GERON CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) GERON CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) MARCH 31, DECEMBER 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 189,761 $ 70,023 Restricted cash 1,119 1,115 Marketable securities 253,288 263,676 Interest and other receivables 1,629 1,655 Prepaid and other current assets 5,712 4,879 Total current assets 451,509 341,348 Noncurrent marketable securities 20,782 43,298 Property and equipment, net 1,681 1,177 Operating leases, right-of-use assets 3,392 3,556 Deposits and other assets 4,710 4,697 $ 482,074 $ 394,076 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,992 $ 6,161 Accrued compensation and benefits 6,794 13,759 Operating lease liabilities 955 949 Debt 71,526 46,893 Accrued liabilities 33,891 40,308 Total current liabilities 123,158 108,070 Noncurrent operating lease liabilities 2,829 3,006 Noncurrent debt 11,219 35,051 Commitments and contingencies Stockholders' equity: Common stock 591 545 Additional paid-in capital 1,997,709 1,844,988 Accumulated deficit ( 1,653,159 ) ( 1,597,769 ) Accumulated other comprehensive loss ( 273 ) 185 Total stockholders' equity 344,868 247,949 $ 482,074 $ 394,076 See accompanying notes. 3 GERON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2024 2023 Revenues: Royalties $ 304 $ 21 Operating expenses: Research and development 29,373 27,219 General and administrative 27,065 12,894 Total operating expenses 56,438 40,113 Loss from operations ( 56,134 ) ( 40,092 ) Interest income 4,239 3,853 Interest expense ( 3,433 ) ( 1,922 ) Other income and (expense), net ( 62 ) 39 Net loss $ ( 55,390 ) $ ( 38,122 ) Basic and diluted net loss per share $ ( 0.09 ) $ ( 0.07 ) Shares used in computing basic and diluted net loss per share 603,493,451 544,459,004 See accompanying notes. 4 GERON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (IN THOUSANDS) (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2024 2023 Net loss $ ( 55,390 ) $ ( 38,122 ) Net unrealized loss on marketable securities ( 448 ) 75 Foreign currency translation adjustments ( 10 ) ( 16 ) Comprehensive loss $ ( 55,848 ) $ ( 38,063 ) See accompanying notes. 5 GERON CORPORATION CONDENSED CONSOLIDATED STATEMENTS O F STOCKHOLDERS’ EQUITY (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Gain (Loss) Equity Balance at December 31, 2023 544,912,215 $ 545 $ 1,844,988 $ ( 1,597,769 ) $ 185 $ 247,949 Net loss — — — ( 55,390 ) — ( 55,390 ) Other comprehensive income — — — — ( 448 ) ( 448 ) Foreign currency translation adjustment — — — — ( 10 ) ( 10 ) Issuance of common stock and pre-funded warrant to purchase common stock in public offering, net of issuance costs of $ 9,000 41,999,998 42 140,958 — — 141,000 Issuance of common stock in connection with exercise of warrants 37,640 — 49 — — 49 Stock-based compensation related to issuance of common stock and options in exchange for services 4,211,493 4 6,745 — — 6,749 Issuance of common stock under equity plans 2,462 — 92 — — 92 Stock-based compensation for equity-based awards to employees and directors — — 4,877 — — 4,877 Balance at March 31, 2024 591,163,808 $ 591 $ 1,997,709 $ ( 1,653,159 ) $ ( 273 ) $ 344,868 6 GERON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED) Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Gain (Loss) Equity Balance at December 31, 2022 390,262,524 $ 390 $ 1,493,469 $ ( 1,413,642 ) $ ( 219 ) $ 79,998 Net loss — — — ( 38,122 ) — ( 38,122 ) Other comprehensive loss — — — — 75 75 Foreign currency translation adjustment — — — — ( 16 ) ( 16 ) Issuance of common stock and pre-funded warrant to purchase common stock in public offering, net of issuance costs of $ 14,507 68,007,741 68 213,269 — — 213,337 Issuance of common stock in connection with exercise of warrants 44,983,193 45 59,790 — — 59,835 Stock-based compensation related to issuance of common stock and options in exchange for services 9,360 1 111 — — 112 Issuance of common stock under equity plans 5,469,028 5 7,870 — — 7,875 Stock-based compensation for equity-based awards to employees and directors — — 2,961 — — 2,961 Balance at March 31, 2023 508,731,846 $ 509 $ 1,777,470 $ ( 1,451,764 ) $ ( 160 ) $ 326,055 See accompanying notes. 7 GERON CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 55,390 ) $ ( 38,122 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 111 99 Accretion and amortization on investments, net ( 2,367 ) ( 1,727 ) Amortization of debt issuance costs/debt discounts 802 242 Stock-based compensation for services by non-employees 92 112 Stock-based compensation for employees and directors 4,877 2,961 Amortization of right-of-use assets 164 152 Changes in assets and liabilities: Current and noncurrent assets ( 819 ) 1,915 Current and noncurrent liabilities ( 9,723 ) ( 11,997 ) Net cash used in operating activities ( 62,253 ) ( 46,365 ) Cash flows from investing activities: Purchases of property and equipment ( 615 ) ( 372 ) Purchases of marketable securities ( 65,618 ) ( 241,611 ) Proceeds from maturities of marketable securities 100,440 63,250 Net cash provided by (used in) investing activities 34,207 ( 178,733 ) Cash flows from financing activities: Proceeds from issuances of common stock from equity plans 6,749 7,875 Proceeds from issuance of common stock from offering and pre-funded warrant, net of paid issuance costs 141,000 213,337 Proceeds from exercise of warrants 49 59,835 Net cash provided by financing activities 147,798 281,047 Effect of exchange rates on cash, cash equivalents and restricted cash ( 10 ) ( 16 ) Net increase in cash, cash equivalents and restricted cash 119,742 55,933 Cash, cash equivalents and restricted cash at the beginning of the period 71,138 57,209 Cash, cash equivalents and restricted cash at the end of the period $ 190,880 $ 113,142 See accompanying notes. 8 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (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 and its wholly-owned subsidiaries, Geron UK Limited, or Geron UK, a United Kingdom company, and Geron Netherlands B.V., or Geron Netherlands, a Netherlands company. Geron UK was incorporated in September 2021, and its operations commenced in January 2022. Geron Netherlands was incorporated in February 2023, and its operations commenced in June 2023. The accompanying unaudited condensed consolidated financial statements 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 United States, or U.S., generally accepted accounting principles, or GAAP, for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements for each of the three years ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023, or the Form 10-K. The accompanying condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements at that date. Principles of Consolidation The condensed consolidated financial statements include the accounts of Geron Corporation and its wholly-owned subsidiaries, Geron UK and Geron Netherlands. For Geron UK and Geron Netherlands, we have eliminated intercompany accounts and transactions. We prepare the financial statements of Geron UK and Geron Netherlands using the local currency as the functional currency. We translate the assets and liabilities of Geron UK and Geron Netherlands at rates of exchange at the balance sheet date and translate income and expense items at average monthly rates of exchange. The resultant translation adjustments are included in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, on our condensed consolidated balance sheets. Net Loss Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding for the periods presented without consideration of potential common shares. In connection with previous public offerings, we issued pre-funded warrants to purchase shares of our common stock. These pre-funded warrants are exercisable immediately at an exercise price of $ 0.001 per share each, and as of March 31, 2024, none of these pre-funded warrants have been exercised. These pre-funded warrants, which represent an aggregate of 59,433,145 shares of common stock, have been included in the computation of basic net loss per share, since their exercise price is negligible and they may be exercised at any time. Diluted net income per share would be calculated by adjusting the weighted-average number of shares of common stock outstanding for the dilutive effect of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued, as determined using the treasury-stock method. Potential dilutive securities consist of outstanding stock options and warrants to purchase our common stock. Diluted net loss per share excludes potential dilutive securities for all periods presented as their effect would be anti-dilutive. Accordingly, basic and diluted net loss per share is the same for all periods presented in the accompanying condensed consolidated statements of operations. Since we incurred a net loss for the three months ended March 31, 2024 and 2023, the diluted net loss per share calculation excludes potential dilutive securities o f 84,430,455 and 107,971,822 respectively, related to outstanding stock options and warrants as their effect would have been anti-dilutive. Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to accrued liabilities, revenue recognition, fair value of marketable securities, operating leases, right-of-use assets, lease liabilities, income taxes, and stock-based compensation. We base our estimates on historical experience and on various other market specific and relevant assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. 9 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Fair Value of Financial Instruments Cash Equivalents and Marketable Securities We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We are subject to credit risk related to our cash equivalents and marketable securities. Our marketable debt securities include U.S. Treasury securities, government-sponsored enterprise securities, commercial paper and corporate notes. We classify our marketable debt securities as available for sale. We record available-for-sale debt securities at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses are included in interest income and are derived using the specific identification method for determining the cost of securities sold and have been insignificant to date. Dividend and interest income are recognized when earned and included in interest income on our condensed consolidated statements of operations. See Note 2 on Fair Value Measurements. Leases At the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present. Operating leases are included in operating leases, right-of-use assets and lease liabilities on our condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of remaining lease payments over the expected lease term. The present value of remaining lease payments within the 12 months following the balance sheet date are classified as current lease liabilities. The present value of lease payments not within the 12 months following the balance sheet date are classified as noncurrent lease liabilities. The interest rate implicit in lease contracts is typically not readily determinable. As such, to calculate the net present value of lease payments, we apply our incremental borrowing rate, which is the estimated rate to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as of the lease commencement date. We may adjust the right-of-use assets for certain adjustments, such as initial direct costs paid or incentives received. In addition, we include any options to extend or terminate the lease in the expected lease term when it is reasonably certain that we will exercise any such option. Lease expense is recognized on a straight-line basis over the expected lease term. For lease agreements entered into after January 1, 2019 that include lease and non-lease components, such components are generally accounted for separately. We have also elected not to recognize on our condensed consolidated balance sheets leases with terms of one year or less. Debt Issuance Costs and Debt Discounts Debt issuance costs include legal fees, accounting fees, and other direct costs incurred in connection with the execution of our debt financing. Debt discounts represent costs paid to the lenders. Debt issuance costs and debt discounts are deducted from the carrying amount of the debt liability and are amortized to interest expense over the term of the related debt using the effective interest method. Revenue Recognition We recognize revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , or Topic 606. In determining the appropriate amount and timing of revenue to be recognized under this guidance, we perform the following five steps: (i) identify the contract(s) with our customer; (ii) identify the promised goods or services in the agreement and determine whether they are performance obligations, including whether they are distinct in the context of the agreement; (iii) measure the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations based on stand-alone selling prices; and (v) recognize revenue when (or as) we satisfy each performance obligation. A performance obligation is a promise in an agreement to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Significant management judgment is required to determine the level of effort required and the period over which completion of the performance obligations is expected under an agreement. If reasonable estimates regarding when performance obligations are either complete or substantially complete cannot be made, then revenue recognition is deferred until a reasonable estimate can be made. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. We allocate the total transaction price to each performance obligation based on the estimated relative stand-alone selling prices of the promised goods or services underlying each performance obligation. Estimated selling prices for license rights are calculated 10 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) using an income approach model and include the following key assumptions, judgments and estimates: the development timeline, revenue forecast, commercialization expenses, discount rate and probabilities of technical and regulatory success. Following is a description of the principal activities from which we generate revenue. License fees and royalty revenue primarily represent amounts earned under agreements that out-license our technology to various companies. License Agreements In connection with the divestiture of Geron’s human embryonic stem cell assets, including intellectual property and proprietary technology, to Lineage Cell Therapeutics, Inc. (formerly BioTime, Inc. which acquired Asterias Biotherapeutics, Inc.) in 2013, we are entitled to receive royalties on sales of certain research or commercial products utilizing Geron’s divested intellectual property. Royalties . For agreements with sales-based royalties, including milestone payments based on the level of sales, where the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (a) when the related sales occur, or (b) when the performance obligation, to which some or all of the royalty has been allocated, has been satisfied (or partially satisfied). At each reporting date, we estimate the sales incurred by each licensee during the reporting period based on historical experience and accrue the associated royalty amount. Restricted Cash Restricted cash consists of funds maintained in separate money market or certificate of deposit accounts for credit card purchases. Research and Development Expenses Research and development expenses currently consist of expenses incurred in developing and testing imetelstat and research related to potential next generation telomerase inhibitors. These expenses include, but are not limited to, payroll and personnel expense, lab supplies, non-clinical studies, clinical trials, including support for investigator-led clinical trials, raw materials to manufacture clinical trial drugs, manufacturing costs for research and clinical trial materials, sponsored research at other labs, consulting, costs to maintain technology licenses and research-related overhead. Our current imetelstat clinical trials are being supported by contract research organizations, or CROs, and other vendors. We accrue expenses for clinical trial activities performed and managed by CROs based upon the amount of work completed on each trial. Expenses are recorded based on contracted amounts agreed to with our CROs and through monthly reporting provided by CROs. We monitor activities conducted and managed by the CROs to the extent possible through internal reviews, review of contractual terms and correspondence with CROs. We record expense on the best information available at the time. However, additional information may become available to us which may require adjustments to research and development expenses in future periods. Depreciation and Amortization We record property and equipment at cost and calculate depreciation using the straight-line method over the estimated useful lives of the assets, generally four years . Leasehold improvements are amortized over the shorter of the estimated useful life or remaining term of the lease. Stock-Based Compensation We maintain various stock incentive plans under which stock options and restricted stock awards can be granted to employees, non-employee directors and consultants. We also have an employee stock purchase plan for all eligible employees. We recognize stock-based compensation expense based on grant-date fair values of service-based stock options on a straight-line basis over the requisite service period, which is generally the vesting period. For performance-based stock options with vesting based on the achievement of certain strategic milestones, stock-based compensation expense is recognized over the period from the date the performance condition is determined to be probable of occurring through the date the applicable condition is expected to be met and is reduced for estimated forfeitures, as applicable. If the performance condition is not considered probable of being achieved, no stock-based compensation expense is recognized until such time as the performance condition is considered probable of being met, if at all. If the assessment of probability of the performance condition changes, the impact of the change in estimate would be recognized in the period of the change. The determination of grant-date fair values for our service-based and performance-based stock options and employee stock purchases using the Black Scholes option‑pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. The grant-date fair value for service-based restricted stock awards is determined using the fair value of our common stock on the date of grant. We evaluate whether an adjustment to the assumptions of 11 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) fair value of our common stock and historical volatility are required if observed prices of our common stock materially differ from historical information. The following table summarizes the stock-based compensation expense included in operating expenses on our condensed consolidated statements of operations related to stock options and employee stock purchases for the three months ended March 31, 2024 and 2023, which was allocated as follows: Three Months Ended March 31, (In thousands) 2024 2023 Research and development $ 1,681 $ 1,306 General and administrative 3,196 1,655 Stock-based compensation expense included in operating expenses $ 4,877 $ 2,961 As stock-based compensation expense recognized in our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures, but at a minimum, reflects the grant-date fair value of those awards that actually vested in the period. Forfeitures have been estimated at the time of grant based on historical data and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We have not recognized any stock-based compensation expense for any remaining performance-based stock options on our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023, as achievement of the specified strategic milestones associated with the remaining performance-based stock options was not considered probable at that time. Stock Options We grant service-based and performance-based stock options under our equity plans to employees, non-employee directors and consultants. The service-based vesting period for employee stock options is generally four years from the date of the stock option grant. Performance-based stock options vest upon the achievement of specified strategic milestones. The fair value of service-based stock options granted during the three months ended March 31, 2024 and 2023 has been estimated at the date of grant using the Black Scholes option-pricing model with the following assumptions: Three Months Ended March 31, 2024 2023 Dividend yield 0 % 0 % Expected volatility range 82.94 % to 86.68 % 81.53 % to 81.64 % Risk-free interest rate range 4.05 % to 4.32 % 3.42 % to 4.10 % Expected term 6 years 6 years Employee Stock Purchase Plan The fair value of employees’ stock purchase rights during the three months ended March 31, 2024 and 2023 has been estimated using the Black Scholes option-pricing model with the following assumptions: Three Months Ended March 31, 2024 2023 Dividend yield 0 % 0 % Expected volatility range 59.46 % to 79.05 % 61.04 % to 81.08 % Risk-free interest rate range 4.79 % to 5.40 % 0.09 % to 4.76 % Expected term range 6 months to 12 months 6 months to 12 months Dividend yield is based on historical cash dividend payments and Geron has paid no cash dividends to date. The expected volatility range is based on historical volatilities of our stock, since traded options on Geron common stock do not correspond to option terms and the trading volume of options is limited. The risk-free interest rate range is based on the U.S. Zero Coupon Treasury Strip Yields for the expected term in effect on the date of grant for an award. The expected term of stock options is derived from actual historical exercise and post-vesting cancellation data and represents the period of time that stock options granted are expected to be outstanding. The expected term of employees’ stock purchase rights is equal to the purchase period. 12 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Non-Employee Stock-Based Awards We measure share-based payments to non-employees based on the grant-date fair value of the equity awards. We recognize stock-based compensation expense for the fair value of the vested portion of non-employee stock-based awards on our condensed consolidated statements of operations. Segment Information Our executive management team represents our chief decision maker. We view our operations as a single segment, the development of therapeutic products for oncology. As a result, the financial information disclosed herein materially represents all of the financial information related to our principal operating segment. Recent Accounting Pronouncements New Accounting Pronouncements – Recently Adopted In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , or ASU 2020-06. The key elements of ASU 2020-06 aim to reduce unnecessary complexity in GAAP for certain financial instruments with characteristics of liabilities and equity. In addressing the complexity, the FASB focused on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in an entity’s own equity. For convertible instruments, the FASB decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock. For contracts in an entity’s own equity, the FASB observed that the application of the derivatives scope exception guidance results in accounting for some contracts as derivatives while accounting for economically similar contracts as equity. The FASB also decided to improve and amend the related earnings per share guidance. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years for public business entities that are not smaller reporting companies. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. We adopted ASU 2020-06 as of January 1, 2024, it did not have a material impact on our condensed consolidated financial statements. New Accounting Pronouncements – Issued But Not Yet Adopted In March 2024, the FASB issued ASU 2024-01, Accounting for Application of Profits Interest and Similar Awards , or ASU 2024-01. The key elements of ASU 2024-01 aim to account for profit interest awards as compensation to employees or nonemployees in return for goods and services effective for annual periods beginning after December 15, 2024, and interim periods with those annual periods. We do not expect the adoption of this standard to have a material impact on our condensed consolidated financial statements. Other recent accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact on our condensed consolidated financial statements. 13 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) 2. FAIR VALUE MEASUREMENTS Cash Equivalents and Marketable Securities Cash equivalents, restricted cash and marketable securities by security type at March 31, 2024 were as follows: Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Included in cash and cash equivalents: Money market funds $ 147,245 $ — $ — $ 147,245 Commercial Paper 1,498 — — 1,498 $ 148,743 $ — $ — $ 148,743 Restricted cash: Money market fund $ 847 $ — $ — $ 847 Certificate of deposit 272 — — 272 $ 1,119 $ — $ — $ 1,119 Marketable securities: U.S. Treasury securities - due in 1 to 2 years $ 29,938 $ 14 $ ( 2 ) $ 29,950 Government-sponsored enterprise securities (due in less than one year) 63,652 14 ( 79 ) 63,587 Commercial paper (due in less than one year) 118,481 3 ( 157 ) 118,327 Corporate notes (due in less than one year) 41,458 5 ( 39 ) 41,424 Corporate notes (due in one to two years) 20,801 18 ( 37 ) 20,782 $ 274,330 $ 54 $ ( 314 ) $ 274,070 14 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Cash equivalents, restricted cash and marketable securities by security type at December 31, 2023 were as follows: Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Included in cash and cash equivalents: Money market funds $ 16,815 $ — $ — $ 16,815 $ 16,815 $ — $ — $ 16,815 Restricted cash: Money market fund $ 843 $ — $ — $ 843 Certificate of deposit 272 — — 272 $ 1,115 $ — $ — $ 1,115 Marketable securities: U.S. Treasury securities (due in less than one year) $ 26,752 $ 95 $ — $ 26,847 U.S. Treasury securities (due in one to two years) 2,877 17 — 2,894 Government-sponsored enterprise securities (due in less than one year) 86,250 43 ( 92 ) 86,201 Government-sponsored enterprise securities (due in one to two years) 13,598 72 — 13,670 Commercial paper (due in less than one year) 102,270 31 ( 33 ) 102,268 Corporate notes (due in less than one year) 48,409 14 ( 63 ) 48,360 Corporate notes (due in one to two years) 26,628 130 ( 24 ) 26,734 $ 306,784 $ 402 $ ( 212 ) $ 306,974 15 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Cash equivalents and marketable securities with unrealized losses that have been in a continuous unrealized loss position for less than 12 months and 12 months or longer at March 31, 2024 and December 31, 2023 were as follows: Less Than 12 Months 12 Months or Longer Total Gross Gross Gross Estimated Unrealized Estimated Unrealized Estimated Unrealized (In thousands) Fair Value Losses Fair Value Losses Fair Value Losses As of March 31, 2024: US Treasury Securities (due in less than one year) $ 4,864 $ ( 2 ) $ — $ — $ 4,864 $ ( 2 ) Government-sponsored enterprise securities (due in less than one year) 38,097 ( 79 ) — — 38,097 ( 79 ) Commercial paper (due in less than one year) 101,008 ( 157 ) — — 101,008 ( 157 ) Corporate notes (due in less than one year) 24,559 ( 27 ) 4,957 ( 12 ) 29,516 ( 39 ) Corporate notes (due in one to two years) 12,364 ( 37 ) — — 12,364 ( 37 ) $ 180,892 $ ( 302 ) $ 4,957 $ ( 12 ) $ 185,849 $ ( 314 ) As of December 31, 2023: Government-sponsored enterprise securities (due in less than one year) $ 69,377 $ ( 92 ) $ — $ — $ 69,377 ( 92 ) Commercial paper (due in less than one year) 58,622 ( 33 ) — — 58,622 ( 33 ) Corporate notes (due in less than one year) 34,567 ( 63 ) — — 34,567 ( 63 ) Corporate notes (due in one to two years) 3,952 ( 23 ) — — 3,952 ( 23 ) $ 166,518 $ ( 211 ) $ — $ — $ 166,518 $ ( 211 ) The gross unrealized losses related to U.S. Treasury securities, municipal securities, government-sponsored enterprise securities, commercial paper and corporate notes as of March 31, 2024 and December 31, 2023 were due to changes in interest rates and not credit risk. If an available-for-sale security’s fair value is less than its amortized cost basis, we evaluate whether the decline is the result of a credit loss, in which case an impairment is recorded through an allowance for credit losses. We have not recorded any allowances for credit losses on our available-for-sale securities for the three months ended March 31, 2024 and 2023 as we have not identified any unrealized losses for these securities attributable to credit factors. Our exposure to unrealized losses may increase in the future due to the economic pressures or uncertainties associated with macroeconomic or other global economic conditions, including those resulting from inflation, rising interest rates, prospects of a recession, bank failures and other disruptions to financial systems, civil or political unrest, military conflicts, pandemics or other health crises. Fair Value on a Recurring Basis We categorize financial instruments recorded at fair value on our condensed consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows: Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Money market funds are categorized as Level 1 within the fair value hierarchy as their fair values are 16 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) based on quoted prices available in active markets. U.S. Treasury securities, municipal securities, government-sponsored enterprise securities, commercial paper, and corporate notes are categorized as Level 2 within the fair value hierarchy as their fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 and indicates the fair value category assigned. Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total As of March 31, 2024: Money market funds (1)(2) $ 148,092 $ — $ — $ 148,092 Certificate of deposit (2) 272 — — 272 U.S. Treasury securities (3) — 29,950 — 29,950 Government-sponsored enterprise securities (3) — 63,589 — 63,589 Commercial paper (3) — 119,825 — 119,825 Corporate notes (3)(4) — 62,206 — 62,206 Total $ 148,364 $ 275,570 $ — $ 423,934 As of December 31, 2023: Money market funds (1)(2) $ 17,658 $ — $ — $ 17,658 Certificate of deposit (2) 272 — — 272 U.S. Treasury securities (3)(4) — 29,742 — 29,742 Government-sponsored enterprise securities (3)(4) — 99,872 — 99,872 Commercial paper (3) — 102,268 — 102,268 Corporate notes (3)(4) — 75,092 — 75,092 Total $ 17,930 $ 306,974 $ — $ 324,904 (1) Included in cash and cash equivalents on our condensed consolidated balance sheets. (2) Included in restricted cash on our condensed consolidated balance sheets. (3) Included in current portion of marketable securities on our condensed consolidated balance sheets. (4) Included in noncurrent portion of marketable securities on our condensed consolidated balance sheets. 3. ACCRUED LIABILITIES Accrued liabilities consisted of the following as o f March 31, 2024 and December 31, 2023: MARCH 31, DECEMBER 31, (In thousands) 2024 2023 CRO and clinical trial costs $ 19,695 $ 23,541 Manufacturing activities 10,593 14,629 Professional legal and accounting fees 1,061 556 Interest payable 896 768 Other 1,646 814 $ 33,891 $ 40,308 4. DEBT On September 30, 2020, we, Hercules Capital, Inc., or Hercules, and Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as receiver for Silicon Valley Bridge Bank, N.A. 17 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) (as successor to Silicon Valley Bank)), or SVB, entered into a term loan facility, or the Original Loan Agreement, consisting of up to $ 75.0 million aggregate principal amount available to us, as amended in August 2021. On June 30, 2022, or the Effective Date, we entered into a second amendment to the Original Loan Agreement, or as amended, the Loan Agreement. Under the second amendment, the aggregate principal amount available to us increased from $ 75.0 million to $ 125.0 million, with such principal being available in a series of tranches, subject to certain terms and conditions. On December 14, 2023, we entered into a third amendment to the Original Loan Agreement, or as amended, the Loan Agreement. As of March 31, 2024, a total of $ 80.0 million has been drawn under the Loan Agreement. On the effective date of the second amendment, we paid $ 100,000 as a facility charge that we recognized as a debt discount and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Additional facility charges applied to future drawdowns will be treated similarly. We also incurred legal fees in connection with the second amendment, which we recognized as debt issuance costs and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Under the third amendment, the aggregate principal amount drawn down and remaining available to us under the Term Loan remains at $ 125.0 million, with such principal being available in a series of tranches, subject to certain terms and conditions. The third amendment also provides that (i) the fourth tranche of the Term Loan was increased from $ 10.0 million to $ 30.0 million, (ii) the commitment period for the fifth tranche of the Term Loan of $ 20.0 million, which is available subject to achievement of a regulatory milestone and satisfaction of certain capitalization requirements, was extended through December 15, 2024, (iii) the variable annual interest rate on the outstanding loans has been decreased to the greater of: (x) 9.0 %, or (y) the sum of (A) the Prime Rate (as reported in The Wall Street Journal) minus 4.5 %, plus (B) 9.0 %; and (iv) the interest only period of the Term Loan has been extended through June 30, 2024, and is further extendable to December 31, 2024 upon achievement of a regulatory and financial milestone and satisfaction of certain capitalization requirements. In connection with the third amendment, on the third amendment effective date, we borrowed and received the entire fourth tranche of the Term Loan in the amount of $ 30.0 million. After giving effect to such borrowing, the outstanding principal amount under the Loan Agreement is $ 80.0 million. On the effective date of the third amendment, we paid $ 300,000 as a facility charge that we recognized as a debt discount and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Additional facility charges applied to future drawdowns will be treated similarly. We also incurred legal fees in connection with the third amendment, which we recognize as debt issuance costs and amortize such cost to interest expense over the life of the loan using the effective interest rate method. The third amendment of the Loan Agreement is not substantially different as compared to the Original Loan Agreement, and accordingly, we treated the amendment as a modification of the debt in accordance with ASC 470. On September 15, 2023, the third tranche of $ 20.0 million of the Term Loan expired and is no longer available for us, but was added to the fourth tranche as part of the third amendment to the Loan Agreement. Under the Term Loan as amended, the Term Loan matures on April 1, 2025 , or the Loan Maturity Date, and may be extended up to an additional six months upon the achievement of certain regulatory and financial milestones. The Term Loan bears interest at a floating rate per annum equal to the greater of either (i) 9.0 % or (ii) the sum of (A) the Prime Rate (as reported in The Wall Street Journal) minus 4.5 %, plus (B) 9.0 % ( 8.5 % as of December 31, 2023). The interest only period of the Term Loan is through June 30, 2024, and is further extendable to December 31, 2024 upon achievement of a regulatory and financial milestone and satisfaction of certain capitalization requirements. Following the expiration of the interest-only period, we are required to repay the Term Loan in equal monthly amortization payments of principal and interest until the Loan Maturity Date. Upon full repayment of the Term Loan, we are also obligated to pay an end of term charge in an amount equal to 6.55 % of the amount of the Term Loans actually borrowed. Such end of term charge is being accrued to interest expense over the term of the Term Loan using the effective interest rate method. At our option, upon at least five business days’ prior written notice to Hercules, we may prepay all or any portion greater than or equal to $ 5.0 million of the outstanding loan by paying the entire principal balance (or portion thereof) and all accrued and unpaid interest. There is no prepayment charge for prepayments of drawdowns under Tranche 1 or Tranche 2. Prepayments of drawdowns under Tranche 3, Tranche 4, Tranche 5 or Tranche 6 are subject to a prepayment charge of 1.5 % of the prepayment amount, if the prepayment is made prior to June 30, 2025. Thereafter, any prepayment of Tranche 3, Tranche 4, Tranche 5 or Tranche 6 is not subject to a prepayment charge. We are in compliance with the covenants under the Loan Agreement as of March 31, 2024. As of March 31, 2024, the net carrying value of the debt under the Loan Agreement was $ 82,745,000 , which includes the principal amount of $ 80,000,000 less net unamortized debt discounts and issuance costs of $ 458,000 plus accrued end of term charge of $ 3,204,000 . The carrying value of the debt approximates the fair value as of March 31, 2024. The debt discounts and debt issuance costs are being amortized to interest expense over the life of the outstanding loan amounts using the effective interest rate method. 18 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) The following table presents future minimum payments, including interest and the end of term charge, under the Loan Agreement as of March 31, 2024 (in thousands): Remainder of 2024 $ 53,564 2025 39,262 Total 92,826 Less: amount representing interest ( 7,587 ) Less: unamortized debt discount and issuance costs ( 458 ) Less: unaccrued end of term charge ( 2,036 ) Less: current portion of debt ( 71,526 ) Noncurrent portion of debt $ 11,219 5. CONTINGENCIES AND UNCERTAINTIES Purported Securities Lawsuits In 2020, three securities class action lawsuits were filed against us and certain of our officers. One of the lawsuits was voluntarily dismissed. The other two lawsuits, filed in the U.S. District Court for the Northern District of California, were consolidated by the court. In September 2022, the parties agreed to a settlement and entered into a Stipulation and Agreement of Settlement, which was subject to court approval. The court granted final approval of the settlement on September 28, 2023 and final judgment was entered on October 3, 2023. Under the terms of the Stipulation, in exchange for the release and dismissal with prejudice of all claims against the defendants in the consolidated class action complaint, we agreed to pay and/or to cause our insurance carriers to pay a total of $ 24,000,000 , comprised of $ 17,000,000 in cash, which was paid into an escrow account under our available directors' and officers', or D&O insurance coverage and, $ 7,000,000 in cash which was paid after final approval of the settlement by the court. The settlement does not constitute an admission of fault or wrongdoing by Geron or any of our officers . Our portion of the settlement amount was paid in the fourth quarter of 2023. There is no liability outstanding as of March 31, 2024 as the matter was fully settled during the year ended December 31, 2023. In 2020 and 2021, seven shareholder derivative actions were filed in a number of courts, naming as defendants certain of our then current officers and certain of our then current and former members of our board. On December 21, 2022, the parties to the shareholder derivative action filed in the Delaware Court of Chancery entered into a stipulation of settlement, or the Derivative Stipulation, and on May 17, 2023, the Delaware Court of Chancery approved the Derivative Stipulation, and the case was dismissed with prejudice. Subsequently, each of the remaining derivative cases were dismissed with prejudice. Under the terms of the Derivative Stipulation, in exchange for the release and dismissal with prejudice of all claims against the defendants in the consolidated shareholder derivative actions filed in the Northern District, we agreed to pay and/or to cause our insurance carriers to pay a total of $ 1,350,000 , comprised of $ 525,000 in cash, which was payable under our available D&O insurance coverage and $ 825,000 in cash payable by us. The settlement does not constitute an admission of fault or wrongdoing by any of our officers or members of our board. In the second quarter of 2023, our insurance carriers paid $ 525,000 in cash, and we paid $ 825,000 in cash, for an aggregate total payment of $ 1,350,000 . Accordingly, there are no outstanding amount to settle against this as of March 31, 2024. While we have settled these lawsuits, it is possible that additional lawsuits might be filed, or allegations might be received from stockholders, with respect to these same or other matters and also naming us and/or our officers and directors as defendants. Such lawsuits and any other related lawsuits are subject to inherent uncertainties, and the actual defense and disposition costs will depend upon many unknown factors. The outcome of such lawsuits is necessarily uncertain. We could be forced to expend significant resources in the defense of any additional lawsuits, and we may not prevail. In addition, we have and may continue to incur substantial legal fees and costs in connection with such lawsuits. Monitoring, initiating and defending against legal actions is time-consuming for our management, is likely to be expensive, and may detract from our ability to fully focus our internal resources on our business activities. We could be forced to expend significant resources in any potential future lawsuits, and we may not prevail in such lawsuits. Additionally, we may not be successful in having any such lawsuits dismissed or settled within the limits of our insurance coverage. Expenses associated with any potential future lawsuits could be material to our consolidated financial statements if we do not prevail in the defense of such lawsuits, or even if we do prevail. We have not established any reserve for any potential liability relating to any potential future lawsuits. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages. 19 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Indemnifications to Officers and Directors Our corporate bylaws require that we indemnify our directors, as well as those who act as directors and officers of other entities at our request, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceedings arising out of their services to Geron. In addition, we have entered into separate indemnification agreements with each of our directors and officers which provide for indemnification of these directors and officers under similar circumstances and under additional circumstances. The indemnification obligations are more fully described in our bylaws and the indemnification agreements. We purchase standard insurance to cover claims or a portion of the claims made against our directors and officers. Since a maximum obligation is not explicitly stated in our bylaws or in our indemnification agreements and will depend on the facts and circumstances that arise out of any future claims, the overall maximum amount of the obligations cannot be reasonably estimated. Severance Plan We have adopted two severance plans that apply to all of our employees who are not subject to performance improvement plans, one plan covering employees above the Vice President level, i.e., executives, and all other employees hired before January 1, 2022, and the other plan covering all non-executive employees hired on or after January 1, 2022. The severance plans provide for, among other benefits: (i) a severance payment upon a Change of Control Triggering Event and Separation from Service and (ii) a severance payment for each non‑executive employee upon a Non‑Change of Control Triggering Event and Separation from Service. As defined in the severance plans, a Change of Control Triggering Event and Separation from Service requires a “double trigger” where: (i) an employee is terminated by us without cause in connection with a change of control or within 12 months following a change of control provided, however, that if an employee is terminated by us in connection with a change of control but immediately accepts employment with our successor or acquirer, the employee will not be eligible for the benefits outlined in the plans, (ii) an employee resigns because in connection with a change of control, the offered terms of employment (new or continuing) by us or our successor or acquirer within 30 days after the change of control results in a material change in the terms of employment, or (iii) after accepting (or continuing) employment with us after a change of control, an employee resigns within 12 months following a change of control due to a material change in the terms of employment. Under the severance plans, a Non‑Change of Control Triggering Event and Separation from Service is defined as an event where an employee is terminated by us without cause. Severance payments range from three to 18 months of base salary in connection with a Change of Control Triggering Event or from six weeks to 12 months of base salary in connection with a Non-Change of Control Triggering Event, as well as a pro-rata portion of the employee’s annual target bonus, depending on the employee’s position with us, payable in a lump sum payment, and monthly COBRA payments for the severance period. The severance plans also provide that they shall not supersede the provisions of any individual employment agreements entered into between us and our employees, and that the employees with such agreements will be entitled to whichever benefits are greater under the severance plan or their employment agreement. A copy of the severance plan covering our executive officers is filed as an exhibit to our annual report on Form 10-K. As March 31, 2024, all our executive officers have employment agreements with severance provisions and will receive the greater severance benefits of their agreements or those in the severance plan applicable to them. 6. STOCKHOLDERS’ EQUITY Registered Offering On March 21, 2024, we completed an underwritten public offering of 41,999,998 shares of our common stock and a pre-funded warrant to purchase 8,002,668 shares of our common stock, or the 2024 pre-funded warrant. All of the securities were issued separately. The public offering price of the common stock was $ 3.00 per share. The public offering price of the 2024 pre-funded warrant was $ 2.99 per share. The 2024 pre- funded warrant has an exercise price of $ 0.001 per share and may be exercised at any time until the 2024 pre-funded warrant is exercised in full. As of March 31, 2024 , none of the 2024 pre-funded warrant has been exercised. The net cash proceeds from the March 2024 offering were approximately $ 141.0 million, after deducting the underwriting discount and other offering expenses paid by us, and excluding any future proceeds from the exercise of the pre-funded warrant. Upon the issuance of the 2024 pre-funded warrant, we evaluated the warrant terms to determine the appropriate accounting and classification pursuant to FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities from Equity , and FASB Accounting Standards Codification Topic 815, Derivatives and Hedging . Warrants are classified as liabilities when the warrant terms allow settlement of the warrant exercise in cash and classified as equity when the warrant terms only allow settlement in shares of common stock. The terms of the 2024 pre-funded warrant include certain provisions related to fundamental transactions and a cashless exercise provision in the event registered shares are not available, and do not include any mandatory redemption provisions. Based on our evaluation, we concluded the 2024 pre-funded warrant should be classified as equity with no subsequent remeasurement as long as such warrant continue to be classified as equity. 20 GERON CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2024 (UNAUDITED ) Warrant Exercises In the first quarter of 2024, warrants to purchase 37,640 s hares of our common stock were exercised for net cash proceeds of approximately $ 49,000 . The warrants were issued in connection with underwritten public offerings of common stock and pre-funded warrants, together with accompanying stock purchase warrants in May 2020. As of March 31, 2024, the following warrants remained outstanding: • pre-funded warrants with an exercise price of $ 0.001 per share to purchase 59,433,145 shares of our common stock , which have no expiration date; and • stock purchase warrants with an exercise price of $ 1.30 per share to purchase 2,436,861 shares of our common stock related to the public offering of our common stock in May 2020, which expire on December 31, 2025 . 21