Big pharma's jumping on the stem-cell bandwagon. But don't worry, investors in Geron
The three drug giants have each donated about $200,000 to SC4SM, and other drugmakers are also expected to join in.
As with the other consortium announced last week, the companies have a good reason for contributing money. The animal models for liver toxicity stink, which explains why it's the No. 1 reason for drug failures in the clinic. If companies had a better model for determining toxicity before clinical trials began, they could save millions of dollars on drugs doomed for failure. Look no further back than ViroPharma
For investors, it's hard to determine whether these initiatives are good moves for the companies involved, without knowing whether the research will amount to anything. For these companies, spending the money is probably closer to buying a lottery ticket than it is to making an investment. If the research is successful, the companies will make their money back 100-fold in saved research costs. At worst, if the research fails, each company is out a few hundred thousand dollars.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Glaxo is a selection of the Income Investor newsletter. The Fool's disclosure policy strengthens your wallet, but leaves your liver alone.