Obama's stem cell move not a big industry boost

Gerald Herbert/AP
President Obama spoke prior to signing an executive order lifting some restrictions on federal funding of embryonic stem cell research.

On the day that President Obama lifted some restrictions on federal funding for controversial stem cell research, share prices jumped of tiny companies most people had never heard of.

So is one of these unheralded firms the next big thing in stocks? Will Geron Corp or StemCells Inc become the next Google?

Maybe. On Monday, the shares of these medical-therapy companies jumped 16 percent and 41 percent, respectively, as of early afternoon.

No big boost -- yet

But today's move by the president does little to change the industry's overall prospects.

"It's good news," said Robin Young, founder of RRY Publications, a market analysis firm in Wayne, Pa., in an interview. "But as a practical matter, it won't make that much difference for the next five [to] seven years."

That's because today's White House announcement involves stem cells harvested from human embryos (a practice that many find morally repugnant) while today's stem cell industry is almost completely focused on adult stem cells, which are far less controversial.

Adult stem cells are key

Of the 100 or so stem cell companies worldwide, only three are working on embryonic stem cell products directly for patients, Mr. Young said. Throw in those firms using them for drug-development and other indirect uses and embryonic stem cells account for about 10 percent of the $100 million industry.

The supposed advantage of these cells -- their flexible ability to turn into various body parts -- turns out to be a liability currently for researchers because adult stem cells are much more predictable and easy to work with, he said.

So, the small collection of companies is poised to grow rapidly into an $8.5 billion industry by 2016, Young estimated. But it looks likely to be on the back of adult stem cells, not embryonic ones.

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