Stemware... All About StemCell Stocks

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Stem-cell trial spotlights sector's prospects
Published: 1/24/2009 11:08 PM
http://www.dailyherald.com/story/?id=266918

NEW YORK -- Geron Corp. will enter uncharted territory when it begins the first federally approved human studies on an embryonic stem cell therapy, marking what some consider a major milestone in a field that's still a long way from commercialization.

The Menlo Park, Calif.-based company plans begin testing a treatment using embryonic stem cells that could fix major spinal cord injuries in people.

The market reacted swiftly and positively to clearance for the trials, pushing shares up $1.88, or 36 percent, to close at $7.09. The stock hit $8.38 earlier in the session, its highest point nearly two years.

The initial study is small and will mostly focus on safety, but the development process is expected to set a tone for how long such work will take, how the Food and Drug Administration will judge it -- and how much any drugs might cost.

"If Geron is successful, this will be the single most important health care advance we've seen," said Steve Brozak of WBB Securities.

The market potential of Geron's treatment is unclear, but it's targeting the right ailment from a commercial standpoint, Brozak said. "Geron is absolutely brilliant in that they picked an indication that has had no meaningful advances in the last generation."

Embryonic stem cells are unspecialized cells capable of turning into a wide variety of other cells. They are collected by cloning embryos in a laboratory, but the embryo is destroyed in the process. They were a hot-button issue throughout George W. Bush's presidency, with a ban on public research funding. That ban does not affect Geron, which does not rely on government financing.

Another publicly traded company developing embryonic stem-cell treatments is Alameda, Calif.-based Advanced Cell Technology Inc. But that company, like many others in the field, also focuses on less-controversial adult stem cells, which are gathered from a person's skin, for example. Its stock is traded over-the-counter.

Palo Alto, Calif.-based StemCells Inc. also focuses on adult stem cells and is already in early-stage clinical trials for a genetic disorder. Geron's news appeared to drive StemCells shares higher, up 38 cents, or 18 percent, to $2.53. The stock reached $2.89 earlier in the session, its highest point in nearly two years.

Rockville, Md.-based Neuralstem has been working for more than a decade on stem-cell therapies and expects to begin human studies using adult stem cells in 2009. Shares rose 5 cents, or 3.5 percent, to $1.48.

Others in the field include Columbia, Md.-based Osiris Therapeutics Inc. and San Diego-based Cytori Therapeutics Inc.

Large pharmaceutical companies also have been targeting stem cells. In October, Pfizer said it would form a Regenerative Medicine unit that would collaborate with researchers at drug developers and universities worldwide. GlaxoSmithKline PLC is in the beginning of a five-year collaborative deal with the Harvard Stem Cell Institute.

There are few privately held companies developing stem cells. South Africa-based Advanced Cell Therapeutics is among those. It develops therapies based on stem cells gained from umbilical cord blood.

Stem cells obtained from embryos, however, are considered potentially the most effective because they can turn into any cell in the body.

The FDA denied Geron's plan to conduct human studies in May and did not provide a reason. The clearance now comes three days after President Barack Obama took office. Geron Chief Executive Dr. Thomas Ikarma said Thursday that Obama's ascent to the White House had nothing to do with the FDA's turnaround.

Obama has previously said he planned to relax federal restrictions on public research funding.

Geron's headstart in development on its competitors further strengthens an already powerful intellectual property position. The company is considered the world's leading embryonic stem cell developer because of its exclusive rights on several cell types. The company helped finance researchers at the University of Wisconsin who first isolated human embryonic stem cells in 1998.

Though Geron is the most advanced, Brozak said investors excited by the attention Geron has received would have to keep a long-term outlook on the company. Analysts also typically say that investing in early-stage biotech companies can be risky because of the substantial chance the drug won't make it to market.

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