Stem cell funding clearance lifts biopharma companies

On Monday, President Barack Obama signed an order lifting restrictions on federal funding of human embryonic stem cell research. Despite many beliefs to the contrary, no ban on stem cell research exists; only a ban on its public funding. In 1996 Congress banned public funding on the creation of new embryonic stem cells or on destruction of embryonic stem cells for research. In August 2001, President Bush has allowed research funding on existing embryonic cells (created by private funding).

Many scientists believe Bush's policies instigated years of stagnation in this crucial area of research, believed to be able to one day cure many diseases, while others oppose the use from ideological reasons. The use of adult stem cell has been suggested as replacement to embryonic ones, but reprogramming adult stem cells to the embryonic state required for science is still quite new, leaving many unknowns. Scientists would like to move forward with both types of stem cell research, with the hopes that adult stem cells would eventually be sensible as a replacement, but thinking it is too early to abandon stem cells obtained from embryos.

While Obama has left many issues open, several stem cell related companies soared Monday, including Geron (GERN), StemCells (STEM) and Advanced Cell Technology (ACTC).

Geron is developing first-in-class biopharmaceuticals for the treatment of cancer and chronic degenerative diseases, including spinal cord injury, heart failure and diabetes. It has three drugs in its pipeline in clinical development, including an anti-cancer drug, a cancer vaccine and a human embryonic stem cell-based therapy for acute spinal cord injury. Geron has received FDA clearance to begin the world's first human clinical trial of a hESC-based therapy. Geron has license ties with Roche and Merck (MRK), among others.

StemCells Inc. is also focused on the discovery and development of stem cell therapeutics to treat damage to or degeneration of major organ systems such as the Central Nervous System, Liver and Pancreas. StemCells is also developing human neural stem cell technology using cells derived from adult (non-embryonic) brain tissue.

Advanced Cell Technology, which trades over-the-counter, is yet another biotech working on stem cell technology in the field of regenerative medicine. ACT hopes to bring effective, patient-specific therapies. Advanced Cell Technology's Myoblast program -- using adult stem cell therapy -- for the treatment of heart failure has successfully completed Phase I human clinical trials.

Only recently some bigger pharmaceuticals have begun early work on stem cells, including AstraZeneca (AZN), which is collaborating with a smaller company, General Electric (GE) and Novartis (NVS), which have small programs, and Johnson & Johsnson (JNJ), which is backing yet another small company.

But if so far much of the funding came from private hands, Obama's decision should clear the way to public funding and to larger companies' willingness to become involved. Over the last few weeks we've witnessed what some say is the beginnig of Big Pharma mega-deals on the heels of their growth problems as so many of their blockbuster drugs come off patent. While stem cell therapies are still in early stages, it wouldn't be a stretch to imagine that any of these stem cell companies would be targets of the drug giants, or at least beneficiaries of more collaboration.

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