GE Taking Decisive Step Into Stem Cells (GE, GERN, STEM, ASTM)

General Electric Company (NYSE: GE) is taking a bold and controversial new step into the field of embryonic stem cell research.  The company has signed an exclusive license and alliance pact with Geron Corporation (NASDAQ: GERN) to develop and commercialize cellular assay products derived from human embryonic stem cells for use in drug discovery, development and toxicity screening.  As noted over at BioHealthInvestor.com, this may have implications for other stem cell stocks such as StemCells Inc. (NASDAQ: STEM), Aastrom Biosciences, Inc. (NASDAQ: ASTM) and others.

The program will use stem cells derived from hESC lines listed on the NIH Human Pluripotent Stem Cell Registry.  While financial terms were not disclosed, this is a major endorsement for Geron and will only add to its position as one of the leaders in the field of stem cell companies in the U.S.

This is a further step in GE Healthcare’s cell technology strategy and is meant to accelerate the development of hESC-derived products for drug discovery and development.  GE Healthcare has been granted an exclusive license under Geron’s extensive intellectual property portfolio, which covers the growth and differentiation of hESCs, as well as a sublicense under Geron’s rights to the foundational hESC patents held by the Wisconsin Alumni Research Foundation.

This is being dubbed a multi-year alliance and GE Healthcare will fund the R&D program and will be responsible for manufacturing, sales and distribution of products developed under the agreement. Intellectual property rights that come out of the alliance program research will be shared, with GE Healthcare receiving rights for the development of drug discovery technologies and Geron receiving rights for cell therapy applications.

GE shares were up almost 1% before consumer confidence was released, but Geron is the real winner here with shares up 18% at $7.99 on the day.

The benefits of this could be the next Holy Grail in biotech.  Stem cell research is hoped to lead into solid cures such as cancer, cardiac science, tissue regeneration, paralysis, and more.  There has long been a ban on new embryonic stem cell lines which was lifted earlier this year.  And then there is the controversy of the use of embryonic stem cells that crosses politics, morality, and religion.

Jon C. Ogg
June 30, 2009