While President George Bush is adamantly opposed to establishing new embryonic stem-cell lines, states including California, Connecticut, and most recently Illinois have passed laws allowing public funding of stem cells.
While most of the money goes to researchers at academic institutions, companies working on stem-cell therapies should also benefit from the increased spending. They could take advantage of the money directly by setting up collaborations with academic labs, but they could also benefit by using the knowledge gained by researchers to their advantage. Here's an initial look at some of the companies that should be able to profit from the increased public spending.
But first, what is a stem cell?
There are essentially two kinds of stem cells: embryonic and adult. All the cells in your body originated from a single cell. The process of creating skin, muscle, and all the other types of cells is known as differentiation.
As the name implies, embryonic stem cells (ESCs) come from embryos. Just like an embryo, ESCs have the ability to become any type of cell, if given the right signals to differentiate.
Adult stem cells are partially differentiated cells on their way to becoming certain types of cells. For instance, hematopoietic stem cells are capable of creating the different types of blood cells, but couldn't become a skin or a lung cell.
Advancing the science
There are a lot of companies working on different aspects of stem cell research. Here's some highlights from a couple to get you started on your research:
There are stem cells all over one's body and even in umbilical cords. Whether stem cells from umbilical cords can be useful for treating the diseases discussed above later in the life of the newly born child is anyone's guess -- in case you're wondering, my guess is yes, although maybe not in my lifetime. Currently the cord blood may be useful for children if they develop some blood based diseases such as leukemia.
ViaCell has yet to make a profit because of the high costs of advertising to all those expectant mothers, plus trying to push stem-cell research further along by running research of its own. But it looks as though things are about to turn around for the company. The advertisements are paying off -- sales are up -- and it's cutting back on costs, including research and development, in the hopes of becoming profitable in the first half of next year.
The biggest risk with ViaCell and its archrival, Cryo-Cell, is that they're banking on stem cells being useful for something. ViaCell will only be able to continue to make a profit if parents believe that paying for storage will help their little John or Jane in the future. Thus, more than anything, I'd say the news about stem cells will drive sales and thus the stock price of this company.
A safer play
I know what you're thinking: "The word 'safe' shouldn't be anywhere in an article about stem cells, unless it's referring to where the companies should keep the large stash of cash they use to finance their burn rates." But one company should be able to make money off stem cells even if a stem-cell drug is never developed.
The stem-cell reagents aren't going to blow the top off Invitrogen's revenue -- it is a rather large company, after all. But for an investor who wanted to be involved in stem-cell research without worrying that the technology might never come to fruition, this would be a good company to investigate further.
A stem-cell drug is still far from a sure thing. But then, so were biotech drugs in the 1970s. That hasn't kept investors in Genentech
Need a little help finding the best emerging technologies? Check out the latest stocks we've picked for the Fool's market-beatingRule Breakers newsletter. Take a look at all our recommendations with a free 30-day trial.