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FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2011
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
2. FAIR VALUE MEASUREMENTS


      We categorize assets and liabilities recorded at fair value on our condensed consolidated balance sheet 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 the 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. Following is a description of the valuation methodologies used for instruments measured at fair value on our condensed consolidated balance sheet, including the category for such instruments.


Cash Equivalents and Marketable Securities Available-for-Sale


      Where quoted prices are available in an active market, securities are categorized as Level 1. Examples of such Level 1 securities include certificates of deposit and money market funds. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Examples of such Level 2 instruments include U.S. Treasury securities, U.S. government-sponsored enterprise securities, municipal securities, corporate notes, asset-backed securities and commercial paper.


      Marketable securities by security type at June 30, 2011 were as follows:


          Gross   Gross    
        Unrealized   Unrealized   Estimated
        Cost       Gains       Losses       Fair Value
    (In thousands)
Included in cash and cash equivalents:                          
       Money market funds   $      9,403   $      —   $      —     $      9,403
       Municipal securities (due in less than 1 year)     20,270     —     —       20,270
    $ 29,673   $ —   $ —     $ 29,673
Restricted cash:                          
       Certificates of deposit   $ 793   $ —   $ —     $ 793
Marketable securities:                          
       Certificate of deposit (due in less than 1 year)   $ 338   $ —   $ —     $ 338
       Government-sponsored enterprise securities (due in                          
              less than 1 year)     8,180     3     (2 )     8,181
       Government-sponsored enterprise securities (due in                          
              1 to 2 years)     16,540     47     (1 )     16,586
       Commercial paper (due in less than 1 year)     10,846     4     —       10,850
       Corporate notes (due in less than 1 year)     100,353     65     (31 )     100,387
       Corporate notes (due in 1 to 2 years)     22,978     32     (4 )     23,006
       Investments in licensees     1     1     —       2
    $ 159,236   $ 152   $ (38 )   $ 159,350
 

                         
      Marketable securities by security type at December 31, 2010 were as follows:


          Gross   Gross      
          Unrealized   Unrealized   Estimated
        Cost       Gains       Losses       Fair Value
    (In thousands)
Included in cash and cash equivalents:                          
       Money market funds   $      21,076   $      —   $      —     $      21,076
       Municipal securities (due in less than 1 year)     18,450     —     —       18,450
       Commercial paper (due in less than 1 year)     3,499     —     —       3,499
       Corporate notes (due in less than 1 year)     1,856     —     (1 )     1,855
    $ 44,881   $ —   $ (1 )   $ 44,880
Restricted cash:                          
       Certificates of deposit   $ 792   $ —   $ —     $ 792
Marketable securities:                          
       Certificate of deposit (due in less than 1 year)   $ 325   $ —   $ —     $ 325
       Government-sponsored enterprise securities (due in                          
              less than 1 year)     11,288     —     (1 )     11,287
       Government-sponsored enterprise securities (due in                          
              1 to 2 years)     27,270     9     (11 )     27,268
       Commercial paper (due in less than 1 year)     12,087     7     —       12,094
       Corporate notes (due in less than 1 year)     116,822     127     (56 )     116,893
       Corporate notes (due in 1 to 2 years)     6,645     1     (3 )     6,643
       Investments in licensees     1     —     —       1
    $ 174,438   $ 144   $ (71 )   $ 174,511
 

                         
      Marketable securities with unrealized losses at June 30, 2011 and December 31, 2010 were as follows:


    Less Than 12 Months   12 Months or Greater   Total
          Gross         Gross         Gross
    Estimated   Unrealized   Estimated   Unrealized   Estimated   Unrealized
        Fair Value       Losses       Fair Value       Losses       Fair Value       Losses
    (In thousands)
As of June 30, 2011:                                          
Government-sponsored enterprise                                          
       securities (due in less than 1 year)   $      2,030   $      (2 )   $      —   $      —     $      2,030   $      (2 )
Government-sponsored enterprise                                          
       securities (due in 1 to 2 years)     4,000     (1 )     —     —       4,000     (1 )
Corporate notes (due in less than 1 year)     43,627     (31 )     —     —       43,627     (31 )
Corporate notes (due in 1 to 2 years)     3,821     (4 )     —     —       3,821     (4 )
    $ 53,478   $ (38 )   $ —   $ —     $ 53,478   $ (38 )
                                           
As of December 31, 2010:                                          
Government-sponsored enterprise                                          
       securities (due in less than 1 year)   $ 7,287   $ (1 )   $ —   $ —     $ 7,287   $ (1 )
Government-sponsored enterprise                                          
       securities (due in 1 to 2 years)     15,287     (11 )     —     —       15,287     (11 )
Corporate notes (due in less than 1 year)     61,354     (56 )     3,019     (1 )     64,373     (57 )
Corporate notes (due in 1 to 2 years)     4,313     (3 )     —     —       4,313     (3 )
    $ 88,241   $ (71 )   $ 3,019   $ (1 )   $ 91,260   $ (72 )
 

                                         
      The gross unrealized losses related to government-sponsored enterprise securities and corporate notes as of June 30, 2011 and December 31, 2010 were due to changes in interest rates. We determined that the gross unrealized losses on our marketable securities as of June 30, 2011 and December 31, 2010 were temporary in nature. We review our investments quarterly to identify and evaluate whether any investments have indications of possible impairment. Factors considered in determining whether a loss is temporary include the length of time and extent to which the fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and whether we intend to sell the security or whether it is more likely than not that we would be required to sell the security. We currently do not intend to sell these securities before recovery of their amortized cost basis.


Marketable and Non-Marketable Investments in Licensees


      Where quoted prices are available in an active market, securities are categorized as Level 1. Level 1 securities include publicly traded equities. Significant investments in licensees accounted for using the equity method of accounting or equity securities in non-marketable companies are not measured at fair value and are not assigned a category level.


      As of June 30, 2011 and December 31, 2010, the carrying values of our investments in non-marketable nonpublic companies were zero and $503,000, respectively. We recognized no charges related to other-than-temporary declines in fair values of investments in licensees for the three and six months ended June 30, 2011 and 2010. See Note 3 on Equity Method Investment for further discussion of investments in licensees.


Derivatives


      Warrants to purchase common stock and non-employee options are normally traded less actively, have trade activity that is one way, and/or traded in less-developed markets and are therefore valued based upon models with significant unobservable market parameters, resulting in Level 3 categorization.


      The fair value of derivatives has been calculated at each reporting date using the Black Scholes option-pricing model with the following assumptions:


        June 30, 2011       December 31, 2010
Dividend yield   None   None
Expected volatility   0.675   0.668
Risk-free interest rate   0.81%   2.01%
Expected term   4 yrs   4 yrs



      Dividend yield is based on historical cash dividend payments and Geron has paid no dividends to date. The expected volatility is based on historical volatilities of our stock since traded options on Geron stock do not correspond to derivatives’ terms and trading volume of Geron options is limited. The risk-free interest rate is based on the U.S. Zero Coupon Treasury Strip Yields for the expected term in effect on the reporting date. The expected term of derivatives is equal to the remaining contractual term of the instrument.


      As of June 30, 2011 and December 31, 2010, the following non-employee options to purchase common stock were considered derivatives and classified as current liabilities:


                  At June 30, 2011   At December 31, 2010
                  Number   Fair   Number   Fair
Issuance   Exercise   Exercisable   Expiration   of   Value   of   Value
Date       Price       Date       Date       Shares       (In thousands)       Shares       (In thousands)
March 2005   $ 6.39   January 2007   March 2015   284,600   $ 428   284,600   $ 707



      Non-employee options for which performance obligations are complete are classified as derivative liabilities on our condensed consolidated balance sheet. Upon the exercise of these options, the instruments are marked to fair value and reclassified from derivative liabilities to stockholders’ equity. No reclassifications from current liabilities to stockholders’ equity were made for derivatives during the six months ended June 30, 2011.

Fair Value on a Recurring Basis


      The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2011, and indicates the fair value category assigned.


    Fair Value Measurements at Reporting Date Using
          Significant            
    Quoted Prices in   Other   Significant      
    Active Markets for   Observable   Unobservable      
        Identical Assets       Inputs       Inputs      
(In thousands)   Level 1   Level 2   Level 3       Total
Assets                        
Money market funds (1)   $      9,403   $      —   $      —   $      9,403
Certificate of deposit (2)     338     —     —     338
Municipal securities (1)     —     20,270     —     20,270
Government-sponsored enterprise securities (2) (3)     —     24,767     —     24,767
Commercial paper (2)     —     10,850     —     10,850
Corporate notes (2) (3)     —     123,393     —     123,393
Investments in licensees (4)     2     —     —     2
Total   $ 9,743   $ 179,280   $ —   $ 189,023
                         
    Fair Value Measurements at Reporting Date Using
          Significant            
    Quoted Prices in   Other   Significant      
    Active Markets for   Observable   Unobservable      
        Identical Assets       Inputs       Inputs      
(In thousands)   Level 1   Level 2   Level 3       Total
Liabilities                        
Derivatives (5)   $ —   $ —   $ 428   $ 428
____________________                        
 


(1)   Included in cash and cash equivalents on our condensed consolidated balance sheet.
       

 
(2)   Included in current marketable securities on our condensed consolidated balance sheet.
 
(3)   Included in noncurrent marketable securities on our condensed consolidated balance sheet.
 
(4)   Included in investments in licensees on our condensed consolidated balance sheet.
 
(5)   Included in fair value of derivatives on our condensed consolidated balance sheet.


Changes in Level 3 Recurring Fair Value Measurements


      The tables below includes a rollforward of the balance sheet amounts for the three and six months ended June 30, 2011 (including the change in fair value), for financial instruments in the Level 3 category. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable components, observable components (that is, components that are actively quoted and can be validated to external sources). Accordingly, the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the methodology.


    Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
    Three Months Ended June 30, 2011
                                    Change in
                                    Unrealized Gains
          Total   Purchases,               Related to
          Unrealized   Sales,   Transfers         Financial
    Fair Value at   Gains   Issuances,   In and/or   Fair Value at   Instruments
    March 31,   Included in   Settlements,   Out of   June 30,   Held at
(In thousands)       2011       Earnings, net (1)       net       Level 3       2011       June 30, 2011 (1)
Derivative liabilities   $      668   $      (240 )   $      —   $      —   $      428   $      (240 )
                                         
    Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
    Six Months Ended June 30, 2011
                                    Change in
                                    Unrealized Gains
          Total   Purchases,               Related to
          Unrealized   Sales,   Transfers         Financial
    Fair Value at   Gains   Issuances,   In and/or   Fair Value at   Instruments
    December 31,   Included in   Settlements,   Out of   June 30,   Held at
(In thousands)       2010       Earnings, net (1)       net       Level 3       2011       June 30, 2011 (1)
Derivative liabilities   $ 707   $ (279 )   $ —   $ —   $ 428   $ (279 )
____________________
 


(1)        Reported as unrealized gain on fair value of derivatives in our condensed consolidated statements of operations.