Investors' love / hate relationship with Geron (Nasdaq: GERN) is back in the worship phase, with the stem cells company up 17% on Friday and nearly an additional 10% or so today.

The reason for the rekindled relationship? Geron announced that the Food and Drug Administration had lifted its clinical hold on a trial testing its stem cell-based therapy, GRNOPC1, in patients with spinal cord injuries.

The agency paused the trial nearly a year ago after an experiment in animals showed a higher frequency of cysts forming. Cysts could turn into tumors, although there wasn't evidence that these cysts would. Nevertheless, the safety-conscious FDA put a hold on the trial anyway.

Geron has since developed tests to ensure the purity of the GRNOPC1 and completed additional animal studies, which seems to be enough to satisfy the FDA.

That's great, but let's keep this in perspective, Fools.

  • This is a phase 1 trial.
  • GRNOPC1 is the first embryonic stem cell-based therapy to make it into clinical trials. How often does the first new therapy work?
  • During the first seven months the trial was originally open, no patients enrolled.

Geron says it could enroll the first patient this quarter, but there's no doubt this is going to be a long, uphill battle.

That's not to say embryonic stem cells aren't exciting. But so was gene therapy, which hasn't amounted to much. Investors were exuberant about Pfizer (NYSE: PFE) and Nektar Therapeutics' (Nasdaq: NKTR) inhaled insulin Exubera until they saw the sales. Alnylam Pharmaceuticals' (Nasdaq: ALNY) RNAi technology has proved successful, but there's still considerable risk because its lead drug isn't even in phase 3 trials yet. I could go on and on.

While embryonic stem cell-based therapy could be Geron's biggest seller, the company has a more advanced product, Imetelstat, which Geron started a phase 2 clinical trial for last month. Treating second-line lung cancer patients might not be as exciting as embryonic stem cells, but it could be a slightly less risky pathway to revenue.

Either way, at a market cap now topping $600 million, Geron looks awfully expensive for the risk involved. Cheaper Exelixis (Nasdaq: EXEL), with more and further-advanced drugs, may be a better option for investors.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value recommendation. The Fool owns shares of Exelixis and has a disclosure policy.