Brian.oco 0 Posting Whiz

Stem cell stocks have been trading higher this week on reports President-elect Barack Obama will allow federal funding of stem-cell research.

According to reports from the Wall Street Journal, "Mr. Obama could also lift restrictions placed by President George W. Bush on the type of stem-cell research that can be funded with federal dollars. Democratic congressional leaders have vowed to push a twice-vetoed stem-cell research bill as one of the first acts of the next Congress."



After John Podesta, a close advisor to Obama, confirmed the Journal report on Sunday, the stocks of prominent stem cell stocks went up in Monday (AM) trading:

-- StemCells Inc (Nasdaq: STEM) up 25% in pre-open trading

-- Geron Corporation (Nasdaq: GERN) up 15% in pre-open trading

-- Aastrom Biosciences Inc (Nasdaq: ASTM) up 20% in pre-open trading

But I’m not so sure that a moratorium lift on embryonic stem cell research will result in long-term gains for biotech companies in the stem cell field.

Obviously, my heart goes out to stem advocates who believe the technology can save lives. I think of Michel J. Fox, who has demonstrated a great deal of courage in going public with his condition and in personalizing the disease that is impacting his own life as a lens into the insidiousness and seriousness of Parkinson’s disease. If I were in his shoes I’d be doing all I could to find a cure – or funding for a cure – for Parkinson’s, too.

But when you make Parkinson’s - - or any disease – a political cause, some facts make it to the light of day and some don’t. Wall Street may be bloodless, and it may aim to keep emotion out of big investment decisions in a stainless steel fashion, but it will unearth all of the facts before traders step up to the plate and invest their money. And without the facts, you have more trouble than Lindsey Lohan at last call.

So what’s the real skinny on stem cell research? What we know is that embryonic stem cells could be the key to curing paralysis and brain damage. We also know that conservative groups disapprove of embryonic stem cells because they are harvested from human embryos. And we also know that, so far, embryonic stem cells aren’t the answer to diseases like Parkinson’s that advocates would have us believe. In fact, there is little or no scientific evidence that embryonic stem fight diseases any more effectively than four-leaf clovers or eye of newt.

As Wesley J. Smith writes in a recent edition of The Weekly Standard, “While there have certainly been successes in embryonic stem cell experiments in animal studies--many of them hyped to the hilt in mainstream media reports--the numbers pale in comparison with the many research advances being made with adult and umbilical cord blood stem cells, which are already being used in human patients.

Based on the published science, there are 72 maladies for which human patients have received some benefit (which is not the same as being "cured") from adult stem cell or umbilical cord blood interventions. Meanwhile, embryonic stem cells have yet to demonstrate any human therapeutic use.”

So, if we take the traditional route we take in these columns and follow the money, what do we find?

That stem cells do work against disease – adult stem cells, that is. Adult stem cells - which are donated by grown men and women – are operating under the radar a bit, but they are way ahead of their embryonic offshoots in effective products on the market.

You want proof? Again, follow the money. Investors don’t waste precious financial resources on technologies that offer little or no potential. Hence, there is no stampede toward public companies engaged in embryonic stem cell research (it’s only fair to mention that much of the research in embryonic stem cells is being done in non-profit venues, like university laboratories).

Conversely, there is plenty of evidence that investors are warming up to adult stem cell research. If you look at the stock activity of publicly-traded firms engaged in stem cell research, adult stem cell stocks are light years ahead of embryonic stem cell companies in terms of stock trading activity. Adult stem cell companies like Osiris, Cytori, and Aastrom are attracting big investment money, most notably because adult stem cell research has demonstrated that the technology can work against myriad diseases, and that adult stem cell firms aren’t shackled by the political debate over embryonic stem cell companies.

Let’s look at Osiris. That company, based in Baltimore, saw its stock price rise from $15 per share to $18 per share in the last week. You think the Obama win had anything to do with that? But it's an adult stem cell research outfit. Investors are buzzing over Osiris because it is one of the few companies that actually has a stem cell product out on the marketplace. The company’s Osteocel helps trigger growth in damaged bones. The firm has a second product, Prochymal, which Osiris says may be the cure for a fatal malady known as Acute Graft versus Host Disease. I never heard of it either until I ran into Osiris, but the benefits of Prochymal may be bigger than some might think. It turn out that Acute Graft versus Host disease afflicts about 50% of all patients who receive a bone marrow transplant for anemia and other diseases, and attacks the gastrointestinal tract, skin and liver.

As I've said many times, Wall Street isn't blue and it's not red - it's green; the color of money. Until embryonic stem cell companies show some actual results, then the sector is at best, a short term play. For now, stick with the stem cell sticks, like Osiris, that have demonstrated actual results.