08-11-2001, 04:13 AM
After an initial period of buoyancy, most of the stem cell company stocks slipped downward since President Bushes announcement. Wall Street apparently has decided that NIH funding of existing cell lines is not particularly good news for the companies.
08-11-2001, 04:15 AM
Stem-cell stocks tumble
Investors cash in, reacting to Bush's limited approval of research funding
By Staff Writer Mark Gongloff
August 10, 2001: 11:28 a.m. ET
NEW YORK (CNNfn) - President Bush's decision to allow limited federal funding for embryonic stem-cell research had an immediate impact on the fortunes of a number of cell-therapy companies, whose shares fell Friday morning.
President BushShares of StemCells Inc. (STEM: down $1.31 to $5.14, Research, Estimates) and Aastrom Biosciences Inc. (ASTM: down $0.37 to $1.88, Research, Estimates) jumped Thursday ahead of Bush's announcement, but fell Friday as investors reacted to Bush's limitations on funding and cashed in on those big gains.
Bush approved funding of research on about 60 stem-cell lines already drawn from embryos, but he also said he would not fund destruction of more embryos for new stem-cell lines. Some supporters of stem-cell research thought this was too constraining.
"Sixty [lines] may not be enough for genetic diversity reasons," said Ira Leiderman, managing director of life sciences for Tanager Capital Group. "The more lines you have the better, and some just kind of poop out after a while."
But Leiderman pointed out that Bush did not go so far as to place an outright ban on further stem-cell harvesting, and some researchers were confident they could work within Bush's guidelines.
"We don't think it's limited as a practical matter," said David Greenwood, chief financial officer of Geron Corp. (GERN: down $1.11 to $13.83, Research, Estimates), a leading embryonic stem-cell research firm. "The cell lines currently available are sufficient to progress the science."
StemCells, Aastrom, Geron and other cell-therapy firms -- including Nexell Therapeutics Inc. (NEXL: down $0.08 to $2.15, Research, Estimates), Cryo-Cell International Inc. (CCEL: down $0.63 to $8.82, Research, Estimates), and Incara Pharmaceuticals (INCR: down $0.10 to $1.85, Research, Estimates) -- might not benefit much from federal funding anyway, since they will be competing with universities, hospitals and government laboratories for grant dollars.
"If I were running a company involved in this research, and I knew I could support that research myself, I'm not sure I'd want the competition of NIH [the National Institutes of Health] and others working in the field," said Eric Schmidt, biotech analyst with SG Cowen Securities.
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But Bush's approval of even the idea of stem-cell research could help sway public opinion and possibly lead to more investment in an industry in its very early stages, with powerful enemies and the very real risk of failure.
"I'm hopeful that this will mean additional funding and resources coming into the field of cell therapy," said Dr. Douglas Armstrong, CEO of Aastrom Biosciences.
Though neither Aastrom nor StemCells engages in embryonic stem-cell research, they do use the discoveries of that research to create cell treatments from full-grown sources such as bone marrow and blood.
"The use of cells to treat human diseases is an important direction and needs to be supported," Armstrong said.
Stem cells are "blank" cells that can develop into virtually any kind of cell in the human body. Because it uses "pure" cells that are still growing, embryonic stem-cell research is important to the development of cell therapies its supporters say could be used to treat diseases such as diabetes, Alzheimer's, and Parkinson's.
But because embryos must be destroyed to harvest the stem cells, abortion opponents and other detractors equate the research with the taking of a human life.
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While additional funding for stem-cell research could lift all boats in the sector, it won't guarantee success for a relatively new industry. In fact, it could be 10 years before stem-cell research yields any "important advances," Dr. Robert Naismith, CEO of eMedsecurities, told CNNfn's Ahead of the Curve program. (400K WAV) or (400K AIF)
For this reason, institutional investors are shying away from stem-cell stocks, and most of the activity in the stocks is driven by individuals reacting to news, analysts said. For example, Alidad Mireskandari, portfolio manager with Orbitex Health & Biotech Fund, said he had no plans to buy stocks in the sector.
"It has great scientific potential, but there's a difference between good science and a good investment," Mireskandari said. "If anybody can point to a winner in that race, they're much smarter than I am. The race has just begun, and the pack hasn't separated yet."Â*