to outstanding options, warrants and convertible securities not included above (as determined using the treasury stock method at average market price during the period).

6

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents and Marketable Debt Securities Available-For-Sale

     The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company is subject to credit risk related to its cash equivalents and securities available-for-sale. The Company places its cash and cash equivalents in money market funds and commercial paper.

     The Company classifies its marketable debt securities as available-for-sale. Available-for-sale securities are recorded at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in stockholders’ equity. Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Realized gains and losses are included in interest and other income and are derived using the specific identification method for determining the cost of securities sold and have been immaterial to date. Declines in market value judged other-than-temporary result in a charge to interest income. Dividend and interest income are recognized when earned. The Company’s investments include corporate notes in United States corporations with original maturities ranging from one to 16 months.

Revenue Recognition

     Since the Company’s inception, a substantial portion of its revenues has been generated from license and research agreements with collaborators. The Company recognizes revenue under these collaborative agreements as the related research and development costs are incurred. Milestone fees are recognized upon completion of specified milestones according to contract terms. Deferred revenue represents the portion of research payments received which have not been earned.

     The Company also has several license, option and marketing agreements with various companies in fields such as diagnostics, research tools, agriculture, biologics production and cancer therapeutics. With each of these agreements, the Company receives nonrefundable license payments in cash or equity securities, option payments in cash or equity securities, royalties on future sales of products, or any combination of these items. Nonrefundable signing or license fees that are not dependent on future performance under these agreements are recognized as revenue when received and over the term of the arrangement if the Company has continuing performance obligations. Option payments are recognized as revenue over the period of the option agreement. Royalties are generally recognized upon receipt.

Restricted Cash

     As of June 30, 2003 and December 31, 2002, the Company held $530,000 in a Certificate of Deposit as collateral on an unused line of credit.

Marketable and Non-Marketable Equity Investments in Licensees

     Equity in nonpublic companies is carried at the lower of cost or net realizable value. Equity in public companies is carried at market value as of the balance sheet date. Unrealized gains and losses are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Realized gains or losses are included in interest and other income and are derived using the specific identification method. Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (SFAS 115), requires companies to determine whether a decline in fair value below the amortized cost basis is other than temporary. If a decline in fair value is determined to be other than temporary, SFAS 115 requires the carrying value of the debt or equity security to be written down to its fair value. No such writedowns were recorded for the three and six months ended June 30, 2003 and 2002.

7

Derivative Financial Instruments

     The Company retains a warrant to purchase preferred stock in a private company. In accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (SFAS 133), the Company accounts for the warrant as a derivative financial instrument. Accordingly, the warrant is recorded at fair value as of the balance sheet date based on the Black-Scholes valuation of such instruments in comparable companies and other indicators of the investment’s value. Any gains or losses in fair value are recorded in interest and other income. The Company does not use derivative financial instruments for trading or speculative purposes.

     In connection with an equity payment agreement with a legal services firm, in March 2003 the Company issued 250,465 shares of common stock at $3.39 per share in exchange for the elimination of approximately $849,000 payable to the law firm. The Company has agreed to review the potential proceeds received from the sale of these shares on November 23, 2003. Any shortfall will be payable to the law firm in cash. The Company accounts for this potential liability as a derivative financial instrument. Accordingly, in the event the closing price of the Company’s common stock is less than the price initially received, the Company will record the fair value of such liability at the balance sheet date. No such liability was recorded as of June 30, 2003.

     The Company’s exposure to currency exchange fluctuation risk is insignificant. Geron Bio-Med, Ltd., the Company’s international subsidiary, satisfies its financial obligations almost exclusively in its local currency. For 2003, there was an insignificant currency exchange impact from intercompany transactions. The Company does not engage in foreign currency hedging activities.

Intangible Asset and Research Funding Obligation

     In May 1999, the Company completed the acquisition of Roslin Bio-Med Ltd., a privately held company formed by the Roslin Institute in Midlothian, Scotland. In connection with this acquisition, the Company formed a research collaboration with the Roslin Institute and committed approximately $20,000,000 in research funding over six years. Using an effective interest rate of 6%, this research funding obligation had a net present value of $17,200,000 and has been capitalized as an intangible asset that is being amortized as research and development expense over six years. Imputed interest is also being accreted to the value of the research funding obligation and is recognized as interest expense.

Research and Development Expenses

     All research and development costs are expensed as incurred. The value of acquired in-process research and development is charged to expense on the date of acquisition. Research and development expenses include, but are not limited to, payroll and personnel expense, lab supplies, preclinical studies, raw materials to manufacture clinical trial drugs, manufacturing costs, sponsored research at other labs, consulting, and research-related overhead. Accrued liabilities for raw materials to manufacture clinical trial drugs, manufacturing costs, legal fees and sponsored research reimbursement fees are included in accrued liabilities and research and development expenses.

Depreciation and Amortization

     The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful lives of the assets, generally four years. Leasehold improvements are amortized over the remaining term of the lease.

Employee Stock Plans

     As permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123), the Company elected to continue to apply the provisions of Accounting Principle Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations in accounting for its employee stock option and stock purchase plans. The Company is generally not required under APB 25 and related interpretations to recognize compensation expense in connection with its employee stock option and stock purchase plans when the exercise prices of the options equals the fair market value of the underlying common stock on the date of grant.

8

     Pro forma information regarding net loss and net loss per share is required by SFAS 123 and has been determined as if the Company had accounted for its employee stock options under the fair value method prescribed by the SFAS 123. The fair value for these options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rates ranging from 1.57% to 2.96% for the six months ended June 30, 2003 and 3.37% to 4.81% for the comparable period in 2002; a dividend yield of 0.0% for the six months ended June 30, 2003 and 2002; a volatility factor of the expected market price of the Company’s common stock of 1.0388 and 0.8807 as of June 30, 2003 and 2002, respectively; and a weighted average expected life of the options of 4 years for the six months ended June 30, 2003 and 2002.

     For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the vesting period of the options using the straight-line method. The Company’s pro forma information follows:

	Three and Six Months Ended						Three and Six Months Ended
	June 30, 2003						June 30, 2002
	In thousands, except per share amounts
Net loss	$	(9,288	)	$	(17,220	)	$	(9,008	)	$	(19,483	)
Add back:
Deferred compensation expense		—			—			60			121
Deduct:
Stock-based employee expense determined under SFAS 123		(2,198	)		(4,122	)		(3,247	)		(2,545	)
Pro forma net loss	$	(11,486	)	$	(21,342	)	$	(12,195	)	$	(21,907	)
Basic and diluted net loss per share as reported	$	(0.32	)	$	(0.63	)	$	(0.37	)	$	(0.79	)
Basic and diluted pro forma net loss per share	$	(0.39	)	$	(0.78	)	$	(0.49	)	$	(0.89	)

     The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options and employee stock purchase plans have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair market value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options, nor do they necessarily represent the effects of employee stock options on reported net income (loss) for future years.

Comprehensive Loss

     Comprehensive loss is comprised of net loss and other comprehensive loss. Other comprehensive loss includes certain changes in equity that are excluded from net loss.

     The components of accumulated other comprehensive loss are as follows:

	June 30,			December 31,
	2003			2002
	(In thousands)
Unrealized holding loss on available-for-sale securities and marketable equity investments in licensees	$	(338	)	$	(316	)
Foreign currency translation adjustments		(137	)		(73	)
	$	(475	)	$	(389	)

Reclassifications

     Certain reclassifications of prior year amounts have been made to conform to current year presentation, including amortization of intangible assets, marketable securities and prepaid assets.

9

Status of Recent Accounting Pronouncements

     In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and supersedes Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” and requires that a liability for a cost associated with an exit or disposal activity be recognized and initially measured at fair value only when the liability is incurred rather than at the date of an entity’s commitment to an exit plan. SFAS 146 further establishes fair value as the objective for initial measurement of the liability and that employee benefit arrangements requiring future service beyond a “minimum retention period” be recognized over the future service period. SFAS 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company adopted this accounting principle on January 1, 2003. See Note 4.

     In November 2002, the FASB issued Financial Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless of the guarantor’s fiscal year-end. The disclosure requirements in FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company does not have any guarantees nor does it provide any guarantees for others. The adoption of FIN 45 has not had a material effect on the Company’s financial condition or results of operations.

     In November 2002, the FASB issued Emerging Issues Task Force (EITF) Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF 00-21 addresses certain aspects of the accounting by a company for arrangements under which it will perform multiple revenue-generating activities. EITF 00-21 addresses when and how an arrangement involving multiple deliverables should be divided into separate units of accounting. EITF 00-21 provides guidance with respect to the effect of certain customer rights due to company nonperformance on the recognition of revenue allocated to delivered units of accounting. EITF 00-21 also addresses the impact on the measurement and/or allocation of arrangement consideration of customer cancellation provisions and consideration that varies as a result of future actions of the customer or the company. Finally, EITF 00-21 provides guidance with respect to the recognition of the cost of certain deliverables that are excluded from the revenue accounting arrangement. The provisions of EITF 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company does not expect the adoption of EITF 00-21 will have a material effect on its financial position and results of operations.

     In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation” (SFAS 148). SFAS 148 amends SFAS 123 to provide alternative methods of transition to SFAS 123’s fair value method of accounting for stock-based compensation. SFAS 148 also amends the disclosure provisions of SFAS 123 and Accounting Principle Board Opinion No. 28, “Interim Financial Reporting” (APB 28), to require disclosure in the summary of significant accounting policies the effect of stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. SFAS 148’s amendment of the transition and annual disclosure requirements of SFAS 123 are effective for fiscal years ending after December 15, 2002, with earlier application permitted. SFAS 148’s amendment of the disclosure requirements of APB 28 is effective for financial reports containing condensed consolidated financial statements for interim periods beginning after December 15, 2002. The Company has adopted the disclosure requirements of SFAS 148.

     In January 2003, the FASB issued Financial Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim periods beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company does not have variable interest entities and does not expect the adoption of FIN 46 to have a material effect on its financial position or results of operations.

10

     In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149 (SFAS 149), “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends SFAS 133 to provide clarification on the financial accounting and reporting of derivative instruments and hedging activities and requires contracts with similar characteristics to be accounted for on a comparable basis. The Company is in the process of assessing the effect of SFAS 149 and does not expect the adoption of the statement, which will be effective for contracts entered into or modified after June 30, 2003, to have a material effect on its financial condition or results of operations.

     In May 2003, the FASB issued Statement of Financial Accounting Standards No. 150 (SFAS 150), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS 150 establishes standards on the classification and measurement of financial instruments with characteristics of both liabilities and equity. SFAS 150 will become effective for financial instruments entered into or modified after May 31, 2003. The adoption of SFAS 150 has not had a material effect on the Company’s financial condition or results of operations.

2.   ISSUANCES OF COMMON STOCK

     In April 2003, the Company sold 4.4 million shares of Geron common stock to two investors at $4.60 per share resulting in net proceeds of approximately $19.0 million. The shares were offered through a prospectus supplement to the Company’s effective universal shelf registration statement. The Company also issued to the investors warrants to purchase an additional 600,000 shares of Geron common stock at an exercise price of $6.34 per share. The warrants expire in April 2006.

     In June 2003, the Company entered into a license agreement with Transgenomic, Inc. covering manufacture of phosphoramidate and thio-phosphoramidate oligonucleotides. In connection with the agreement, Transgenomic purchased 310,000 shares of Geron common stock at $5.05 per share in addition to paying a non-refundable cash license fee. In a separate collaboration research agreement between the two companies, a research fee was paid to Transgenomic, Inc.

3.   SERIES D CONVERTIBLE DEBENTURES AND WARRANTS

     As of December 31, 2002, $15,000,000 of series D convertible debentures and series D warrants to purchase 834,836 shares of Geron common stock were outstanding. The series D convertible debentures had a maturity date of June 30, 2005, an interest rate of 2.5%, and a conversion price of $20.00 per share. The series D-1 warrants to purchase 333,935 shares of common stock had an exercise price of $15.625 per share with an exercise period to June 30, 2003. The series D-2 warrants to purchase 500,901 shares of common stock had an exercise price of $25.00 per share and expire if unexercised prior to December 31, 2006.

     In May 2003, the Company modified the existing terms of the outstanding $15,000,000 series D convertible debentures to provide for an automatic conversion into equity on the maturity date, to fix the conversion price at $5.00 per share and to eliminate the interest accrual for the remainder of the term. In addition, the Company modified the terms of the related outstanding warrants to change the exercise prices to $7.50 per share. The expiration periods were unchanged.

     The difference between the current fair values of the existing series D-1 and D-2 warrants and the amended series D-1 and D-2 warrants was recorded as conversion expense of $583,000. The Company also recorded the amended series D convertible debentures at a fair value of $16,509,000 with the difference of $935,000 being recorded as conversion expense. The remaining excess of the fair value over the face value of the debentures from the first modification of $739,000 was recorded as a reduction to conversion expense in the second quarter. The 2.5% interest accrued through the date of the second modification was added to the outstanding principal balance. No further interest accruals are required after the date of the second modification. In calculating the conversion expense associated with the series D-1 and D-2 warrants we used the Black-Scholes Valuation Model to determine fair values; the conversion expense associated with the amended series D convertible debentures was based on the fair value of the underlying common stock.

     During May and June 2003, all of the remaining series D convertible debentures plus accrued interest of $575,340 were converted into 3,115,068 shares of Geron common stock. As of June 30, 2003, no series D convertible debentures remained outstanding; series D-1 warrants to purchase 333,935 shares of Geron

11

common stock remained outstanding (but expired on July 1, 2003 without having been exercised); and series D-2 warrants to purchase 500,901 shares of Geron common stock at $7.50 per share remained outstanding.

4.   RESTRUCTURING AND EXIT ACTIVITIES

     In January 2003, Geron restructured its organization to focus available resources on its most advanced product development programs. In the process, Geron reduced its research staff by 29 employees and its support staff by 11 employees, a reduction of approximately 44% of Geron’s work force in Menlo Park, California. The Company recorded a restructuring charge of $507,000 in January 2003 for employee severance benefits, of which $342,000 related to research and development expense and $165,000 related to general and administrative expense. At June 30, 2003, all amounts had been paid and no accrued amounts remained.

     In connection with the restructuring, the Company also entered into employment agreements with its remaining executive officers and certain other employees, and adopted a Severance Plan applicable according to its terms to all remaining employees. The Company is currently accruing the retention bonus commitment required under the Severance Plan.

     In June 2003, the Company entered into an agreement to sublease to a third party a portion of its leased facilities and ceased using such portion of the facilities for its own purposes. In connection with this sublease agreement, the Company recognized a liability of approximately $557,000 for the present value of remaining lease payments in excess of future sublease rental receipts. The Company will accrete this liability over the remaining sublease term to the face value of the liability by recording accretion expense. The liability will be reduced as monthly lease payments are made.

5.   SEGMENT INFORMATION

     Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information” (SFAS 131) establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions how to allocate resources and assess performance. The Company’s chief decision maker, as defined under SFAS 131, is the Chief Executive Officer. To date, the Company has viewed its operations as principally one segment, the development of therapeutic and diagnostic products for applications in oncology, drug discovery and regenerative medicine. As a result, the financial information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment.

6.   CONSOLIDATED STATEMENTS OF CASH FLOWS DATA

	SIX MONTHS			SIX MONTHS
	ENDED			ENDED
(IN THOUSANDS)	JUNE 30, 2003			JUNE 30, 2002
Supplemental Operating, Investing and Financing Activities:
Net unrealized gain (loss) on equity investments	$	1		$	(150	)
Net unrealized (loss) on marketable securities	$	(23	)	$	(341	)
401(k) matching contribution	$	548		$	—
Shares or warrants issued for services	$	929		$	—
Conversion of debentures	$	16,509		$	—

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

     This Form 10-Q contains forward-looking statements that involve risks and uncertainties. We use words such as “anticipate”, “believe”, “plan”, “expect”, “future”, “intend” and similar expressions to identify forward-looking statements. These statements appear throughout the Form 10-Q and are statements regarding our intent, belief, or current expectations, primarily with respect to our operations and related industry developments. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Form 10-Q. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described under the heading “Additional Factors that May Affect Future Results” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, in the section of this Item 2 titled “Additional Factors That May Affect Future Results,” and elsewhere in this Form 10-Q.

     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 on Form 10-Q 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, 2002.

     We are a biopharmaceutical company focused on developing and commercializing therapeutic and diagnostic products for applications in oncology and regenerative medicine, and research tools for drug discovery. Our product development programs are based upon three patented core technologies: telomerase, human embryonic stem cells and nuclear transfer.

     Our 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 our various collaborative agreements, as well as the progress of our research and development efforts and variations in the level of expenses related to developmental efforts during any given period. 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. We are subject to risks common to companies in our industry and at our stage of development, including risks inherent in our research and development efforts, reliance upon our collaborative partners, enforcement of our patent and proprietary rights, need for future capital, potential competition and uncertainty of regulatory approvals or clearances. In order for a product to be commercialized based on our research, we and our collaborators must conduct preclinical tests and clinical trials, demonstrate the efficacy and safety of our product candidates, obtain regulatory approvals or clearances and enter into manufacturing, distribution and marketing arrangements, as well as obtain market acceptance. We do not expect to receive revenues or royalties based on therapeutic products for a period of years, if at all.

CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Actual results could differ from these estimates. Note 1 of Notes to Condensed Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

     A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

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     Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

     We consider that the following are critical accounting policies:

Revenue Recognition

     Since our inception, a substantial portion of our revenues has been generated from license and research agreements with collaborators. We recognize cost reimbursement revenue under these collaborative agreements as the related research and development costs are incurred. We recognize milestone fees upon completion of specified milestones according to contract terms. Deferred revenue represents the portion of research payments received which has not been earned. We make estimates about the estimated lives for license agreements related to deferred revenue.

     We also have several license, option and marketing agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies. With each of these agreements, we may receive nonrefundable license payments in cash or equity securities, option payments in cash or equity securities, royalties on future sales of products, milestone payments, or any combination of these items. We recognize nonrefundable signing or license fees that are not dependent on future performance under these agreements as revenue when received and over the term of the arrangement if we have continuing performance obligations. We recognize option payments as revenue over the period of the option agreement. We recognize milestone payments upon completion of specified milestones according to contract terms. We generally recognize royalties as revenue upon receipt.

     We receive income from United States government grants that support our research efforts in defined research projects. These grants generally provide for reimbursement of approved costs incurred as defined in the various grants. We recognize income associated with these grants upon receipt of reimbursement and include it in interest and other income on the condensed consolidated statements of operations.

Intangible Asset and Research Funding Obligation

     In May 1999, we completed the acquisition of Roslin Bio-Med Ltd., a privately held company formed by the Roslin Institute in Midlothian, Scotland. In connection with this acquisition, we formed a research collaboration with the Roslin Institute and committed approximately $20.0 million in research funding over six years. Using an effective interest rate of 6%, this research funding obligation had a net present value of $17.2 million. We have capitalized this obligation as an intangible asset that is being amortized as research and development expense over six years. Imputed interest is also being accreted to the value of the research funding obligation and is recognized as interest expense. We made assumptions in the valuation of the intangible asset.

Research and Development Expenses

     All research and development costs are expensed as incurred. The value of acquired in-process research and development is charged to expense on the date of acquisition. Research and development expenses include, but are not limited to, payroll and personnel expense, lab supplies, preclinical studies, raw materials to manufacture clinical trial drugs, manufacturing costs, sponsored research at other laboratories, consulting, legal fees and research-related overhead. Accrued liabilities for raw materials and manufacturing costs for preclinical and clinical testing, legal fees and sponsored research reimbursement fees are included in accrued liabilities and research and development expenses. We make assumptions regarding the timing and probability of costs incurred for research and development.

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Employee Stock Plans

     As permitted by SFAS 123, we have elected to continue to apply the provisions of APB 25 and related interpretations in accounting for our employee stock option and stock purchase plans. We are generally not required under APB 25 and related interpretations to recognize compensation expense in connection with our employee stock option and stock purchase plans. As required by SFAS 123, we present in the Notes to Condensed Consolidated Financial Statements, the pro forma effects on reported net income and earnings per share as if compensation expense had been recognized based on the fair value method of accounting prescribed by SFAS 123. We make assumptions in valuing options and warrants.

RESULTS OF OPERATIONS

Revenues

     We recognized revenues from collaborative agreements of $36,000 and $72,000 for the three and six months ended June 30, 2003, respectively, compared to $15,000 and $530,000 for the comparable periods in 2002. Revenues recognized in 2003 primarily related to funding received under various consulting arrangements. Revenues in 2002 primarily represented research support payments from our collaborative agreement with Kyowa Hakko. Our collaboration with Kyowa Hakko has moved the project from the research phase to the development phase and Kyowa Hakko is not obligated to provide any further research funding in the future. We recognize revenue under collaborative agreements as we incur the related research and development costs.

     We have entered into license and option agreements with various companies involved in fields such as diagnostics, research tools, agriculture, biologics production and cancer therapeutics. In each of these agreements, we have conveyed certain rights to our technologies. In connection with the agreements, we are entitled to receive license fees, option fees, milestone payments, royalties on future sales, or any combination in cash or equity securities. We recognized license and option fee revenues of $195,000 and $380,000 for the three and six months ended June 30, 2003, respectively, compared to $61,000 and $122,000 for the same periods in 2002 related to our various agreements. The increase in license and option fee revenue in 2003 reflected new license agreements signed with various companies for Geron’s telomerase technology during the second quarter of 2003. We received royalties of $54,000 and $95,000 for the three and six months ended June 30, 2003, respectively, compared to $35,000 and $85,000 for the comparable periods in 2002, on product sales of telomerase diagnostic kits to the research-use-only market and cell-based research products. License and royalty revenues are dependent upon additional agreements being signed and future product sales. We expect to recognize total revenue of $259,000 during the remainder of 2003, $215,000 in 2004, $137,000 in 2005, $137,000 in 2006 and $542,000 thereafter related to our existing deferred revenue. Current revenues may not be predictive of future results.

Research and Development Expenses

     Research and development expenses were $7.8 million and $14.7 million for the three and six months ended June 30, 2003, respectively, compared to $8.1 million and $18.3 million for the comparable periods in 2002. The overall decrease for the second quarter 2003 compared to the second quarter 2002 was the net result of reduced personnel-related costs of approximately $2.2 million associated with restructurings in June 2002 and January 2003 offset by an increase in scientific supplies of approximately $1.8 million related to the manufacturing of Geron’s telomerase inhibitor compounds for preclinical studies. Overall, we expect research and development expenses to approximate current levels in the future as we continue to manage increases in expenses related to manufacturing and testing of Geron’s telomerase inhibitor compounds and continued development of our human embryonic stem cell (hESC) technology with reductions in other operating costs.

     Our research and development activities can be divided into two major categories of related programs, oncology and regenerative medicine, and a third group of other projects (e.g., research tools for drug discovery). The oncology programs focus on treating or diagnosing cancer by targeting or detecting the presence of telomerase, either inhibiting activity of the telomerase enzyme, diagnosing cancer by detecting the presence of telomerase, or using telomerase as a target for therapeutic vaccines or oncolytic viruses. Our core knowledge base in telomerase and telomere biology supports all these approaches, and our scientists may contribute to any or all of these programs in a given period.

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     The regenerative medicine programs focus on treating degenerative diseases with cell therapies based on cells derived from hESCs. A core of knowledge of hESC biology, as well as a significant continuing effort in deriving, growing, maintaining, and differentiating hESCs, underlies all aspects of this group of programs. Many of our researchers are allocated to more than one hESC project, and the percentage allocations of time changes as the resource needs of individual projects vary.

     Research and development expenses allocated to programs are as follows (in thousands):

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2003		2002		2003		2002
Oncology		$	4,744	$	2,792	$	8,571	$	8,304
Regenerative medicine			3,028		4,817		5,976		8,989
Other			—		537		189		1,017
	Total	$	7,772	$	8,146	$	14,736	$	18,310

     In our oncology area, we have concentrated our resources in two programs: telomerase inhibitor compounds and telomerase therapeutic vaccines. Currently our telomerase inhibitor compounds are in preclinical disease models and toxicology studies to enable initiation of Phase 1 clinical trials. After we receive conclusive results from such studies, we expect to file an Investigational New Drug Application (IND). A Phase 1 clinical study is currently in progress at Duke University Medical Center for a telomerase therapeutic vaccine for patients with metastatic prostate cancer. In April 2003, we reported the preliminary results of the low-dose group in that Phase 1 study. The study results suggest the vaccinations were very well-tolerated, without any adverse effects attributable to the treatment and resulted in the generation of an anti-telomerase immune response in almost all patients. The study is proceeding to enroll the high-dose group of patients. After the study is completed, we will evaluate its results. Future clinical trials with these potential products will depend on the achieved results.

     In our regenerative medicine area, we have concentrated our resources on several specific cell types, including hESC-derived neural cells for spinal cord injury and Parkinson’s disease, cardiomyocytes for heart failure and pancreatic islet cells for diabetes. We are engaged in animal proof-of-concept testing with various cell types. If these tests are successful, we will determine the strategy for additional preclinical testing.

     At this time, we cannot provide reliable estimates of how much time or what cost will be necessary to complete the projects currently in progress. Drug development in the U.S. is a process that includes multiple steps defined by the Food and Drug Administration (FDA) under applicable statutes, regulations and guidance documents. After the preclinical research process of identifying, selecting and testing in animals a potential pharmaceutical compound, the clinical development process begins with the filing of an IND. If successful, an IND allows opportunity for clinical study of the potential new medicine. Clinical development typically involves three phases of study: Phase 1, 2, and 3. The most significant costs associated with clinical development are incurred in Phase 3 trials, which tend to be the longest and largest studies conducted during the drug development process. After the completion of a successful preclinical and clinical development program, a New Drug Application (NDA) must be filed with the FDA, which includes among other things very large amounts of preclinical and clinical data and results and manufacturing-related information necessary to support requested approval of the product. The NDA must be reviewed and approved by the FDA.

     According to industry statistics, on average it takes 10 to 15 years to research, develop and bring to market a new prescription medicine in the United States. In light of the steps and complexities involved, the successful development of our products is highly uncertain. Actual product timelines and costs are subject to enormous variability and are very difficult to predict, as our clinical development programs are updated and changed to reflect the most recent preclinical and clinical data and other relevant information. In addition, various statutes and regulations also govern or influence the manufacturing, safety reporting, labeling, storage, recordkeeping and marketing of each product. The lengthy process of seeking these regulatory reviews and approvals, and the subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could materially adversely affect our business. In responding to an NDA submission, the FDA may grant marketing approval, may request additional information, may deny the application if it determines that the application does not provide an adequate basis for approval, and may also refuse to review an application that has been submitted if it determines that the application does not provide an adequate basis for filing and

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review. We cannot assure you that any approval required by the FDA will be obtained on a timely basis, if at all.

     For a more complete discussion of the risks and uncertainties associated with completing development of potential products, see the sub-section titled “Because we or our collaborators must obtain regulatory approval to market our products in the United States and foreign jurisdictions, we cannot predict whether or when we will be permitted to commercialize our products” and “Entry into clinical trials with one or more products may not result in any commercially viable products” in the section of Item 2 entitled “Additional Factors That May Affect Future Results,” and elsewhere in this Form 10-Q.

General and Administrative Expenses

     General and administrative expenses were $1.2 million and $2.5 million for the three and six months ended June 30, 2003, respectively, compared to $1.5 million and $3.0 million for the comparable periods in 2002. The decrease in general and administrative expenses for the three and six month periods ending June 30, 2003, primarily reflects reduced personnel-related costs as a result of the restructurings in June 2002 and January 2003.

Interest and Other Income

     Interest income was $222,000 and $471,000 for the three and six months ended June 30, 2003, respectively, compared to $466,000 and $1.2 million for the comparable periods in 2002. The decrease in interest income for 2003 compared to 2002 was primarily due to lower interest rates. Interest earned in the future will depend on future funding and prevailing interest rates.

     We also received $172,000 and $199,000 in research payments under government grants for the three and six months ended June 30, 2003, respectively, compared to $199,000 and $358,000 for the comparable periods in 2002.

Interest and Other Expense

     Interest and other expense was $250,000 and $414,000 for the three and six months ended June 30, 2003, respectively, compared to $185,000 and $397,000 for the comparable periods in 2002. The increase in interest and other expense for 2003 compared to 2002 was primarily the result of higher interest expenses related to convertible debentures which were fully converted in June 2003.

Debenture Conversion Expense

     In May 2003, the Company modified the existing terms of the outstanding $15,000,000 series D convertible debentures to provide for an automatic conversion into equity on the maturity date, to fix the conversion price at $5.00 per share and to eliminate the interest accrual for the remainder of the term. In addition, the Company modified the terms of the related outstanding warrants to change the exercise prices to $7.50 per share. The expiration periods were unchanged.

     The difference between the current fair values of the existing series D-1 and D-2 warrants and the amended series D-1 and D-2 warrants was recorded as conversion expense of $583,000. The Company also recorded the amended series D convertible debentures at a fair value of $16,509,000 with the difference of $935,000 being recorded as conversion expense. The remaining excess of the fair value over the face value of the debentures from the first modification of $739,000 was recognized as a reduction to conversion expense. The 2.5% interest accrued through the date of the second modification was added to the outstanding principal balance. No further interest accruals are required after the date of the second modification. In calculating the conversion expense associated with the series D-1 and D-2 warrants we used the Black-Scholes Valuation Model to determine fair values; the conversion expense associated with the amended series D convertible debentures was based on the fair value of the underlying common stock.

     During May and June 2003, all of the remaining $15,000,000 of series D convertible debentures plus accrued interest of $575,340 were converted into 3,115,068 shares of Geron common stock. As of June 30, 2003, no series D convertible debentures remained outstanding; series D-1 warrants to purchase 333,935 shares of Geron common stock remained outstanding (but expired on July 1, 2003 without having been

17

exercised); and series D-2 warrants to purchase 500,901 shares of Geron common stock remained outstanding.

Net Loss

     Net loss was $9.3 million and $17.2 million for the three and six months ended June 30, 2003, compared to $9.0 million and $19.5 million for the comparable periods in 2002. The decrease in net loss for the six months ended June 30, 2003 was primarily due to lower operating expenses as a result of restructurings in June 2002 and January 2003. The small increase in net loss for the three months ended June 30, 2003 was primarily due to the conversion expense associated with the conversion of the series D convertible debentures, partially offset by increased revenues and reduced operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

     In April 2003, we sold 4.4 million shares of Geron common stock to two investors at $4.60 per share resulting in net proceeds of approximately $19.0 million. The shares were offered through a prospectus supplement to our effective universal shelf registration statement. We issued to the investors warrants to purchase an additional 600,000 shares of Geron common stock at an exercise price of $6.34 per share. The warrants expire in April 2006.

     In June 2003, Geron entered into a licensing agreement with Transgenomic, Inc. covering manufacture of phosphoramidate and thio-phosphoramidate oligonucleotides. In connection with the agreement, Transgenomic purchased 310,000 shares of Geron common stock at $5.05 per share in addition to paying a non-refundable cash license fee. In a separate collaboration research agreement between the two companies, a research fee was paid to Transgenomic, Inc.

     Cash, restricted cash, cash equivalents and marketable securities at June 30, 2003 totaled $53.8 compared to $47.5 million at December 31, 2002. The increase in cash, cash equivalents and investments in 2003 was the net result of the sale of common stock in April and June 2003 and use of cash in operations. Our investment policy is to invest these funds in liquid, investment-grade securities, such as interest-bearing money market funds, commercial paper and municipal securities.

     Net cash used in operations was $13.8 million for the six months ended June 30, 2003 compared to $16.7 million for the comparable period in 2002. The decrease was primarily due to decreased expenses as a result of restructurings in June 2002 and January 2003.

     For the six months ended June 30, 2003, we have invested approximately $157,000 in property and equipment compared to $274,000 for the comparable 2002 period. For the six months ended June 30, 2003, no equipment was financed through equipment financing compared to $498,000 for the comparable 2002 period. As of June 30, 2003, we had approximately $505,000 outstanding under our current equipment financing arrangements and had approximately $607,000 available for borrowing under our equipment financing arrangements. The drawdown period under the equipment financing arrangements will expire on September 30, 2003. We intend to renew the commitment for a new equipment financing facility. If we are unable to renew the commitment or obtain other financing alternatives, then we will not be financing future equipment purchases.

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As of December 31, 2002, our contractual obligations for the next five years, and thereafter were as follows:

		Principal Payments Due by Period
				Less Than						After 5
Contractual Obligations (1)		Total		1 Year		1-3 Years		4-5 Years		Years
		(Amounts in thousands)
Convertible debentures (2)		$	15,000	$	—	$	15,000	$	—	$	—
Equipment loans			744		367		377		—		—
Operating leases			2,032		1,096		936		—		—
Research funding (3)			10,687		3,187		7,133		367		—
Product manufacturing (4)			1,750		1,750		—		—		—
	Total contractual cash obligations	$	30,213	$	6,400	$	23,446	$	367	$	—

(1)	This table does not include any milestone payments under research collaborations or license agreements as the timing and likelihood of such payments are not known.
(2)	Our convertible debentures fully converted into common stock as of June 30, 2003. No amounts remain outstanding.
(3)	Research funding is comprised of sponsored research commitments at various academic laboratories around the world, including the Roslin Institute.
(4)	In July 2002, we entered into a manufacturing agreement to produce GMP-grade GRN163 for preclinical and clinical studies. The full amount was paid in March 2003. No amounts remain outstanding.

     We estimate that our existing capital resources, interest income and equipment financing will be sufficient to fund our current and planned operations through June 30, 2005. Changes in our research and development plans or other changes affecting our operating expenses may result in the expenditure of available resources before such time, and in any event, we will need to raise substantial additional capital to fund our operations in the future. We intend to seek additional funding through strategic collaborations, public or private equity financings, capital lease transactions or other financing sources that may be available.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     Our business is subject to various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this Form 10-Q. Any of these risks could materially adversely affect our business, operating results and financial condition.

Our business is at an early stage of development.

     The science and technology of telomere biology and telomerase, human embryonic stem cells, and nuclear transfer are relatively new. Our business is at an early stage of development, in that we do not yet have products in late-stage clinical trials or on the market. Our ability to produce products that progress to and through clinical trials is subject to our ability to, among other things:

• continue to have success with our research and development efforts;

• select therapeutic compounds for development;

• obtain the required regulatory approvals; and

• manufacture and market resulting products.

     When potential lead drug compounds or product candidates are identified through our research programs, they will require significant preclinical and clinical testing prior to regulatory approval in the United States and elsewhere. In addition, we will also need to determine whether any of these potential products can be manufactured in commercial quantities at an acceptable cost. Our efforts may not result in a product that can be marketed. Because of the significant scientific, regulatory and commercial milestones that must be reached for any of our development programs to be successful, any program may be abandoned, even after significant resources have been expended.

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We have a history of losses and anticipate future losses; continued losses could impair our ability to sustain operations.

     We have incurred operating losses every year since our operations began in 1990. As of June 30, 2003, our accumulated deficit was approximately $243.0 million. Losses have resulted principally from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations. We expect to incur additional operating losses as our development efforts and clinical testing activities are continued. Substantially all of our revenues to date have been research support payments under collaboration agreements. We may be unsuccessful in entering into any new corporate collaboration that results in revenues. Even if we are able to obtain new collaboration arrangements with third parties, the revenues generated from these arrangements may not be sufficient alone to continue or expand our research or development activities and otherwise sustain our operations.

     We are unable to estimate at this time the level of revenue to be received from the sale of diagnostic products and telomerase-immortalized cell lines, and do not currently expect to receive significant revenues from the sale of these products. Our ability to continue or expand our research activities and otherwise sustain our operations is dependent on our ability, alone or with others to, among other things, manufacture and market therapeutic products. We may never receive material revenues from product sales or if we do receive revenues, such revenues may not be sufficient to continue or expand our research or development activities and otherwise sustain our operations.

We will need additional capital to conduct our operations and develop our products, and our ability to obtain the necessary funding is uncertain.

     We will require substantial capital resources in order to conduct our operations and develop our products. While we estimate that our existing capital resources, interest income and equipment financing arrangements will be sufficient to fund our current and planned operations through June 30, 2005, we cannot guarantee that this will be the case. The timing and degree of any future capital requirements will depend on many factors, including:

• the accuracy of the assumptions underlying our estimates for our capital needs in 2003 and beyond;

• continued scientific progress in our research and development programs;

• the magnitude and scope of our research and development programs;

• our ability to maintain and establish strategic arrangements for research, development, clinical testing, manufacturing and marketing;

• our 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; and

• the potential for new technologies and products.

     We intend to acquire additional funding through strategic collaborations, public or private equity financings, capital lease transactions or other financing sources that may be available. Additional financing may not be available on acceptable terms, or 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, these arrangements may require us to relinquish rights to some of our technologies, product candidates or products that we would otherwise seek to develop and commercialize ourselves. If sufficient capital is not available, we may be required to delay, reduce the scope of or eliminate one or more of our programs, any of which could have a material adverse effect on our business.

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We may be unable to identify a safe and effective inhibitor of telomerase that can be developed into a commercially viable cancer treatment product, which would adversely impact our future business prospects.

     As a result of our drug discovery efforts to date, we have identified compounds in laboratory studies that demonstrate potential for inhibiting telomerase in humans. We have selected one of these compounds, GRN163, as a lead compound for development as a telomerase inhibitor for cancer. Further research is required to determine if this compound can be fully developed as an efficacious, safe and commercially viable treatment for cancer.

     This compound, and other compounds we have identified, may prove to have undesirable and unintended side effects or other characteristics adversely affecting its safety, efficacy or cost-effectiveness that would likely prevent or limit its commercial use. Accordingly, it may not be appropriate for us to proceed with clinical development, to obtain regulatory approval or to market a telomerase inhibitor for the treatment of cancer. If we abandon our research for cancer treatment for any of these reasons or for other reasons, our business prospects would be materially and adversely affected.

If our access to necessary tissue samples, information or licensed technologies is restricted, we will not be able to develop our business.

     To continue the research and development of our therapeutic and diagnostic products, we need access to normal and diseased human and other tissue samples, other biological materials and related clinical and other information. We compete with many other companies for these materials and information. We may not be able to obtain or maintain access to these materials and information on acceptable terms, if at all. In addition, government regulation in the United States and foreign countries could result in restricted access to, or prohibiting the use of, human and other tissue samples. If we lose access to sufficient numbers or sources of tissue samples, or if tighter restrictions are imposed on our use of the information generated from tissue samples, our business will be materially harmed.

Some of our competitors may develop technologies that are superior to or more cost-effective than ours, which may impact the commercial viability of our technologies and which may significantly damage our ability to sustain operations.

     The pharmaceutical and biotechnology industries are intensely competitive. Other pharmaceutical and biotechnology companies and research organizations currently engage in or have in the past engaged in efforts related to the biological mechanisms that are the focus of our programs in oncology and regenerative medicine, including the study of telomeres, telomerase, human embryonic stem cells, and nuclear transfer. In addition, other products and therapies that could compete directly with the products that we are 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 competitors of ours. According to published reports as of December 2002, there are approximately 90 approved anti-cancer products on the market in the United States, and several hundred in clinical development. Many of the pharmaceutical companies developing and marketing these competing products (including Astra-Zeneca, Bristol-Meyers Squibb and Novartis, among others) have significantly greater financial resources and expertise than we do in:

• research and development;

• manufacturing;

• preclinical and clinical testing;

• obtaining regulatory approvals; and

• marketing.

     Smaller companies may also prove to be significant competitors, particularly through collaborative

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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 ours. These companies and institutions compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring technologies complementary to our programs.

     In addition to the above factors, we expect to face competition in the following areas:

• 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.

     As a result of the foregoing, our competitors may develop more effective or more affordable products, or achieve earlier patent protection or product commercialization than we do. Most significantly, competitive products may render the products that we develop obsolete.

The ethical, legal and social implications of our research using embryonic stem cells and nuclear transfer could prevent us from developing or gaining acceptance for commercially viable products in this area.

     Our programs in regenerative medicine may involve the use of stem cells that are derived from human embryonic tissue. The use of human embryonic stem cells gives rise to ethical, legal and social issues regarding the appropriate use of these cells. In the event that our research related to human embryonic stem cells becomes the subject of adverse commentary or publicity, the market price for our common stock could be significantly harmed.

     Some groups have voiced opposition to our technology and practices. The concepts of cell regeneration, cell immortality, and nuclear transfer have stimulated significant debate in social and political arenas. We use stem cells derived through a process that uses as the starting material donated embryos created for in vitro fertilization procedures but no longer needed or suitable for that use. Many research institutions, including some of our scientific collaborators, have adopted policies regarding the ethical use of human embryonic tissue. These policies may have the effect of limiting the scope of research conducted using human embryonic stem cells, resulting in reduced scientific progress. In addition, the United States government and its agencies have in recent years refused to fund research which involves the use of human embryonic tissue. President Bush announced on August 9, 2001 that he would permit federal funding of research on human embryonic stem cells using the limited number of embryonic stem cell lines that had already been created, but relatively few federal grants have been made so far. The President’s Council on Bioethics will monitor stem cell research, and the guidelines and regulations it recommends may include restrictions on the scope of research using human embryonic or fetal tissue. The Council issued a report in July 2002 that recommended “that the federal government undertake a thorough-going review of present and projected practices of human embryo research, with the aim of establishing appropriate institutions to advise and shape federal policy in this arena.” Our inability to conduct research using human embryonic stem cells due to such factors as government regulation or otherwise could have a material adverse effect on us.

     Finally, we acquired Roslin Bio-Med to gain the rights to somatic cell nuclear transfer technology (sometimes called “somatic cell nuclear transfer”). We acquired exclusive rights to this technology for all areas except human reproductive cloning and certain other limited applications. Although we will not be pursuing human reproductive cloning, the use of nuclear transfer to produce embryonic stem cells (referred to as “therapeutic cloning”) could provide scientific insights that would help us advance our research. Government-imposed restrictions with respect to any or all of these practices could:

• harm our ability to establish critical partnerships and collaborations;

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• prompt government regulation of our technologies;

• cause delays in our research and development; and

• cause a decrease in the price of our stock.

     The U.S. Congress has recently considered legislation that would ban human therapeutic cloning as well as reproductive cloning. Such a bill has been passed by the House of Representatives, although not by the Senate, and many legislators reportedly favor such a ban. The July 2002 report of the President’s Council on Bioethics recommended a four-year moratorium on therapeutic cloning. If human therapeutic cloning is restricted or banned, our ability to commercialize those applications could be significantly harmed. Also, if regulatory bodies were to ban nuclear transfer processes, our research using nuclear transfer technology could be canceled and our business could be significantly harmed.

Entry into clinical trials with one or more products may not result in any commercially viable products.

     We do not expect to generate any significant revenues from product sales for a period of several years. We may never generate revenues from product sales or become profitable because of a variety of risks inherent in our business, including the following risks:

• clinical trials may not demonstrate the safety and efficacy of our products;

• completion of clinical trials may be delayed, or costs of clinical trials may exceed anticipated amounts;

• we may not be able to obtain regulatory approval of our products, or may experience delays in obtaining such approvals;

• we may not be able to manufacture our drugs economically on a commercial scale;

• we and our licensees may not be able to successfully market our products;

• physicians may not prescribe our products, or patients may not accept such products;

• others may have proprietary rights which prevent us from marketing our products; and

• competitors may sell similar, superior or lower-cost products.

Impairment of our intellectual property rights may limit our ability to pursue the development of our intended technologies and products.

     Protection of our proprietary technology is critically important to our business. Our success will depend in part on our ability to obtain and enforce our patents and maintain trade secrets, both in the United States and in other countries. The patent positions of pharmaceutical and biopharmaceutical companies, including ours, are highly uncertain and involve complex legal and technical questions. In particular, legal principles for biotechnology patents in the United States and in other countries are evolving, and the extent to which we will be able to obtain patent coverage to protect our technology, or enforce issued patents, is uncertain. Further, our patents may be challenged, invalidated or circumvented, and our patent rights may not provide proprietary protection or competitive advantages to us. In the event that we are unsuccessful in obtaining and enforcing patents, our business would be negatively impacted.

     Publication of discoveries in scientific or patent literature tends to lag behind actual discoveries by at least several months and sometimes several years. Therefore, the persons or entities that we or our licensors name as inventors in our patents and patent applications may not have been the first to invent the inventions disclosed in the patent applications or patents, or file patent applications for these inventions. As a result, we may not be able to obtain patents for discoveries that we otherwise would consider patentable and that we consider to be extremely significant to our future success.

     Where several parties seek patent protection for the same technology, the U.S. Patent Office may declare

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an interference proceeding in order to ascertain the party to which the patent should be issued. Patent interferences are typically complex, highly contested legal proceedings, subject to appeal. They are usually expensive and prolonged, and can cause significant delay in the issuance of patents. Moreover, parties that receive an adverse decision in an interference can lose important patent rights. Our pending patent applications, or our issued patents, may be drawn into interference proceedings which may delay or prevent the issuance of patents, or result in the loss of issued patent rights.

     The interference process can also be used to challenge a patent that has been issued to another party. In 2001, the U.S. Patent Office granted our request for the declaration of an interference between one of our pending applications relating to nuclear transfer and an issued patent, held by the University of Massachusetts. We requested this interference in order to clarify our patent rights in nuclear transfer technology. In March 2002, a second interference was declared involving our patent application and a patent application held by Infigen Inc. Both of these interferences are now ongoing. Based on a review of publicly available information, we believe that the technology at issue in both of these interferences was invented first at the Roslin Institute and is encompassed within our nuclear transfer license. However, we do not have access to the other party’s invention records, and, as in any legal proceeding, the outcome is uncertain.

     Outside of the U.S., certain jurisdictions, such as Europe and Australia, permit oppositions to be filed against the granting of patents. Because our intent is to commercialize products internationally, securing both proprietary protection and freedom to operate outside of the U.S. is important to us. We are involved in both opposing the grant of patents to others through such opposition proceedings, and in defending against oppositions filed by others.

     If interferences, oppositions or other challenges to our patent rights are not resolved promptly in our favor, our existing business relationships may be jeopardized and we could be delayed or prevented from entering into new collaborations or from commercializing certain products, which could materially harm our business.

     Patent litigation may also be necessary to enforce patents issued or licensed to us or to determine the scope and validity of our proprietary rights or the proprietary rights of another. We may not be successful in any patent litigation. Patent litigation can be extremely expensive and time-consuming, even if the outcome is favorable to us. An adverse outcome in a patent litigation or any other proceeding in a court or patent office could subject our business to significant liabilities to other parties, require disputed rights to be licensed from other parties or require us to cease using the disputed technology.

If we fail to meet our obligations under license agreements, we may face loss of our rights to key technologies on which our business depends.

     Our business depends on our three core technology platforms, each of which is based in part on patents licensed from third parties. Those third-party license agreements impose obligations on us, such as payment obligations and obligations to diligently pursue development of commercial products under the licensed patents. If a licensor believes that we have failed to meet our obligations under a license agreement, the licensor could seek to limit or terminate our license rights, which would most likely lead to costly and time-consuming litigation. During the period of any such litigation our ability to carry out the development and commercialization of potential products could be significantly and negatively affected. If our license rights were ultimately lost, our ability to continue our business based on the affected technology platform would be severely affected.

We may be subject to litigation that will be costly to defend or pursue and uncertain in its outcome.

     Our business may bring us into conflict with our licensees, licensors, or others with whom we have contractual or other business relationships, or with our competitors or others whose interests differ from ours. If we are unable to resolve those conflicts on terms that are satisfactory to all parties, we may become involved in litigation brought by or against us. That litigation is likely to be expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of our business. The outcome of litigation is always uncertain, and in some cases could include judgments against us that require us to pay damages, enjoin us from certain activities, or otherwise affect our legal or contractual rights, which could have a significant effect on our business.

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We may be subject to infringement claims that are costly to defend, and which may limit our ability to use disputed technologies and prevent us from pursuing research and development or commercialization of potential products.

     Our commercial success depends significantly on our ability to operate without infringing patents and the proprietary rights of others. Our technologies may infringe the patents or proprietary rights of others. In addition, we may become aware of discoveries and technology controlled by third parties that are advantageous to our research programs. In the event our technologies do infringe on the rights of others or we require the use of discoveries and technology controlled by third parties, we may be prevented from pursuing research, development or commercialization of potential products or may be required to obtain licenses to those patents or other proprietary rights or develop or obtain alternative technologies. We may not be able to obtain alternative technologies or any required license on commercially favorable terms, if at all. If we do not obtain the necessary licenses or alternative technologies, we may be delayed or prevented from pursuing the development of some potential products. Our failure to obtain alternative technologies or a license to any technology that we may require to develop or commercialize our products will significantly and negatively affect our business.

Much of the information and know-how that is critical to our business is not patentable and we may not be able to prevent others from obtaining this information and establishing competitive enterprises.

     We sometimes rely on trade secrets to protect our proprietary technology, especially in circumstances in which patent protection is not believed to be appropriate or obtainable. We attempt to protect our proprietary technology in part by confidentiality agreements with our employees, consultants, collaborators and contractors. We cannot assure you that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors, any of which would harm our business significantly.

We depend on our collaborators to help us complete the process of developing and testing our products and our ability to develop and commercialize products may be impaired or delayed if our collaborative partnerships are unsuccessful.

     Our strategy for the development, clinical testing and commercialization of our products requires entering into collaborations with corporate partners, licensors, licensees and others. We are dependent upon the subsequent success of these other parties in performing their respective responsibilities and the continued cooperation of our partners. Our collaborators may not cooperate with us or perform their obligations under our agreements with them. We cannot control the amount and timing of our collaborators’ resources that will be devoted to our research activities related to our collaborative agreements with them. Our collaborators may choose to pursue existing or alternative technologies in preference to those being developed in collaboration with us.

     Under agreements with collaborators, we rely significantly on them, among other activities, to:

• design and conduct advanced clinical trials in the event that we reach clinical trials;

• fund research and development activities with us;

• pay us fees upon the achievement of milestones; and

• market with us any commercial products that result from our collaborations.

     The development and commercialization of potential products will be delayed if collaborators fail to conduct these activities in a timely manner or at all. In addition, our collaborators could terminate their agreements with us and we may not receive any development or milestone payments. If we do not achieve milestones set forth in the agreements, or if our collaborators breach or terminate their collaborative agreements with us, our business may be materially harmed.

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Our reliance on the research activities of our non-employee scientific consultants and other research institutions, whose activities are not wholly within our control, may lead to delays in technological developments.

     We rely extensively and have relationships with scientific consultants at academic and other institutions, some of whom conduct research at our request. These scientific consultants are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. We have limited control over the activities of these consultants and, except as otherwise required by our collaboration and consulting agreements, can expect only limited amounts of their time to be dedicated to our activities. If our scientific consultants are unable or refuse to contribute to the development of any of our potential discoveries, our ability to generate significant advances in our technologies will be significantly harmed.

     In addition, we have formed research collaborations with many academic and other research institutions throughout the world, including the Roslin Institute. These research facilities may have commitments to other commercial and non-commercial entities. We have limited control over the operations of these laboratories and can expect only limited amounts of time to be dedicated to our research goals.

The loss of key personnel could slow our ability to conduct research and develop products.

     Our future success depends to a significant extent on the skills, experience and efforts of our executive officers and key members of our scientific staff. Competition for personnel is intense and we may be unable to retain our current personnel or attract or assimilate other highly qualified management and scientific personnel in the future. The loss of any or all of these individuals could harm our business and might significantly delay or prevent the achievement of research, development or business objectives.

     We also rely on consultants and advisors who assist us in formulating our research and development and clinical strategy. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. We may not be able to attract and retain these individuals on acceptable terms. Failure to do so would materially harm our business.

We may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage against potential liabilities in order to protect ourselves against product liability claims.

     Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic and diagnostic products. We may become subject to product liability claims if the use of our products is alleged to have injured subjects or patients. This risk exists for products tested in human clinical trials as well as products that are sold commercially. We currently have no clinical trial liability insurance and we may not be able to obtain and maintain this type of insurance for any of our clinical trials. In addition, product liability insurance is becoming increasingly expensive. As a result, we may not be able to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities which could have a material adverse effect on us.

Because we or our collaborators must obtain regulatory approval to market our products in the United States and foreign jurisdictions, we cannot predict whether or when we will be permitted to commercialize our products.

     Federal, state and local governments in the United States and governments in other countries have significant regulations in place that govern many of our activities. The preclinical testing and clinical trials of the products that we develop ourselves or that our collaborators develop are subject to extensive government regulation and may prevent us from creating commercially viable products from our discoveries. In addition, the sale by us or our collaborators of any commercially viable product will be subject to government regulation from several standpoints, including the processes of:

• manufacturing;

• advertising and promoting;

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• selling and marketing;

• labeling; and

• distributing.

     We may not obtain regulatory approval for the products we develop and our collaborators may not obtain regulatory approval for the products they develop. Regulatory approval may also entail limitations on the indicated uses of a proposed product. Because certain of our product candidates involve the application of new technologies and may be based upon a new therapeutic approach, such products may be subject to substantial additional review by various government regulatory authorities, and, as a result, we may obtain regulatory approvals for such products more slowly than for products based upon more conventional technologies. If, and to the extent that, we are unable to comply with these regulations, our ability to earn revenues will be materially and negatively impacted.

     The regulatory process, particularly for biopharmaceutical products like ours, is uncertain, can take many years and requires the expenditure of substantial resources. Any product that we or our collaborative partners develop must receive all relevant regulatory agency approvals or clearances before it may be marketed in the United States or other countries. Generally, biological drugs and non-biological drugs are regulated more rigorously than medical devices. In particular, human pharmaceutical therapeutic products are subject to rigorous preclinical and clinical testing and other requirements by the Food and Drug Administration in the United States and similar health authorities in foreign countries. 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 is susceptible to varying interpretations that could delay, limit or prevent regulatory agency approvals or clearances. In addition, delays or rejections may be encountered as a result of 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:

• significantly harm the marketing of any products that we or our collaborators develop;

• impose costly procedures upon our activities or the activities of our collaborators;

• diminish any competitive advantages that we or our collaborative partners may attain; or

• adversely affect our ability to receive royalties and generate revenues and profits.

     Even if we commit the necessary time and resources, economic and otherwise, the required regulatory agency approvals or clearances may not be obtained for any products developed by or in collaboration with us. If regulatory agency approval or clearance for a new product is obtained, this approval or clearance may entail limitations on the indicated uses for which it may be marketed that could limit the potential commercial use of the 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 the product or manufacturer, including withdrawal of the product from the market. Failure to comply with regulatory requirements can result in severe civil and criminal penalties, including but not limited to:

• recall or seizure of products;

• injunction against manufacture, distribution, sales and marketing; and

• criminal prosecution.

     The imposition of any of these penalties could significantly impair our business, financial condition and results of operations.

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To be successful, our products must be accepted by the health care community, which can be very slow to adopt or unreceptive to new technologies and products.

     Our products and those developed by our collaborative partners, if approved for marketing, may not achieve market acceptance since physicians, patients or the medical community in general may decide to not accept and utilize these products. The products that we are attempting to develop may represent substantial departures from established treatment methods and will compete with a number of traditional drugs and therapies manufactured and marketed by major pharmaceutical companies. The degree of market acceptance of any of our developed products will depend on a number of factors, including:

• our establishment and demonstration to the medical community of the clinical efficacy and safety of our product candidates;

• our ability to create products that are superior to alternatives currently on the market;

• our ability to establish in the medical community the potential advantage of our treatments over alternative treatment methods; and

• reimbursement policies of government and third-party payors.

     If the health care community does not accept our products for any of the foregoing reasons, or for any other reason, our business would be materially harmed.

The reimbursement status of newly-approved health care products is uncertain and failure to obtain reimbursement approval could severely limit the use of our products.

     Significant uncertainty exists as to the reimbursement status of newly approved health care products, including pharmaceuticals. If we fail to generate adequate third party reimbursement for the users of our potential products and treatments, then we may be unable to maintain price levels sufficient to realize an appropriate return on our investment in product development.

     In both domestic and foreign markets, sales of our products, if any, will depend in part on the availability of reimbursement from third-party payors, examples of which include:

• government health administration authorities;

• private health insurers;

• health maintenance organizations; and

• pharmacy benefit management companies.

     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 our potential products are approved for marketing. Cost control initiatives could decrease the price that we receive for any product we may develop in the future. In addition, third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services and any of our potential products and treatments may ultimately not be considered cost effective by these third parties. Any of these initiatives or developments could materially harm our business.

Our products are likely to be expensive to manufacture, and they may not be profitable if we are unable to significantly reduce the costs to manufacture them.

     Both GRN163 and our hESC-based products are likely to be significantly more expensive to manufacture than most other drugs currently on the market today. Oligonucleotides are large molecules with complex chemistry, and the cost of manufacturing even a short oligonucleotide like GRN163 is considerably greater than the cost of making most small-molecule drugs. Our present manufacturing processes are conducted at a relatively small scale and are at an early stage of development. We hope to substantially reduce

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manufacturing costs by process improvements, as well as through scale increases. If we are not able to do so, however, and depending on the pricing of the product, the profit margin on GRN163 may be significantly less than that of most drugs on the market today. Similarly, we currently make differentiated cells from hESCs on a laboratory scale, at a high cost per unit of measure. The cell-based therapies we are developing based on hESCs will probably require large quantities of cells. We continue to develop processes to scale up production of the cells in a cost-effective way. If we cannot continue to improve our manufacturing processes, we may not be able to charge a high enough price for our cell therapy products, even if they are safe and effective, to make a profit. If we are unable to realize significant profits from our potential products, our business would be materially harmed.

Our activities involve hazardous materials and improper handling of these materials by our employees or agents could expose us to significant legal and financial penalties.

     Our research and development activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds. As a consequence, we are subject to numerous environmental and safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. We may be required to incur significant costs to comply with current or future environmental laws and regulations and may be adversely affected by the cost of compliance with these laws and regulations.

     Although we believe that our safety procedures for using, handling, storing and disposing of hazardous 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, state or federal authorities could curtail our use of these materials and we could be liable for any civil damages that result, the cost of which could be substantial. Further, any failure by us to control the use, disposal, removal or storage of, or to adequately restrict the discharge of, or assist in the cleanup of, hazardous chemicals or hazardous, infectious or toxic substances could subject us to significant liabilities, including joint and several liability under certain statutes, and any liability could exceed our resources and could have a material adverse effect on our business, financial condition and results of operations. Additionally, an accident could damage our research and manufacturing facilities and operations.

     Additional federal, state and local laws and regulations affecting us may be adopted in the future. We may incur substantial costs to comply with these laws and regulations and substantial fines or penalties if we violate any of these laws or regulations.

Our stock price has historically been very volatile.

     Stock prices and trading volumes for many biopharmaceutical companies fluctuate widely for a number of reasons, including factors which may be unrelated to their businesses or results of operations such as media coverage, legislation and regulatory measures and the activities of various interest groups or organizations. This market volatility, as well as general domestic or international economic, market and political conditions, could materially and adversely affect the market price of our common stock and the return on your investment.

     Historically, our stock price has been extremely volatile. Between January 1998 and June 30, 2003, our stock has traded as high as $75.88 per share and as low as $1.41 per share. Between July 1, 2002 and June 30, 2003, the price has ranged between a high of $9.75 per share and a low of $1.41 per share. The significant market price fluctuations of our common stock are due to a variety of factors, including:

• depth of the market for the common stock;

• the experimental nature of our prospective products;

• fluctuations in our operating results;

• market conditions relating to the biopharmaceutical and pharmaceutical industries;

• any announcements of technological innovations, new commercial products or clinical progress or lack thereof by us, our collaborative partners or our competitors; or

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• announcements concerning regulatory developments, developments with respect to proprietary rights and our collaborations.

     In addition, the stock market is subject to other factors outside our control that can cause extreme price and volume fluctuations. Securities class action litigation has often been brought against companies, including many biotechnology companies, which then experience volatility in the market price of their securities. Litigation brought against us could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business.

The sale of a substantial number of shares may adversely affect the market price for our common stock.

     Sales of substantial number of shares of our common stock in the public market could significantly and negatively affect the market price for our common stock. As of June 30, 2003, we had 33,125,988 shares of common stock outstanding. Of these shares, approximately 19,620,067 shares were issued (including shares issuable upon conversion or exercise of convertible notes or warrants) since December 1998 pursuant to private placements. Of these shares, approximately 15,143,463 shares have been registered pursuant to shelf registration statements and therefore may be resold (if not sold prior to the date hereof) in the public market and approximately 4,476,604 of the remaining shares may be resold pursuant to Rule 144 into the public markets.

Our undesignated preferred stock may inhibit potential acquisition bids; this may adversely affect the market price for our common stock and the voting rights of the holders of common stock.

     Our certificate of incorporation provides our Board of Directors with the authority to issue up to 3,000,000 shares of undesignated preferred stock and to determine the rights, preferences, privileges and restrictions of these shares without further vote or action by the stockholders. As of the date of this Form 10-Q, 50,000 shares of preferred stock have been designated Series A Junior Participating Preferred Stock and the Board of Directors still has authority to designate and issue up to 2,950,000 shares of preferred stock. 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 shares of preferred stock may delay or prevent a change in control transaction without further action by our stockholders. As a result, the market price of our common stock may be adversely affected. The issuance of preferred stock may also result in the loss of voting control by others.

Provisions in our share purchase rights plan, charter and bylaws, and provisions of Delaware law, may inhibit potential acquisition bids for us, which may prevent holders of our common stock from benefiting from what they believe may be the positive aspects of acquisitions and takeovers.

     Our Board of Directors has adopted a share purchase rights plan, commonly referred to as a “poison pill”. This plan entitles existing stockholders to rights, including the right to purchase shares of common stock, in the event of an acquisition of 15% or more of our outstanding common stock. Our share purchase rights plan could prevent stockholders from profiting from an increase in the market value of their shares as a result of a change of control of Geron by delaying or preventing a change of control. In addition, our Board of Directors has the authority, without further action by our stockholders, to issue additional shares of common stock, to fix the rights and preferences of, and to issue authorized but undesignated shares of preferred stock.

     In addition to our share purchase rights plan and the undesignated preferred stock, provisions of our charter documents and bylaws may make it substantially more difficult for a third party to acquire control of us and may prevent changes in our management, including provisions that:

• prevent stockholders from taking actions by written consent;

• divide the Board of Directors into separate classes with terms of office that are structured to prevent all of the directors from being elected in any one year; and

• set forth procedures for nominating directors and submitting proposals for consideration at stockholders’ meetings.

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     Provisions of Delaware law may also inhibit potential acquisition bids for us or prevent us from engaging in business combinations. Either collectively or individually, these provisions may prevent holders of our common stock from benefiting from what they may believe are the positive aspects of acquisitions and takeovers, including the potential realization of a higher rate of return on their investment from these types of transactions.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The following discussion about our market risk disclosures contains forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We are exposed to market risk related to changes in interest rates and foreign currency exchange rates. We do not use derivative financial instruments for speculative or trading purposes.

     Credit Risk. We place our cash, restricted cash, cash equivalents, and marketable securities with three financial institutions in the United States. Generally, these deposits may be redeemed upon demand and therefore, bear minimal risk. Deposits with banks may exceed the amount of insurance provided on such deposits. Financial instruments that potentially subject us to concentrations of credit risk consist primarily of marketable securities. Marketable securities consist of high-grade corporate bonds and U.S. government agency securities. Our investment policy, approved by our Board of Directors, limits the amount we may invest in any one type of investment, thereby reducing credit risk concentrations.

     Interest Rate Sensitivity. The fair value of our cash equivalents and marketable securities at June 30, 2003 was $52.3 million. These investments include $10.0 million of cash equivalents which are due in less than 90 days, $37.7 million of short-term investments which are due in less than one year and $4.6 million in long-term investments which are due in 12 to 16 months. Our investment policy is to manage our marketable securities portfolio to preserve principal and liquidity while maximizing the return on the investment portfolio through the full investment of available funds. We diversify the marketable securities portfolio by investing in multiple types of investment-grade securities. We primarily invest our marketable securities portfolio in short-term securities with at least an investment grade rating to minimize interest rate and credit risk as well as to provide for an immediate source of funds. Although changes in interest rates may affect the fair value of the marketable securities portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless the investments are sold. Due to the nature of our investments, which are primarily corporate notes and money market funds, we have concluded that there is no material market risk exposure.

     Foreign Currency Exchange Risk. Because we translate foreign currencies into United States dollars for reporting purposes, currency fluctuations can have an impact, though generally immaterial, on our results. We believe that our exposure to currency exchange fluctuation risk is insignificant primarily because our international subsidiary satisfies its financial obligations almost exclusively in its local currency. As of June 30, 2003, there was an immaterial currency exchange impact from our intercompany transactions. However, our financial obligations to the Roslin Institute are stated in British pounds sterling over the next two years. This obligation may become more expensive for us if the United States dollar becomes weaker against the British pounds sterling. As of June 30, 2003, we did not engage in foreign currency hedging activities.

ITEM 4.   CONTROLS AND PROCEDURES

     Based on their evaluation as of a date within 90 days of the filing date of this Quarterly Report on Form 10-Q, Geron’s principal executive officer and principal financial officer have concluded that Geron’s disclosure controls and procedures as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act) are effective to ensure that information required to be disclosed by Geron in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

     There were no significant changes in Geron’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation and up to the filing date of this Quarterly Report on Form 10-Q. We have not identified any significant deficiencies or material weaknesses, and therefore there were no corrective actions taken.

     It should be noted that any system of controls, however well designed and operated, can provide only

31

reasonable, and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II.   OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     None

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     During May and June 2003, an institutional investor converted an aggregate principal amount of $15 million plus accrued interest of series D convertible debentures into 3,115,068 shares of Geron common stock. As of June 30, 2003, no series D convertible debentures remained outstanding. This issuance was exempt from registration under the Securities Act of 1933 pursuant to Section 3(a)(9) thereof as an exchange with an existing security holder.

Recent Sales of Unregistered Securities

     None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The 2003 Annual Meeting of Stockholders of the Company was held pursuant to notice on May 30, 2003, at 9:00 a.m. local time at the Company’s headquarters, 230 Constitution Drive, Menlo Park, California. There were present at the meeting, in person or represented by proxy, the holders of 21,137,622 shares of Common Stock. The matters voted on at the meeting and the votes cast are as follows:

(a) As listed below, all of the nominees for Class I Directors were elected at the meeting.

	NO. OF COMMON		NO. OF COMMON		NO. OF COMMON
NAME OF NOMINEE	VOTES IN FAVOR		VOTES ABSTAINING		VOTES WITHHELD
Thomas B. Okarma		20,428,556		709,066		0
John P. Walker		20,848,853		288,769		0
Patrick J. Zenner		20,870,737		266,885		0

(b)	The proposal to amend the Company’s 1996 Directors’ Stock Option Plan to increase the number of authorized shares for issuance under such plan by 500,000 shares was approved. There were 18,916,701 shares of Common Stock voting in favor, 2,112,899 shares of Common Stock voting against and 108,022 shares of Common Stock abstaining.
(c)	The proposal to amend the 1996 Employee Stock Purchase Plan to increase the aggregate number of shares of common stock authorized for issuance under such plan by 300,000 shares, was approved. There were 19,828,059 shares of Common Stock voting in favor, 1,197,009 shares of Common Stock voting against and 112,554 shares of Common Stock abstaining.
(d)	The appointment of Ernst & Young LLP as the Company’s independent accountants for the fiscal year ending December 31, 2003 was ratified. There were 20,827,320 shares of Common Stock voting in favor, 230,996 shares of Common Stock voting against and 79,306 shares of Common Stock abstaining.

ITEM 5.   OTHER INFORMATION

     None

32

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)    EXHIBITS

Exhibit
Number		Description
10.1†		License Agreement Amendment between Geron Corporation and Transgenomic, Inc., dated June 2, 2003.
31.1		Certification of Chief Executive Officer pursuant to Form of Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
31.2		Certification of Chief Financial Officer pursuant to Form of Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
†	Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.

     (b)    REPORTS ON FORM 8-K

(i)	The Registrant filed a report on Form 8-K, dated April 7, 2003, announcing the presentation of positive preliminary results from a Phase 1 clinical trial of telomerase immunotherapy for metastatic prostate cancer on a webcast conference call.
(ii)	The Registrant filed a report on Form 8-K, dated April 8, 2003, announcing an agreement to sell four million shares of Geron common stock to two investors at $4.60 per share. In connection with the sale, the Company issued warrants to purchase an additional 600,000 shares at $6.34 per share.
(iii)	The Registrant filed a report on Form 8-K, dated April 9, 2003, announcing that the Company exercised its put option to the investors, resulting in the issuance of an additional 400,000 shares of Geron common stock at $4.60 per share.
(iv)	The Registrant filed a report on Form 8-K, dated April 30, 2003, announcing the Company’s financial results for the first quarter ended March 31, 2003.
(v)	The Registrant filed a report on Form 8-K, dated May 27, 2003, announcing that the Company entered into a Restructuring Agreement with the holder of its Series D Convertible Debentures.
(vi)	The Registrant filed a report on Form 8-K, dated June 4, 2003, announcing that the Company had entered a License Amendment Agreement with Transgenomic, Inc., a Delaware corporation, to amend an existing license agreement between the parties.

33

SIGNATURE

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 Senior Vice President, Corporate Development and Chief Financial Officer (Duly Authorized Signatory)

Date: July 30, 2003

34

EXHIBIT INDEX

Exhibit
Number		Description
10.1†		License Agreement Amendment between Geron Corporation and Transgenomic, Inc., dated June 2, 2003.
31.1		Certification of Chief Executive Officer pursuant to Form of Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
31.2		Certification of Chief Financial Officer pursuant to Form of Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated July 30, 2003.
†	Certain portions of this Exhibit have been omitted for which confidential treatment has been requested and filed separately with the Securities and Exchange Commission.

EX-10.1 3 f91837exv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. EXECUTION COPY - FINAL LICENSE AMENDMENT AGREEMENT This License Amendment Agreement (the "Agreement") is made by and between Geron Corporation, a Delaware corporation having a principal place of business at 230 Constitution Drive, Menlo Park, California 94025 ("Geron"), and Transgenomic, Inc., a Delaware corporation having a principal place of business at 12325 Emmet Street, Omaha, NE 68164, ("Transgenomic"), effective June 2, 2003. WHEREAS, effective June 15, 1998, Lynx Therapeutics, Inc. ("Lynx") and Cruachem Inc. ("Cruachem") entered into a License Agreement (the "License Agreement") under which Lynx granted to Cruachem a license under certain patents owned by Lynx (the "Lynx Patents") and certain patents owned by Northwestern University and licensed exclusively to Lynx (the "Northwestern Patents"); and WHEREAS, Lynx has assigned to Geron all Lynx's rights in the Lynx Patents and the License Agreement, and granted to Geron an exclusive sublicense (subject to the License Agreement) to the Northwestern Patents; Geron has assumed all Lynx's obligations under the License Agreement; and Transgenomic is the successor in interest to Cruachem with regard to the License Agreement; and WHEREAS, Transgenomic and Geron now wish to amend the License Agreement to broaden the scope of Transgenomic's license rights with respect to Licensed Products (as such term is defined in the License Agreement) covered by the Lynx Patents, as set forth herein; and WHEREAS, Geron is willing to grant Transgenomic an option to amend the License Agreement similarly with respect to Licensed Products covered by the Northwestern Patents. EXECUTION COPY - FINAL NOW, THEREFORE, Transgenomic and Geron hereby agree as follows: 1. AMENDMENT OF LICENSE AGREEMENT. The License Agreement is amended as indicated in the Amended License Agreement attached as Attachment A to this Agreement. Added language is indicated by underlining (e.g., Added [text underscored/example of added text]); deleted language is indicated by strikethrough (e.g., Deleted [text struckthrough/example of deleted text]). [See NOTE below] As amended, the License Agreement remains in full force and effect. 2. CONSIDERATION FOR AMENDMENT. In consideration for Geron's agreement to amend the License Agreement as described in Section 1, Transgenomic agrees to pay Geron, in cash, the sum of [***] Dollars ($[***]) and to purchase three hundred and ten thousand shares (310,000) shares of Geron's Common Stock, at a price equal to the closing price on the date of issue of such shares, on the terms and conditions of the Stock Purchase Agreement attached as Attachment B to this Agreement, to be executed simultaneously with this Agreement. 3. OPTION FOR FURTHER AMENDMENT. Transgenomic shall have the option (the "Option") to further amend the License Agreement to revise the definition of "Field of Use" to delete the phrase "(for the Lynx Patents only)" before the words "Therapeutic Uses." The Option shall be exercisable by written notice to Geron given at any time before [***], provided that at such time the License Agreement is in full force and effect and Transgenomic is in full compliance with all its terms, and further provided that Transgenomic pays to Geron, in consideration for the amendment, the sum of [***] Dollars ($[***]) in cash, or other equivalent consideration as may be mutually agreed upon between the parties. The parties to this Amendment, having read and understood the foregoing, acknowledge their legally binding acceptance of this Agreement by the signatures of their respective authorized representatives below. NOTE: For purposes of EDGAR filing, Attachment A is the License Agreement as amended, but not marked to show additions or deletions. [***] Confidential portion has been filed separately with the Securities and Exchange Commission. -2- EXECUTION COPY - FINAL Accepted And Agreed: GERON CORPORATION TRANSGENOMIC, INC. /s/ David L. Greenwood /s/ Mitchell L. Murphy - --------------------------------------- -------------------------------- David L. Greenwood Name: Mitchell L. Murphy Chief Financial Officer and Senior Title: Vice President, Vice President, Corporate Secretary and Treasurer Development 6/20/03 20 Jun 2003 - --------------------------------------- -------------------------------- Date Date -3- ATTACHMENT A AMENDED LICENSE AGREEMENT This License Agreement ("Agreement") is effective as of the 15th day of June, 1998 ("Effective Date"), by and between Transgenomic, Inc., a Delaware corporation having its principal office at 12325 Emmet Street, Omaha, NE 68164 as successor to Cruachem, Inc., ("Licensee"), and Geron Corporation, a Delaware corporation having its principal office at 230 Constitution Drive, Menlo Park, CA 94025, as assignee of Lynx Therapeutics, Inc., ("Licensor"). RECITALS WHEREAS, Licensor owns and is an exclusive licensee of proprietary technology relating to oligonucleotide N3'->P5' phosphoramidates, their manufacture, and their uses in a variety of fields ("Amidate Technology"); WHEREAS, Licensee has expertise in nucleic acid chemistry and is in the business of manufacturing, marketing, selling, and distributing nucleic acid compounds; and WHEREAS, Licensee desires to acquire from Licensor, and Licensor desires to grant to Licensee in exchange for the consideration described below the right to use Licensor's Amidate Technology to manufacture, market, sell, and commercialize oligonucleotide N3'-->P5' phosphoramidates in the Field of Use. NOW, THEREFORE, in view of the foregoing premises and in consideration of the mutual promises and covenants contained in the Agreement, Licensor and Licensee agree as follows: ARTICLE 1. DEFINITIONS. 1.1 "Affiliate" means a corporation, partnership, entity, person, firm, company or joint venture that controls, is controlled by or is under the common control with the referenced Party. For the purposes of this definition the word "control" (including, with correlative meaning, the ATTACHMENT A--Amended License Agreement Page A-4 terms "controlled by" or "is under the common control with") means the power to direct or cause the direction of the management and policies of such entity, or the ownership of at least fifty percent (50%) of the voting stock of such entity. 1.2 "Licensed Product" shall mean any product(s) whose manufacture, use, or sale in any country would, but for this Agreement, comprise an infringement, including contributory infringement, of one or more Valid Claims, including, without limitation, Monomer Licensed Products and Oligonucleotide Licensed Products, as defined below. 1.3 "Monomer Licensed Product" shall mean a Licensed Product which is a monomer used in the synthesis of an oligonucleotide N3'--->P5' phosphoramidate. 1.4 "Net Sales" means the total amount invoiced or otherwise charged by Licensee or its Affiliates or its sublicensee on account of the final or end product sale of a Licensed Product to a non-Affiliate, less the following deductions to the extent actually incurred or allowed based upon the sale of such Licensed Product: (a) credits, allowances, discounts and rebates to, and chargebacks from the account of, such non-Affiliate for spoiled, damaged, out dated and returned Licensed Product; (b) freight and insurance costs for transporting such Licensed Product, to the extent invoiced to the purchaser; (c) sales, value-added and other direct taxes on the sale of the Licensed Product; (d) customs duties, surcharges and other governmental charges incurred in connection with the exportation or importation of such Licensed Product; (e) trade, cash, and quantity discounts off of the invoiced price and similar promotional discounts (such as management fees required by hospital buying groups) off the invoiced price, all to the extent consistent with normal practice in the industry; (f) amounts reflecting retroactive price adjustments on sale of Licensed Products, to the extent not previously deducted from Net Sales; and (g) rebates or chargebacks made on the sale of such Licensed Product, to the extent consistent with the normal practice in the industry, and provided that any and all of the foregoing are calculated in accordance with generally accepted accounting principles applicable to the ATTACHMENT A--Amended License Agreement Page A-5 locality where the invoices are prepared and consistently applied. 1.5 "Oligonucleotide Licensed Product" shall mean a Licensed Product which is an oligonucleotide N3'--->P5' phosphoramidate. 1.6 "Patent Rights" shall mean the patents and patent applications listed in Exhibit A (consisting of the patents and patent applications listed in Exhibit A-1 (the "Lynx Patents") and the patents and patent applications listed in Exhibit A-2 (the "Northwestern Patents")); and with respect to U.S. patents and applications, all foreign equivalents thereof; and patents issuing on said foreign and U.S. patent applications. "Patent Rights" shall also include any divisional, continuation, reissue, reexamination or extension of the above-described patent applications and resulting patents, along with any extended or restored term, and any confirmation patent, registration patent, or patent of addition. 1.7 "Field of Use " shall mean Research Uses only for all of the Patent Rights and both Research and Therapeutic Uses for the Lynx Patents. 1.8 "Valid Claim" means any claim(s) in an unexpired patent or pending in a patent application included within the Patent Rights which has not been held unenforceable, unpatentable, or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer. 1.9 "Research Uses" shall mean all uses which are neither Therapeutic Uses, as defined below, nor Prohibited Uses, as defined below. 1.10 "Therapeutic Uses" shall mean the prevention, diagnosis or treatment of any human disease or medical condition, through the use of any product, service or application, including, without limitation, human clinical trials of a product, service or application; provided that Therapeutic Uses excludes Prohibited Uses. ATTACHMENT A--Amended License Agreement Page A-6 1.11 "Prohibited Uses" means any use or application to upregulate, downregulate, inhibit or modulate the function, activity or expression of telomerase or any subunit, fragment or component thereof, including telomerase reverse transcriptase ("hTERT"), telomerase RNA (hTR) or other components or regulators of the telomerase enzyme complex. ARTICLE 2. GRANT. 2.1 Subject to all the terms and limitations of this Agreement, Licensor hereby grants to Licensee and its Affiliates a worldwide non-exclusive royalty-bearing license, without the right to sublicense, under the Patent Rights to make, use, and sell Licensed Products in the Field of Use. 2.2 Licensee covenants that it will not make, use, or sell Licensed Products outside the Field of Use, nor shall Licensee or any of its Affiliates promote the use, marketing, distribution, or sale of Licensed Products outside the Field of Use. 2.3 Licensee will promptly disclose and hereby grants back to Licensor a worldwide, royalty-free, sublicensable license of a scope that permits Licensor to fully exploit any improvement made in the manufacture, purification, or quality control of oligonucleotide N3'---> P5' phosphoramidates or monomers used in the synthesis of oligonucleotide N3'--->P5' phosphoramidates during the term of this Agreement; provided that such improvements would be covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder. For other improvements made in the manufacture, purification, or quality control of oligonucleotide N3'--->P5' phosphoramidates during the term of this Agreement that are not covered by or within the scope of a Valid Claim of a patent or patent application licensed hereunder, Licensee hereby grants Licensor an option to a worldwide royalty-bearing license, with right to Sublicense, to make, use, and sell such improvements under reasonable terms. ARTICLE 3. ROYALTIES. 3.1 (a) Royalty Payments. In consideration of the rights and licenses herein granted to it, Licensee shall pay to Licensor a royalty of ATTACHMENT A--Amended License Agreement Page A-7 (i) [***] percent ([***]%) on the Net Sales of Licensed Products sold by Licensee or its Affiliates for Research Uses; and (ii) [***] percent ([***]%) of Net Sales of Licensed Products sold by License or its Affiliates for Therapeutic Uses. Royalties on Net Sales of Licensed Products are payable by Licensee until the last of the Valid Claims in the Patent Rights expires. (b) Minimum Annual Royalty. From and after the first anniversary of the Effective Date of the Agreement, Licensee shall pay to Licensor a minimum annual royalty of [***] dollars (U.S.$[***]) (the "Minimum Annual Payment"), as follows: if the royalties payable pursuant to Section 3.1(a) for such period are less than the Minimum Annual Payment, then Licensee shall, within thirty (30) days after the end of such year, pay Geron the difference between the Minimum Annual Payment and the amounts previously paid to Geron pursuant to Section 3.1(a) for such year. 3.2 Payments of royalties on Net Sales of Licensed Products (other than the minimum annual royalties whose payment schedule is set forth above) under this Article are to be made to Licensor within forty-five (45) days of the end of each December and June for sales invoiced in the six month period prior to the end of each of those months. Royalties shall be accompanied by a statement that shall include for each country in which sales of products occurred: the gross sales and Net Sales in each country's currency; the royalty rate; the related amounts payable in each country's currency; the applicable exchange rate to convert from each country's currency to U.S. dollars; and the amounts payable in U.S. dollars. Royalties shall first be calculated in the currency of the country in which sales took place and then directly converted to U.S. Dollars using the exchange rate as reported in the Wall Street Journal for the last business day of the calendar quarter of sales. All payments hereunder shall be made to Licensor in U.S. dollars by bank wire transfer in immediately available funds to such account designated by Licensor. The paying party shall provide notice at least five (5) business days prior to the wire transfer date of the amount of payment, the nature of the payment (with reference to the applicable section of the subject agreement) and the date of receipt of good funds. Such notice should be given to the [***] Confidential portion has been filed separately with the Securities and Exchange Commission. ATTACHMENT A--Amended License Agreement Page A-8 Controller of Licensor at the address set forth at the beginning of this Agreement or such other address directed by Licensor. 3.3 Any payment under this Article not paid by the payment due date shall bear interest at the rate which is the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law, calculated on the number of days such payment is delinquent. 3.4 The payments under this Article shall be free and clear of any taxes, duties, levies, fees or charges, except for withholding taxes (to the extent applicable). The paying party shall make any withholding payments due on behalf of Licensor and shall promptly provide Licensor with written documentation of any such payment sufficient to satisfy the reasonable requirements of an appropriate tax authority concerning an application by Licensor for a foreign tax credit for such payment or for similar treatment. The paying party agrees to take such reasonable and lawful steps as Licensor may request to minimize the amount of tax to which the payments to Licensor are subject. ARTICLE 4. DUE DILIGENCE. 4.1 Licensee shall at its expense: (a) use its best efforts to promote the sale of the Licensed Products and to satisfy market demand for them; (b) engage in advertising and sales promotion of Licensed Products; and (c) maintain an active and suitably trained sales force to carry out such efforts. 4.2 Licensee's due diligence obligation shall be deemed satisfied hereunder by documented expenditures of at least [***] dollars ($[***]) on sales promotion and marketing of Licensed Products in the following amounts in the following periods: [***] Confidential portion has been filed separately with the Securities and Exchange Commission. ATTACHMENT A--Amended License Agreement Page A-9

Sale promotion & marketing expenses Period during which amount is expended - ----------------------------------------------------------------------------------------------- $ [***]. From Effective Date to 1st anniversary thereof $ [***]. From 1st anniversary to 2nd anniversary $ [***]. From 2nd anniversary to 3rd anniversary

ARTICLE 5. QUALITY ASSURANCE. 5.1 Licenses shall use its best efforts to make Licensed Products of the highest quality for their intended use. Licensee shall make Licensed Products with the minimal purity standards set forth in Exhibit B. ARTICLE 6. BOOKS AND RECORDS. 6.1 Licensee shall keep, for at least three (3) years, records of all sales of products in sufficient detail to permit Licensor to confirm the accuracy of Licensee's payment calculations. Once a year, at the request and the expense of Licensor, upon at least five (5) days prior written notice, Licensee shall permit a nationally recognized, independent, certified public accountant, appointed by Licensor and acceptable to Licensee, access to these records during regular business hours solely to the extent necessary to verify such calculations, provided that such an accountant has entered into a confidentiality agreement with Licensee with terms substantially similar to the confidentiality provisions of this Agreement, limiting the use and disclosure of such information to purposes germane to this section. Results of any such examination shall be made available to both parties to this Agreement. If such examination reveals an underpayment of amounts by five percent (5%) or more, Licensee shall pay all costs of such examination. In the event such accountant concludes that additional payments are owed, the additional payments shall be paid within thirty (30) days of the date Licensor delivers to Licensee the accountant's written report reflecting such conclusion. This section shall survive any termination of this Agreement for ten (10) years. [***] Confidential portion has been filed separately with the Securities and Exchange Commission. ATTACHMENT A--Amended License Agreement Page A-10 ARTICLE 7. TERM AND TERMINATION. 7.1 Unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of this Agreement, this Agreement shall be in force from the Effective Date and shall remain in effect for the life of the last-to-expire patent licensed under this Agreement, or until the last patent application licensed under this Agreement is abandoned. 7.2 Any termination of this Agreement will not affect the rights and obligations set forth in the following Articles: Article 3. Royalties Article 6. Books and Records Article 10. Indemnification Article 11. Confidentiality Article 12. Use of Names 7.3 If Licensee should violate or fail to perform any material term or covenant of this Agreement, then Licensor may give written notice of such default ("Notice of Default") to Licensee. If Licensee should fail to repair such default within sixty (60) days after the date of such Notice of Default, Licensor shall have the right to terminate this Agreement and the licenses herein by a second written notice ("Notice of Termination") to Licensee. If a Notice of Termination is sent to Licensee, this Agreement shall automatically terminate on the date such notice takes effect. Such termination shall not relieve Licensee of its obligation to pay any royalty or license fees owing at the time of such termination and will not impair any accrued right of Licensor. Material terms under this Agreement include, but are not limited to, Article 2 (Grant), Article 3 (Royalties), Article 4 (Due Diligence), Article 5 (Quality Assurance), Article 6 (Books and Records), and Article 10 (Indemnification). 7.4 Licensee shall have the right at any time to terminate this Agreement by giving notice in writing to Licensor. Such Notice of Termination shall be effective sixty (60) days after the date thereof. ATTACHMENT A--Amended License Agreement Page A-11 7.5 Any termination pursuant to the above paragraph shall not relieve Licensee of any obligation or liability accrued hereunder prior to such termination or rescind anything done by Licensee or any payments made to Licensor hereunder prior to the time such termination becomes effective, and such termination shall not affect in any manner rights of Licensor arising under this Agreement prior to such termination. ARTICLE 8. REPRESENTATIONS AND WARRANTIES. 8.1 Licensor warrants and represents to Licensee that it has the lawful right to grant the license under this Agreement and that the Licensor has made all filings and paid all fees and done all such other things as to maintain the Patent Rights in good standing. 8.2 This license and the associated inventions are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. LICENSOR MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPERTY RIGHT. 8.3 Nothing in this Agreement shall be construed as: (a) a warranty or representation by Licensor as to the validity, enforceability, or scope of any of the Patent Rights hereunder, or elsewhere; (b) a warranty or representation that anything made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents of third parties; (c) an obligation to bring or prosecute actions or suits against third parties for patent infringement, except as provided in Article 11; (d) conferring by implication, estoppel, or otherwise, any license or rights under any patents or patent applications of Licensor other than those of the Patent Rights as defined herein; or (e) an obligation to furnish to Licensee any know-how or other information relating to the Patent Rights. ARTICLE 9. LIMITATION OF LIABILITY. 9.1 In no event shall Licensor be liable for any incidental, special, or consequential ATTACHMENT A--Amended License Agreement Page A-12 damages resulting from exercise of the license granted herein or the use of any invention described in any of the Patent Rights or the use of any Licensed Products. ARTICLE 10. INDEMNIFICATION. 10.1 Licensee will indemnity hold harmless, and defend Licensor, its officers, employees, and agents against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license. This indemnification will include, but will not be limited to, any product liability. 10.2 Licensor will indemnity, hold harmless, and defend Licensee, its officers, employees, and agents against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of acts or omissions which are the sole responsibility of Licensor. This indemnification will include, but will not be limited to, any product liability. ARTICLE 11. CONFIDENTIALITY. 11.1 Licensee and Licensor respectively will treat and maintain the proprietary business, patent prosecution, software, engineering drawings, process and technical information, and other proprietary information ("Proprietary Information") of the other party in confidence using at least the same degree of care as that party uses to protect its own proprietary information of a like nature for a period from the date of disclosure until five years after the date of termination of this Agreement. 11.2 All Proprietary Information will be labeled or marked confidential or as otherwise similarly appropriate by the disclosing party, or if the Proprietary Information is orally disclosed, it will be reduced to writing or some other physically tangible form, marked and labeled as set forth above by the disclosing party, and delivered to the receiving party within 30 days after the oral disclosure as a record of the disclosure and the confidential nature thereof Notwithstanding the foregoing, Licensee and Licensor may use and disclose Proprietary Information to its employees, agents, consultants, contractors, provided that any such parties are bound by a like ATTACHMENT A--Amended License Agreement Page A-13 duty of confidentiality. 11.3 Nothing contained herein will in any way restrict or impair the right of Licensee or Licensor to use, disclose, or otherwise deal with any Proprietary Information: 11.3a that recipient can demonstrate by written records was previously known to it; 11.3b that is now, or becomes in the future, public knowledge other than through acts or omissions by recipient. 11.3c that is lawfully obtained without restrictions by recipient from sources independent of the disclosing party; 11.3d that is required to be disclosed to a governmental entity or agency in connection with seeking any governmental or regulatory approval, or pursuant to the lawful requirement or request of a governmental entity or agency; or 11.3e that is furnished to a third party by the recipient with similar confidentiality restrictions imposed on such third party, as evidenced in writing. 11.4 Upon termination of this Agreement, Licensee and Licensor will destroy or return to the disclosing party proprietary information received from the other in its possession within 15 days following the effective date of termination. Licensee and Licensor will provide each other, within 30 days following termination, with a written notice that Proprietary Information has been returned or destroyed. Each party may, however, retain one copy of Proprietary Information for archival purposes in non-working files. ARTICLE 12. USE OF NAMES. 12.1 Neither party shall use the name or trademarks of the other party without the prior written consent of the other party. Notwithstanding the previous sentence, Licensee shall ATTACHMENT A--Amended License Agreement Page A-14 prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, Licensor's name in association with such products. ARTICLE 13. NOTICES. 13.1 Any notice or payment required to be given to either party will be deemed to have been properly given and to be effective (a) on the date of delivery if delivered in person or (b) five days after mailing if mailed by first-class certified mail, postage paid, to the respective addresses given below, or to another address as it may designate by written notice given to the other party. As to Licensor: Geron Corporation 230 Constitution Drive Menlo Park, CA 94025 Attention: General Counsel As to Licensee: Transgenomic, Inc. 12325 Emmet Street Omaha, NE 68164 Attention: _________ ARTICLE 14. ASSIGNABILITY. 14.1 Neither this Agreement nor any rights or benefits hereunder shall be assignable or transferable by Licensee without the prior written consent of Licensor, except that Licensee may assign its rights and obligations under this Agreement as a part of the sale or transfer of its entire business. ARTICLE 15. GOVERNING LAWS. 15.1 This Agreement shall be considered to have been made in the United States, and shall be interpreted in accordance with the laws of the State of California. ATTACHMENT A--Amended License Agreement Page A-15 ARTICLE 16. MISCELLANEOUS. 16.1 Headings. The headings of the several sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 16.2 Entire Agreement. This Agreement embodies the entire understanding of the parties and will supersede all previous communication, representations or understandings, either oral or written, between the parties relating to the subject matter hereof. No amendment or modification hereof will be valid or binding upon the parties unless made in writing and signed on behalf of each party. 16.3 Severability. In case any of the provisions contained in the Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not affect any other provisions hereof, but this Agreement will be construed as if such invalid or illegal or unenforceable provisions had never been contained herein. 16.4 Waiver. It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth will be deemed a waiver as to any subsequent and /or similar breach or default. 16.5 No Agency. Nothing herein shall be deemed to create an agency, joint venture, or partnership relationship between Licensee and Licensor. 16.7 Export Control Laws. Licensee will observe all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. 16.8 Patent Marking. Licensee will mark all Licensed Products made, distributed, or sold ATTACHMENT A--Amended License Agreement Page A-16 under the terms of this Agreement, or their containers, in accordance with the applicable patents marking laws. Licensee shall prominently display in catalogues, brochures, or other advertisements or materials describing Licensed Products, a label license statement with the following, or comparable, restriction: Purchase of this product is accompanied by a license under U.S. patents 5,599,922; 5,591,607; 5,631,135; 5,726,297; 5,476,925; 5,646,260; their foreign counterparts, and other pending patents, owned or exclusively licensed by Geron Corporation ATTACHMENT A--Amended License Agreement Page A-17 In Witness Whereof, Licensee and Licensor have caused this Agreement to be duly executed by their duly authorized representatives as of the date first shown herein. GERON CORPORATION, AS ASSIGNEE OF TRANSGENOMIC, INC., AS SUCCESSOR TO LYNX THERAPEUTICS, INC. CRUACHEM, INC By: ________________________ By:_____________________________ Title:____________________________ Title:____________________________ ATTACHMENT A--Amended License Agreement Page A-18 EXHIBIT A. PATENT RIGHTS. A-1 LYNX PATENTS

Docket No. Subject Matter (m-d-y) Ser. No. Date Pat. No. - ------------------------------------------------------------------------------------------------------------------------ 005 meth enhancing nuclease resist. 3-18-94 08/214,599 2-4-97 5,599,922 ------------------------------------------------------------------------------------------------------- 005-01 ss-100% amidates 4-50-mers 6-6-95 08/477,306 ------------------------------------------------------------------------------------------------------- 005-02 amidate triplexes 6-6-95 08/478,470 1-7-97 5,591,607 ------------------------------------------------------------------------------------------------------- 005-03 meth enhancing hybrid/diag kits 6-6-95 08/473,015 5-20-97 5,631,135 ------------------------------------------------------------------------------------------------------- 005-05us PCT nat'l--incl. LR3280 seq, etc. 3-20-95 08/700,448 10-12-99 5,965,720 ------------------------------------------------------------------------------------------------------- 005-06 amidate duplexes 9-3-97 08/923,386 01-01-02 6,169,170 ------------------------------------------------------------------------------------------------------- 005-05wo 3-20-95 PCT/US95/03575 ------------------------------------------------------------------------------------------------------- 005-05au 3-20-95 21900/95 08-05-99 704549 ------------------------------------------------------------------------------------------------------- 005-05ca 2,184,375 ------------------------------------------------------------------------------------------------------- 005-05cz PV 2745-96 ------------------------------------------------------------------------------------------------------- 005-05ep 95914800.8 ------------------------------------------------------------------------------------------------------- 005-05fi 9-11-96 963581 ------------------------------------------------------------------------------------------------------- 005-05hu 3-20-95 P9602549 ------------------------------------------------------------------------------------------------------- 005-05jp 3-20-95 7-524793 ------------------------------------------------------------------------------------------------------- 005-05kr 9-17-96 96-705131 ------------------------------------------------------------------------------------------------------- 005-05no 9-17-96 P963891 ------------------------------------------------------------------------------------------------------- 005-05pl 9-17-96 P 316434 ------------------------------------------------------------------------------------------------------- 006-01 ss amidate compounds; hairpins 6-5-95 08/465368 3-10-98 5,726,297 ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- 035-01 amidate synth. via amidite Xfer 6-14-96 08/663,918 07-14-96 5,824,793 ------------------------------------------------------------------------------------------------------- 035wo amidate synth. via amidite Xfer 6-14-96 PCT/US9610418 ------------------------------------------------------------------------------------------------------- 035-02 add G monomer & example 12-20-96 08/771,789 12-20-96 5,859,233 ------------------------------------------------------------------------------------------------------- 038 hydrophob. prot/amidate synth 9-15-97 08/929,620 -------------------------------------------------------------------------------------------------------

A-2 NORTHWESTERN PATENTS

Docket No. Subject Matter (m-d-y) Ser. No. Date Pat. No. ------------------------------------------------------------------------------------------------------- 9213 oligos w/1-4 amidate linkages 1-23-95 08/376,291 12-19-95 5,476,925 ------------------------------------------------------------------------------------------------------- 9213A oligos w/3'-terminal amine 6-6-95 08/465,961 ------------------------------------------------------------------------------------------------------- 9213B chimeric amidates w/thio&diester 6-6-95 08/471,248 7-8-97 5,646,260 ------------------------------------------------------------------------------------------------------- 9213C meth synth oligo w/3'term amine 6-6-95 08/467,219 7-15-97 5,648,480 ------------------------------------------------------------------------------------------------------- 9213E meth synth amidates via AT oxid. 6-7-96 08/659,924 08-03-99 5,932,718 -------------------------------------------------------------------------------------------------------

ATTACHMENT A--Amended License Agreement Page A-19 EXHIBIT B. MINIMUM QUALITY ASSURANCE. I. Oligonucleotide N3'->P5' phosphoramidates: Minimum purity of [***] percent ([***]%) as measured by ion exchange chromatography or capillary electrophoresis. II. Monomers: Minimum purity of [***] percent ([***]%) as measured by reverse phase HPLC. [***] Confidential portion has been filed separately with the Securities and Exchange Commission. ATTACHMENT A--Amended License Agreement Page A-20 ATTACHMENT B STOCK PURCHASE AGREEMENT Incorporated by reference to Exhibit 4.1 of Geron's Current Report on Form 8-K filed on June 4, 2003. ATTACHMENT B-Stock Purchase Agreement Page B-1 EX-31.1 4 f91837exv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION PURSUANT TO FORM OF RULE 13a-14(a) AS ADOPTED PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002 I, Thomas B. Okarma, Chief Executive Officer of Geron Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Geron Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Paragraph reserved pursuant to SEC Release 33-8238]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 30, 2003 /s/ THOMAS B. OKARMA - ------------------------------------ Thomas B. Okarma President and Chief Executive Officer EX-31.2 5 f91837exv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION PURSUANT TO FORM OF RULE 13a-14(a) AS ADOPTED PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002 I, David L. Greenwood, Chief Financial Officer of Geron Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Geron Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Paragraph reserved pursuant to SEC Release 33-8238]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: July 30, 2003 /s/ DAVID L. GREENWOOD - ------------------------------------ David L. Greenwood Senior Vice President, Corporate Development and Chief Financial Officer EX-32.1 6 f91837exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Geron Corporation (the "Company") hereby certifies, to such officer's knowledge, that: (i) the accompanying Quarterly Report on Form 10-Q of the Company for the three months ended June 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: July 30, 2003 /s/ Thomas B. Okarma -------------------------- Thomas B. Okarma President and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Geron Corporation and will be retained by Geron Corporation and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 7 f91837exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Geron Corporation (the "Company") hereby certifies, to such officer's knowledge, that: (i) the accompanying Quarterly Report on Form 10-Q of the Company for the three months ended June 30, 2003 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: July 30, 2003 /s/ David L. Greenwood -------------------------------------------- David L. Greenwood Senior Vice President, Corporate Development and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Geron Corporation and will be retained by Geron Corporation and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                    EXHIBIT 10.1

Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

                                                          EXECUTION COPY - FINAL

                           LICENSE AMENDMENT AGREEMENT

This License Amendment Agreement (the "Agreement") is made by and between Geron
Corporation, a Delaware corporation having a principal place of business at 230
Constitution Drive, Menlo Park, California 94025 ("Geron"), and Transgenomic,
Inc., a Delaware corporation having a principal place of business at 12325 Emmet
Street, Omaha, NE 68164, ("Transgenomic"), effective June 2, 2003.

WHEREAS, effective June 15, 1998, Lynx Therapeutics, Inc. ("Lynx") and Cruachem
Inc. ("Cruachem") entered into a License Agreement (the "License Agreement")
under which Lynx granted to Cruachem a license under certain patents owned by
Lynx (the "Lynx Patents") and certain patents owned by Northwestern University
and licensed exclusively to Lynx (the "Northwestern Patents"); and

WHEREAS, Lynx has assigned to Geron all Lynx's rights in the Lynx Patents and
the License Agreement, and granted to Geron an exclusive sublicense (subject to
the License Agreement) to the Northwestern Patents; Geron has assumed all Lynx's
obligations under the License Agreement; and Transgenomic is the successor in
interest to Cruachem with regard to the License Agreement; and

WHEREAS, Transgenomic and Geron now wish to amend the License Agreement to
broaden the scope of Transgenomic's license rights with respect to Licensed
Products (as such term is defined in the License Agreement) covered by the Lynx
Patents, as set forth herein; and

WHEREAS, Geron is willing to grant Transgenomic an option to amend the License
Agreement similarly with respect to Licensed Products covered by the
Northwestern Patents.



                                                          EXECUTION COPY - FINAL

NOW, THEREFORE, Transgenomic and Geron hereby agree as follows:

         1. AMENDMENT OF LICENSE AGREEMENT. The License Agreement is amended as
indicated in the Amended License Agreement attached as Attachment A to this
Agreement. Added language is indicated by underlining (e.g., Added [text
underscored/example of added text]); deleted language is indicated by
strikethrough (e.g., Deleted [text struckthrough/example of deleted text]).
[See NOTE below] As amended, the License Agreement remains in full force and
effect.

         2. CONSIDERATION FOR AMENDMENT. In consideration for Geron's agreement
to amend the License Agreement as described in Section 1, Transgenomic agrees to
pay Geron, in cash, the sum of [***] Dollars ($[***]) and to purchase three
hundred and ten thousand shares (310,000) shares of Geron's Common Stock, at a
price equal to the closing price on the date of issue of such shares, on the
terms and conditions of the Stock Purchase Agreement attached as Attachment B to
this Agreement, to be executed simultaneously with this Agreement.

         3. OPTION FOR FURTHER AMENDMENT. Transgenomic shall have the option
(the "Option") to further amend the License Agreement to revise the definition
of "Field of Use" to delete the phrase "(for the Lynx Patents only)" before the
words "Therapeutic Uses." The Option shall be exercisable by written notice to
Geron given at any time before [***], provided that at such time the License
Agreement is in full force and effect and Transgenomic is in full compliance
with all its terms, and further provided that Transgenomic pays to Geron, in
consideration for the amendment, the sum of [***] Dollars ($[***]) in cash, or
other equivalent consideration as may be mutually agreed upon between the
parties.

The parties to this Amendment, having read and understood the foregoing,
acknowledge their legally binding acceptance of this Agreement by the signatures
of their respective authorized representatives below.

NOTE: For purposes of EDGAR filing, Attachment A is the License Agreement as
amended, but not marked to show additions or deletions.

[***] Confidential portion has been filed separately with the Securities and
Exchange Commission.

                                      -2-


                                                          EXECUTION COPY - FINAL

Accepted And Agreed:

GERON CORPORATION                               TRANSGENOMIC, INC.

/s/ David L. Greenwood                          /s/ Mitchell L. Murphy
- ---------------------------------------         --------------------------------
David L. Greenwood                              Name: Mitchell L. Murphy

Chief Financial Officer and Senior              Title: Vice President,
Vice President, Corporate                       Secretary and Treasurer
Development
6/20/03                                         20 Jun 2003
- ---------------------------------------         --------------------------------
Date                                            Date


                                      -3-


                                  ATTACHMENT A

                            AMENDED LICENSE AGREEMENT

         This License Agreement ("Agreement") is effective as of the 15th day of
June, 1998 ("Effective Date"), by and between Transgenomic, Inc., a Delaware
corporation having its principal office at 12325 Emmet Street, Omaha, NE 68164
as successor to Cruachem, Inc., ("Licensee"), and Geron Corporation, a Delaware
corporation having its principal office at 230 Constitution Drive, Menlo Park,
CA 94025, as assignee of Lynx Therapeutics, Inc., ("Licensor").

                                    RECITALS

         WHEREAS, Licensor owns and is an exclusive licensee of proprietary
technology relating to oligonucleotide N3'->P5' phosphoramidates, their
manufacture, and their uses in a variety of fields ("Amidate Technology");

         WHEREAS, Licensee has expertise in nucleic acid chemistry and is in the
business of manufacturing, marketing, selling, and distributing nucleic acid
compounds; and

         WHEREAS, Licensee desires to acquire from Licensor, and Licensor
desires to grant to Licensee in exchange for the consideration described below
the right to use Licensor's Amidate Technology to manufacture, market, sell, and
commercialize oligonucleotide N3'-->P5' phosphoramidates in the Field of Use.

         NOW, THEREFORE, in view of the foregoing premises and in consideration
of the mutual promises and covenants contained in the Agreement, Licensor and
Licensee agree as follows:

ARTICLE 1.        DEFINITIONS.

         1.1 "Affiliate" means a corporation, partnership, entity, person, firm,
company or joint venture that controls, is controlled by or is under the common
control with the referenced Party. For the purposes of this definition the word
"control" (including, with correlative meaning, the

                     ATTACHMENT A--Amended License Agreement

                                    Page A-4


terms "controlled by" or "is under the common control with") means the power to
direct or cause the direction of the management and policies of such entity, or
the ownership of at least fifty percent (50%) of the voting stock of such
entity.

         1.2 "Licensed Product" shall mean any product(s) whose manufacture,
use, or sale in any country would, but for this Agreement, comprise an
infringement, including contributory infringement, of one or more Valid Claims,
including, without limitation, Monomer Licensed Products and Oligonucleotide
Licensed Products, as defined below.

         1.3 "Monomer Licensed Product" shall mean a Licensed Product which is a
monomer used in the synthesis of an oligonucleotide N3'--->P5' phosphoramidate.

         1.4 "Net Sales" means the total amount invoiced or otherwise charged by
Licensee or its Affiliates or its sublicensee on account of the final or end
product sale of a Licensed Product to a non-Affiliate, less the following
deductions to the extent actually incurred or allowed based upon the sale of
such Licensed Product:

         (a) credits, allowances, discounts and rebates to, and chargebacks from
the account of, such non-Affiliate for spoiled, damaged, out dated and returned
Licensed Product;

         (b) freight and insurance costs for transporting such Licensed Product,
to the extent invoiced to the purchaser;

         (c) sales, value-added and other direct taxes on the sale of the
Licensed Product;

         (d) customs duties, surcharges and other governmental charges incurred
in connection with the exportation or importation of such Licensed Product;

         (e) trade, cash, and quantity discounts off of the invoiced price and
similar promotional discounts (such as management fees required by hospital
buying groups) off the invoiced price, all to the extent consistent with normal
practice in the industry;

         (f) amounts reflecting retroactive price adjustments on sale of
Licensed Products, to the extent not previously deducted from Net Sales; and

         (g) rebates or chargebacks made on the sale of such Licensed Product,
to the extent consistent with the normal practice in the industry, and provided
that any and all of the foregoing are calculated in accordance with generally
accepted accounting principles applicable to the

                     ATTACHMENT A--Amended License Agreement

                                    Page A-5


locality where the invoices are prepared and consistently applied.

         1.5 "Oligonucleotide Licensed Product" shall mean a Licensed Product
which is an oligonucleotide N3'--->P5' phosphoramidate.

         1.6 "Patent Rights" shall mean the patents and patent applications
listed in Exhibit A (consisting of the patents and patent applications listed in
Exhibit A-1 (the "Lynx Patents") and the patents and patent applications listed
in Exhibit A-2 (the "Northwestern Patents")); and with respect to U.S. patents
and applications, all foreign equivalents thereof; and patents issuing on said
foreign and U.S. patent applications. "Patent Rights" shall also include any
divisional, continuation, reissue, reexamination or extension of the
above-described patent applications and resulting patents, along with any
extended or restored term, and any confirmation patent, registration patent, or
patent of addition.

         1.7 "Field of Use " shall mean Research Uses only for all of the Patent
Rights and both Research and Therapeutic Uses for the Lynx Patents.

         1.8 "Valid Claim" means any claim(s) in an unexpired patent or pending
in a patent application included within the Patent Rights which has not been
held unenforceable, unpatentable, or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer.

         1.9 "Research Uses" shall mean all uses which are neither Therapeutic
Uses, as defined below, nor Prohibited Uses, as defined below.

         1.10 "Therapeutic Uses" shall mean the prevention, diagnosis or
treatment of any human disease or medical condition, through the use of any
product, service or application, including, without limitation, human clinical
trials of a product, service or application; provided that Therapeutic Uses
excludes Prohibited Uses.

                     ATTACHMENT A--Amended License Agreement

                                    Page A-6


         1.11 "Prohibited Uses" means any use or application to upregulate,
downregulate, inhibit or modulate the function, activity or expression of
telomerase or any subunit, fragment or component thereof, including telomerase
reverse transcriptase ("hTERT"), telomerase RNA (hTR) or other components or
regulators of the telomerase enzyme complex.

ARTICLE 2.        GRANT.

         2.1 Subject to all the terms and limitations of this Agreement,
Licensor hereby grants to Licensee and its Affiliates a worldwide non-exclusive
royalty-bearing license, without the right to sublicense, under the Patent
Rights to make, use, and sell Licensed Products in the Field of Use.

         2.2 Licensee covenants that it will not make, use, or sell Licensed
Products outside the Field of Use, nor shall Licensee or any of its Affiliates
promote the use, marketing, distribution, or sale of Licensed Products outside
the Field of Use.

         2.3 Licensee will promptly disclose and hereby grants back to Licensor
a worldwide, royalty-free, sublicensable license of a scope that permits
Licensor to fully exploit any improvement made in the manufacture, purification,
or quality control of oligonucleotide N3'---> P5' phosphoramidates or monomers
used in the synthesis of oligonucleotide N3'--->P5' phosphoramidates during the
term of this Agreement; provided that such improvements would be covered by or
within the scope of a Valid Claim of a patent or patent application licensed
hereunder. For other improvements made in the manufacture, purification, or
quality control of oligonucleotide N3'--->P5' phosphoramidates during the term
of this Agreement that are not covered by or within the scope of a Valid Claim
of a patent or patent application licensed hereunder, Licensee hereby grants
Licensor an option to a worldwide royalty-bearing license, with right to
Sublicense, to make, use, and sell such improvements under reasonable terms.

ARTICLE 3. ROYALTIES.

         3.1      (a)      Royalty Payments. In consideration of the rights and
licenses herein granted to it, Licensee shall pay to Licensor a royalty of

                     ATTACHMENT A--Amended License Agreement

                                    Page A-7



         (i) [***] percent ([***]%) on the Net Sales of Licensed Products sold
         by Licensee or its Affiliates for Research Uses; and

         (ii) [***] percent ([***]%) of Net Sales of Licensed Products sold by
         License or its Affiliates for Therapeutic Uses. Royalties on Net Sales
         of Licensed Products are payable by Licensee until the last of the
         Valid Claims in the Patent Rights expires.

                  (b)      Minimum Annual Royalty. From and after the first
anniversary of the Effective Date of the Agreement, Licensee shall pay to
Licensor a minimum annual royalty of [***] dollars (U.S.$[***]) (the "Minimum
Annual Payment"), as follows: if the royalties payable pursuant to Section
3.1(a) for such period are less than the Minimum Annual Payment, then Licensee
shall, within thirty (30) days after the end of such year, pay Geron the
difference between the Minimum Annual Payment and the amounts previously paid to
Geron pursuant to Section 3.1(a) for such year.

         3.2 Payments of royalties on Net Sales of Licensed Products (other than
the minimum annual royalties whose payment schedule is set forth above) under
this Article are to be made to Licensor within forty-five (45) days of the end
of each December and June for sales invoiced in the six month period prior to
the end of each of those months. Royalties shall be accompanied by a statement
that shall include for each country in which sales of products occurred: the
gross sales and Net Sales in each country's currency; the royalty rate; the
related amounts payable in each country's currency; the applicable exchange rate
to convert from each country's currency to U.S. dollars; and the amounts payable
in U.S. dollars. Royalties shall first be calculated in the currency of the
country in which sales took place and then directly converted to U.S. Dollars
using the exchange rate as reported in the Wall Street Journal for the last
business day of the calendar quarter of sales. All payments hereunder shall be
made to Licensor in U.S. dollars by bank wire transfer in immediately available
funds to such account designated by Licensor. The paying party shall provide
notice at least five (5) business days prior to the wire transfer date of the
amount of payment, the nature of the payment (with reference to the applicable
section of the subject agreement) and the date of receipt of good funds. Such
notice should be given to the

[***] Confidential portion has been filed separately with the Securities and
Exchange Commission.

                     ATTACHMENT A--Amended License Agreement

                                    Page A-8


Controller of Licensor at the address set forth at the beginning of this
Agreement or such other address directed by Licensor.

         3.3 Any payment under this Article not paid by the payment due date
shall bear interest at the rate which is the lesser of ten percent (10%) per
annum or the maximum rate permitted by applicable law, calculated on the number
of days such payment is delinquent.

         3.4 The payments under this Article shall be free and clear of any
taxes, duties, levies, fees or charges, except for withholding taxes (to the
extent applicable). The paying party shall make any withholding payments due on
behalf of Licensor and shall promptly provide Licensor with written
documentation of any such payment sufficient to satisfy the reasonable
requirements of an appropriate tax authority concerning an application by
Licensor for a foreign tax credit for such payment or for similar treatment. The
paying party agrees to take such reasonable and lawful steps as Licensor may
request to minimize the amount of tax to which the payments to Licensor are
subject.

ARTICLE 4.        DUE DILIGENCE.

         4.1 Licensee shall at its expense:

         (a) use its best efforts to promote the sale of the Licensed Products
and to satisfy market demand for them;

         (b) engage in advertising and sales promotion of Licensed Products; and

         (c) maintain an active and suitably trained sales force to carry out
such efforts.

         4.2 Licensee's due diligence obligation shall be deemed satisfied
hereunder by documented expenditures of at least [***] dollars ($[***]) on sales
promotion and marketing of Licensed Products in the following amounts in the
following periods:

[***] Confidential portion has been filed separately with the Securities and
Exchange Commission.

                     ATTACHMENT A--Amended License Agreement

                                    Page A-9




Sale promotion & marketing expenses         Period during which amount is expended
- -----------------------------------------------------------------------------------------------
                                         
         $ [***].                           From Effective Date to 1st anniversary thereof

         $ [***].                           From 1st anniversary to 2nd anniversary

         $ [***].                           From 2nd anniversary to 3rd anniversary


ARTICLE 5.        QUALITY ASSURANCE.

         5.1 Licenses shall use its best efforts to make Licensed Products of
the highest quality for their intended use. Licensee shall make Licensed
Products with the minimal purity standards set forth in Exhibit B.

ARTICLE 6.        BOOKS AND RECORDS.

         6.1 Licensee shall keep, for at least three (3) years, records of all
sales of products in sufficient detail to permit Licensor to confirm the
accuracy of Licensee's payment calculations. Once a year, at the request and the
expense of Licensor, upon at least five (5) days prior written notice, Licensee
shall permit a nationally recognized, independent, certified public accountant,
appointed by Licensor and acceptable to Licensee, access to these records during
regular business hours solely to the extent necessary to verify such
calculations, provided that such an accountant has entered into a
confidentiality agreement with Licensee with terms substantially similar to the
confidentiality provisions of this Agreement, limiting the use and disclosure of
such information to purposes germane to this section. Results of any such
examination shall be made available to both parties to this Agreement. If such
examination reveals an underpayment of amounts by five percent (5%) or more,
Licensee shall pay all costs of such examination. In the event such accountant
concludes that additional payments are owed, the additional payments shall be
paid within thirty (30) days of the date Licensor delivers to Licensee the
accountant's written report reflecting such conclusion. This section shall
survive any termination of this Agreement for ten (10) years.

[***] Confidential portion has been filed separately with the Securities and
Exchange Commission.

                     ATTACHMENT A--Amended License Agreement

                                   Page A-10


ARTICLE 7.        TERM AND TERMINATION.

         7.1 Unless otherwise terminated by operation of law or by acts of the
parties in accordance with the terms of this Agreement, this Agreement shall be
in force from the Effective Date and shall remain in effect for the life of the
last-to-expire patent licensed under this Agreement, or until the last patent
application licensed under this Agreement is abandoned.

         7.2 Any termination of this Agreement will not affect the rights and
obligations set forth in the following Articles:

                  Article 3. Royalties

                  Article 6. Books and Records

                  Article 10. Indemnification

                  Article 11. Confidentiality

                  Article 12. Use of Names

         7.3 If Licensee should violate or fail to perform any material term or
covenant of this Agreement, then Licensor may give written notice of such
default ("Notice of Default") to Licensee. If Licensee should fail to repair
such default within sixty (60) days after the date of such Notice of Default,
Licensor shall have the right to terminate this Agreement and the licenses
herein by a second written notice ("Notice of Termination") to Licensee. If a
Notice of Termination is sent to Licensee, this Agreement shall automatically
terminate on the date such notice takes effect. Such termination shall not
relieve Licensee of its obligation to pay any royalty or license fees owing at
the time of such termination and will not impair any accrued right of Licensor.
Material terms under this Agreement include, but are not limited to, Article 2
(Grant), Article 3 (Royalties), Article 4 (Due Diligence), Article 5 (Quality
Assurance), Article 6 (Books and Records), and Article 10 (Indemnification).

         7.4 Licensee shall have the right at any time to terminate this
Agreement by giving notice in writing to Licensor. Such Notice of Termination
shall be effective sixty (60) days after the date thereof.

                     ATTACHMENT A--Amended License Agreement

                                   Page A-11


         7.5 Any termination pursuant to the above paragraph shall not relieve
Licensee of any obligation or liability accrued hereunder prior to such
termination or rescind anything done by Licensee or any payments made to
Licensor hereunder prior to the time such termination becomes effective, and
such termination shall not affect in any manner rights of Licensor arising under
this Agreement prior to such termination.

ARTICLE 8.        REPRESENTATIONS AND WARRANTIES.

         8.1 Licensor warrants and represents to Licensee that it has the lawful
right to grant the license under this Agreement and that the Licensor has made
all filings and paid all fees and done all such other things as to maintain the
Patent Rights in good standing.

         8.2 This license and the associated inventions are provided WITHOUT
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY, EXPRESS OR IMPLIED. LICENSOR MAKES NO REPRESENTATION OR WARRANTY THAT
THE INVENTION OR LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER
PROPERTY RIGHT.

         8.3 Nothing in this Agreement shall be construed as: (a) a warranty or
representation by Licensor as to the validity, enforceability, or scope of any
of the Patent Rights hereunder, or elsewhere; (b) a warranty or representation
that anything made, used, sold, or otherwise disposed of under any license
granted in this Agreement is or will be free from infringement of patents of
third parties; (c) an obligation to bring or prosecute actions or suits against
third parties for patent infringement, except as provided in Article 11; (d)
conferring by implication, estoppel, or otherwise, any license or rights under
any patents or patent applications of Licensor other than those of the Patent
Rights as defined herein; or (e) an obligation to furnish to Licensee any
know-how or other information relating to the Patent Rights.

ARTICLE 9.        LIMITATION OF LIABILITY.

         9.1 In no event shall Licensor be liable for any incidental, special,
or consequential

                     ATTACHMENT A--Amended License Agreement

                                   Page A-12


damages resulting from exercise of the license granted herein or the use of any
invention described in any of the Patent Rights or the use of any Licensed
Products.

ARTICLE 10.       INDEMNIFICATION.

         10.1 Licensee will indemnity hold harmless, and defend Licensor, its
officers, employees, and agents against any and all claims, suits, losses,
damage, costs, fees, and expenses resulting from or arising out of exercise of
this license. This indemnification will include, but will not be limited to, any
product liability.

         10.2 Licensor will indemnity, hold harmless, and defend Licensee, its
officers, employees, and agents against any and all claims, suits, losses,
damage, costs, fees, and expenses resulting from or arising out of acts or
omissions which are the sole responsibility of Licensor. This indemnification
will include, but will not be limited to, any product liability.

ARTICLE 11.       CONFIDENTIALITY.

         11.1 Licensee and Licensor respectively will treat and maintain the
proprietary business, patent prosecution, software, engineering drawings,
process and technical information, and other proprietary information
("Proprietary Information") of the other party in confidence using at least the
same degree of care as that party uses to protect its own proprietary
information of a like nature for a period from the date of disclosure until five
years after the date of termination of this Agreement.

         11.2 All Proprietary Information will be labeled or marked confidential
or as otherwise similarly appropriate by the disclosing party, or if the
Proprietary Information is orally disclosed, it will be reduced to writing or
some other physically tangible form, marked and labeled as set forth above by
the disclosing party, and delivered to the receiving party within 30 days after
the oral disclosure as a record of the disclosure and the confidential nature
thereof Notwithstanding the foregoing, Licensee and Licensor may use and
disclose Proprietary Information to its employees, agents, consultants,
contractors, provided that any such parties are bound by a like

                     ATTACHMENT A--Amended License Agreement

                                   Page A-13


duty of confidentiality.

         11.3 Nothing contained herein will in any way restrict or impair the
right of Licensee or Licensor to use, disclose, or otherwise deal with any
Proprietary Information:

         11.3a that recipient can demonstrate by written records was previously
known to it;

         11.3b that is now, or becomes in the future, public knowledge other
than through acts or omissions by recipient.

         11.3c that is lawfully obtained without restrictions by recipient from
sources independent of the disclosing party;

         11.3d that is required to be disclosed to a governmental entity or
agency in connection with seeking any governmental or regulatory approval, or
pursuant to the lawful requirement or request of a governmental entity or
agency; or

         11.3e that is furnished to a third party by the recipient with similar
confidentiality restrictions imposed on such third party, as evidenced in
writing.

         11.4 Upon termination of this Agreement, Licensee and Licensor will
destroy or return to the disclosing party proprietary information received from
the other in its possession within 15 days following the effective date of
termination. Licensee and Licensor will provide each other, within 30 days
following termination, with a written notice that Proprietary Information has
been returned or destroyed. Each party may, however, retain one copy of
Proprietary Information for archival purposes in non-working files.

ARTICLE 12.       USE OF NAMES.

         12.1 Neither party shall use the name or trademarks of the other party
without the prior written consent of the other party. Notwithstanding the
previous sentence, Licensee shall

                     ATTACHMENT A--Amended License Agreement

                                   Page A-14


prominently display in catalogues, brochures, or other advertisements or
materials describing Licensed Products, Licensor's name in association with such
products.

ARTICLE 13.       NOTICES.

         13.1 Any notice or payment required to be given to either party will be
deemed to have been properly given and to be effective (a) on the date of
delivery if delivered in person or (b) five days after mailing if mailed by
first-class certified mail, postage paid, to the respective addresses given
below, or to another address as it may designate by written notice given to the
other party.

                                    As to Licensor:           Geron Corporation

                                    230 Constitution Drive
                                    Menlo Park, CA 94025
                                    Attention: General Counsel

                                    As to Licensee:           Transgenomic, Inc.
                                    12325 Emmet Street
                                    Omaha, NE 68164
                                    Attention:  _________

ARTICLE 14.       ASSIGNABILITY.

         14.1 Neither this Agreement nor any rights or benefits hereunder shall
be assignable or transferable by Licensee without the prior written consent of
Licensor, except that Licensee may assign its rights and obligations under this
Agreement as a part of the sale or transfer of its entire business.

ARTICLE 15.       GOVERNING LAWS.

         15.1 This Agreement shall be considered to have been made in the United
States, and shall be interpreted in accordance with the laws of the State of
California.

                     ATTACHMENT A--Amended License Agreement

                                   Page A-15


ARTICLE 16.       MISCELLANEOUS.

         16.1 Headings. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

         16.2 Entire Agreement. This Agreement embodies the entire understanding
of the parties and will supersede all previous communication, representations or
understandings, either oral or written, between the parties relating to the
subject matter hereof. No amendment or modification hereof will be valid or
binding upon the parties unless made in writing and signed on behalf of each
party.

         16.3 Severability. In case any of the provisions contained in the
Agreement are held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability will not affect any other provisions
hereof, but this Agreement will be construed as if such invalid or illegal or
unenforceable provisions had never been contained herein.

         16.4 Waiver. It is agreed that no waiver by either party hereto of any
breach or default of any of the covenants or agreements herein set forth will be
deemed a waiver as to any subsequent and /or similar breach or default.

         16.5 No Agency. Nothing herein shall be deemed to create an agency,
joint venture, or partnership relationship between Licensee and Licensor.

         16.7 Export Control Laws. Licensee will observe all applicable United
States and foreign laws with respect to the transfer of Licensed Products and
related technical data to foreign countries, including, without limitation, the
International Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations.

         16.8 Patent Marking. Licensee will mark all Licensed Products made,
distributed, or sold

                     ATTACHMENT A--Amended License Agreement

                                   Page A-16


under the terms of this Agreement, or their containers, in
accordance with the applicable patents marking laws. Licensee shall prominently
display in catalogues, brochures, or other advertisements or materials
describing Licensed Products, a label license statement with the following, or
comparable, restriction:

         Purchase of this product is accompanied by a license under U.S. patents
         5,599,922; 5,591,607; 5,631,135; 5,726,297; 5,476,925; 5,646,260; their
         foreign counterparts, and other pending patents, owned or exclusively
         licensed by Geron Corporation

                     ATTACHMENT A--Amended License Agreement

                                   Page A-17


         In Witness Whereof, Licensee and Licensor have caused this Agreement to
be duly executed by their duly authorized representatives as of the date first
shown herein.

                                                 
GERON CORPORATION, AS ASSIGNEE OF                   TRANSGENOMIC, INC., AS SUCCESSOR TO
LYNX THERAPEUTICS, INC.                             CRUACHEM, INC

By: ________________________                        By:_____________________________

Title:____________________________                  Title:____________________________



                     ATTACHMENT A--Amended License Agreement

                                   Page A-18


                                   EXHIBIT A.

                                 PATENT RIGHTS.

                                       A-1

                                  LYNX PATENTS



Docket No.          Subject Matter                     (m-d-y)           Ser. No.            Date         Pat. No.
- ------------------------------------------------------------------------------------------------------------------------
                                                                                           
005              meth enhancing nuclease resist.        3-18-94         08/214,599            2-4-97       5,599,922
                 -------------------------------------------------------------------------------------------------------
005-01           ss-100% amidates 4-50-mers             6-6-95          08/477,306
                 -------------------------------------------------------------------------------------------------------
005-02           amidate triplexes                      6-6-95          08/478,470            1-7-97       5,591,607
                 -------------------------------------------------------------------------------------------------------
005-03           meth enhancing hybrid/diag kits        6-6-95          08/473,015            5-20-97      5,631,135
                 -------------------------------------------------------------------------------------------------------
005-05us         PCT nat'l--incl. LR3280 seq, etc.      3-20-95         08/700,448            10-12-99     5,965,720
                 -------------------------------------------------------------------------------------------------------
005-06           amidate duplexes                       9-3-97          08/923,386            01-01-02     6,169,170
                 -------------------------------------------------------------------------------------------------------
005-05wo                                                3-20-95         PCT/US95/03575
                 -------------------------------------------------------------------------------------------------------
005-05au                                                3-20-95         21900/95              08-05-99     704549
                 -------------------------------------------------------------------------------------------------------
005-05ca                                                                2,184,375
                 -------------------------------------------------------------------------------------------------------
005-05cz                                                                PV 2745-96
                 -------------------------------------------------------------------------------------------------------
005-05ep                                                                95914800.8
                 -------------------------------------------------------------------------------------------------------
005-05fi                                                9-11-96         963581
                 -------------------------------------------------------------------------------------------------------
005-05hu                                                3-20-95         P9602549
                 -------------------------------------------------------------------------------------------------------
005-05jp                                                3-20-95         7-524793
                 -------------------------------------------------------------------------------------------------------
005-05kr                                                9-17-96         96-705131
                 -------------------------------------------------------------------------------------------------------
005-05no                                                9-17-96         P963891
                 -------------------------------------------------------------------------------------------------------
005-05pl                                                9-17-96         P 316434
                 -------------------------------------------------------------------------------------------------------
006-01           ss amidate compounds; hairpins         6-5-95          08/465368             3-10-98      5,726,297
                 -------------------------------------------------------------------------------------------------------

                 -------------------------------------------------------------------------------------------------------
035-01           amidate synth. via amidite Xfer        6-14-96         08/663,918            07-14-96     5,824,793
                 -------------------------------------------------------------------------------------------------------
035wo            amidate synth. via amidite Xfer        6-14-96         PCT/US9610418
                 -------------------------------------------------------------------------------------------------------
035-02           add G monomer & example                12-20-96        08/771,789            12-20-96     5,859,233
                 -------------------------------------------------------------------------------------------------------
038              hydrophob. prot/amidate synth          9-15-97         08/929,620
                 -------------------------------------------------------------------------------------------------------


                                      A-2

                              NORTHWESTERN PATENTS



Docket No.          Subject Matter                     (m-d-y)           Ser. No.            Date         Pat. No.
                 -------------------------------------------------------------------------------------------------------
                                                                                           
9213             oligos w/1-4 amidate linkages          1-23-95         08/376,291            12-19-95     5,476,925
                 -------------------------------------------------------------------------------------------------------
9213A            oligos w/3'-terminal amine             6-6-95          08/465,961
                 -------------------------------------------------------------------------------------------------------
9213B            chimeric amidates w/thio&diester       6-6-95          08/471,248            7-8-97       5,646,260
                 -------------------------------------------------------------------------------------------------------
9213C            meth synth oligo w/3'term amine        6-6-95          08/467,219            7-15-97      5,648,480
                 -------------------------------------------------------------------------------------------------------
9213E            meth synth amidates via AT oxid.       6-7-96          08/659,924            08-03-99     5,932,718
                 -------------------------------------------------------------------------------------------------------


                     ATTACHMENT A--Amended License Agreement

                                   Page A-19


                                   EXHIBIT B.

                           MINIMUM QUALITY ASSURANCE.

I. Oligonucleotide N3'->P5' phosphoramidates:

         Minimum purity of [***] percent ([***]%) as measured by ion exchange
         chromatography or capillary electrophoresis.

II. Monomers:

         Minimum purity of [***] percent ([***]%) as measured by reverse phase
         HPLC.

[***] Confidential portion has been filed separately with the Securities and
Exchange Commission.

                     ATTACHMENT A--Amended License Agreement

                                   Page A-20


                                  ATTACHMENT B

                            STOCK PURCHASE AGREEMENT

Incorporated by reference to Exhibit 4.1 of Geron's Current Report on Form 8-K
filed on June 4, 2003.

                      ATTACHMENT B-Stock Purchase Agreement

                                    Page B-1

EX-31.1

                                                                    EXHIBIT 31.1

                            CERTIFICATION PURSUANT TO
                             FORM OF RULE 13a-14(a)
                             AS ADOPTED PURSUANT TO
                SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas B. Okarma, Chief Executive Officer of Geron Corporation, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Geron Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
    financial reporting (as defined in Exchange Act Rules 13a-15(f) and
    15d-15(f)) for the registrant and have:

    (a)  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

    (b)  [Paragraph reserved pursuant to SEC Release 33-8238];

    (c)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

    (d)  Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of the registrant's board
    of directors (or persons performing the equivalent functions):

    (a)  All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

    (b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date: July 30, 2003

/s/ THOMAS B. OKARMA
- ------------------------------------
Thomas B. Okarma
President and Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
                             FORM OF RULE 13a-14(a)
                             AS ADOPTED PURSUANT TO
                SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, David L. Greenwood, Chief Financial Officer of Geron Corporation, certify
that:

1.  I have reviewed this quarterly report on Form 10-Q of Geron Corporation;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material respects
    the financial condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
    financial reporting (as defined in Exchange Act Rules 13a-15(f) and
    15d-15(f)) for the registrant and have:

    (a)  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

    (b)  [Paragraph reserved pursuant to SEC Release 33-8238];

    (c)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

    (d)  Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of the registrant's board
    of directors (or persons performing the equivalent functions):

    (a)  All significant deficiencies and material weaknesses in the design or
         operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

    (b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         control over financial reporting.

Date: July 30, 2003

/s/ DAVID L. GREENWOOD
- ------------------------------------
David L. Greenwood
Senior Vice President, Corporate Development
and Chief Financial Officer

EX-32.1

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the
Sarbanes-Oxley Act of 2002, the undersigned officer of Geron Corporation (the
"Company") hereby certifies, to such officer's knowledge, that:

    (i)  the accompanying Quarterly Report on Form 10-Q of the Company for the
         three months ended June 30, 2003 (the "Report") fully complies with the
         requirements of Section 13(a) or Section 15(d), as applicable, of the
         Securities Exchange Act of 1934, as amended; and

    (ii) the information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.

Dated: July 30, 2003                /s/ Thomas B. Okarma
                                    --------------------------
                                    Thomas B. Okarma
                                    President and
                                    Chief Executive Officer

A signed original of this written statement required by Section 906 has been
provided to Geron Corporation and will be retained by Geron Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

                                                                    EXHIBIT 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

         Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the
Sarbanes-Oxley Act of 2002, the undersigned officer of Geron Corporation (the
"Company") hereby certifies, to such officer's knowledge, that:

    (i)  the accompanying Quarterly Report on Form 10-Q of the Company for the
         three months ended June 30, 2003 (the "Report") fully complies with the
         requirements of Section 13(a) or Section 15(d), as applicable, of the
         Securities Exchange Act of 1934, as amended; and

    (ii) the information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Company.

Dated: July 30, 2003                /s/ David L. Greenwood
                                    --------------------------------------------
                                    David L. Greenwood
                                    Senior Vice President, Corporate Development
                                    and Chief Financial Officer

A signed original of this written statement required by Section 906 has been
provided to Geron Corporation and will be retained by Geron Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.