A Synopsis of the Stem Cell Debate
Updated: 19-Jul-01
[BRIEFING.COM - Robert J. Reid] You have probably heard much about stem cells as President Bush is weighing a decision to overturn or at least modify the ban on federal funding of stem cell research. This Brief provides a quick summary of the research as well as companies that are affected by the President's decision. The debate has put these beaten down stocks back on the radar screen.
What Is It?
Human embryonic stem cells can develop into all cells and tissues in the body. As such, they are a potential source for the manufacture of replacement cells and tissues for applications in regenerative medicine. Most of these cells are derived from embryos left over after in vitro fertilization. Unlike other types of cells, embryonic stem cells can probably reproduce forever. Several diseases may be amenable to treatment with cells that are manufactured from stem cells, including Parkinson's disease, diabetes, spinal cord injuries, liver disease and heart disease.
Ban on Federal Funding
Stem cell research has been in the news a lot lately. Earlier this year, President Bush suspended federal funding on human embryonic stem cells. However, that position is being reconsidered amid pressure from Congress and scientific leaders who fear top talent in the field will leave the US for more stem cell-friendly countries like England.
Briefing.com expects the President to scale back an outright ban on spending as there is growing support in Congress. While many Republicans are in Bush's corner, even some prominent conservative Republican lawmakers such as Utah Sen. Orrin Hatch, are backing the research. Given the virtual party tie in Congress, even modest Republican support could vote to overturn the ban. Bush realizes this, so we expect some change in his stance on funding.
Biotechs Involved in Stem Cell Research
A continuation of the ban would be a near term benefit for companies that work with the cells as they own most of the stem-cell technology being developed in the US. However, it's in these companies' long term benefit to remove the ban as additional research would create greater acceptance of the technology and speed trials for use in humans. Here's a list of companies involved:
Geron (GERN 14.72): Geron is the most prominent public company focused on stem cell research. It is well funded with $65 mln in cash/inv and was recently awarded a patent. Geron funded the work of Dr. John Gearhart at Johns Hopkins that led to the successful isolation of human embryonic germ (hEG) cells. These hEG cells are are capable of developing into all cell types in the human body. The hEG cells are now being developed at Johns Hopkins with Geron funding for a variety of applications.
StemCells (STEM 6.11): STEM recently announced it was granted two patents that further its proprietary position in the neural and pancreatic programs. One patent covers a novel method to separate neural stem cells for growth in culture allowing it to expand and harvest a significantly greater number of viable cells than was previously possible. The company hopes the second patent is a stepping stone to the discovery of the stem cell capable of regenerating the pancreas or liver.
Curis (CRIS 6.13): Curis, which was recently added to the Russell 2000 and 3000 Indexes, is another well funded operation with $66 mln in cash/inv.
Others: Smaller companies involved in stem cell research include Incara Pharmaceuticals (INCR 1.90) and Aastrom Biosciences (ASTM 1.91).
Conclusion
Yesterday, NIH issued a report calling for more study of stem cells describing the research as important in treating disease. This may be just the shield Bush needs to deflect criticism from many in the Republican party to lift the ban. The issue should be decided over the next couple of weeks. Leaving aside the moral issue, stem cell research provides a solid long term growth opportunity as more uses of the technology emerge. The stocks, which had been given up for dead a few months ago, have been attracting interest heading into the President's decision.
Please send comments or questions to rreid@briefing.com.
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