StemCells Up for All the Right Reasons

By Brian Orelli | More Articles
May 2, 2011 | Comments (2)

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Investors in stem cells companies seem to have finally realized that federal funding of stem cell research isn't all that important for companies developing stem cell therapies -- at least for most of them.

On Friday, a federal appeals panel overturned a 2010 ruling by a federal judge that banned the National Institutes of Health from funding embryonic stem cell research. The appeals court had already put a stay on the earlier ruling, so the funding was already continuing.

The ruling is very important for academics, but most of the research being done at stem cell companies is funded by the companies' coffers. The companies will indirectly benefit from the advancement of the field, but whether the government funds research at universities doesn't matter all that much to their clinical programs.

Unlike with previous rulings, investors didn't go crazy -- with one exception.

Company	Share Increase (Decrease)
Geron (Nasdaq: GERN )	(1.0%)
StemCells (Nasdaq: STEM )	10.7%
Cytori Therapeutics (Nasdaq: CYTX )	2.3%
Pluristem Therapeutics (Nasdaq: PSTI )	(0.4%)
Athersys	0.4%
Aastrom Biosciences (Nasdaq: ASTM )	1.9%
Neuralstem	2.9%

Source: Capital IQ, a division of Standard & Poor's.

Investors in StemCells are somewhat justified in their exuberance over the ruling. In addition to developing stem cell therapies for spinal cord injuries and other disorders, StemCells sells reagents that help scientists grow stem cells. Like Life Technologies (Nasdaq: LIFE ) , which sells similar products, StemCells reagent sales would be severely hurt if the ban had gone through. Long term, the value of StemCells should be tied to its clinical therapies, but in the short term, revenue from reagents sales is helpful.

This isn't the end of the fight over federal funding. There will likely be appeals to the full appeals court and all the way to the Supreme Court, but hopefully this is the end of overreactions by investors.

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Report this Comment On May 02, 2011, at 11:29 PM, doublepedro wrote:

Pssst! Geron also generates some revenue from sales of stem cell research products - most notably hESC-derived cardiomyocytes. These are marketed and sold by their partner (GE) for drug candidate toxicity screening.
Report this Comment On May 02, 2011, at 11:41 PM, doublepedro wrote:

Oh yeah...one other minor point...I believe StemCells main focus is ***adult*** stem cells and therefore the over-turned ban of federal funds (which applied to embryonic stem cells) never affected them directly in the first place. Go figure.
Geron on the other hand is probably the dominant publically traded embryonic stem cell company and the first to start human trials last October (for complete spinal cord injuries). A recent Washington Post article even reports that the first patient treated in that trial is doing well and (may be) recovering some sensation in his legs! Despite all of this, Geron's share price managed to not "go crazy" on either account.
Once again, go figure?

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