Stem cell stocks are getting hit pretty hard this Tuesday.  On Monday came a ruling from a U.S. district judge which effectively blocks the federal government from funding research which involves human embryonic stem cell.  The ruling was based upon the grounds that this type of funding violates a 1996 law that was intended to prevent human embryos from being destroyed.

This was a preliminary injunction by Judge Royce Lamberth in Washington, D.C. that stemmed from a case with two scientists challenging the Obama stem cell funding designed to catch back up and to expand federal support for stem cell research and this falls under the Dickey-Wicker Amendment.

Stem cells are still very controversial because of the moral and religious aspects.  Those who want stem cell research feel that the field holds cure to cancer, blindness, paralysis, organ replacement, and on and on.  This case will still have many steps along the way and ultimately this could end up being one of those cases that either tests the Constitution or that goes all the way to the U.S. Supreme Court.

According to the ruling, Congress did not make any specifications for exceptions.  The current funding approved is for embryonic stem cells which have been destroyed and is not in support of new lines.  Effectively, this would force stem cell research back under much of the same guidelines that had been in place under President Bush.

The current injunction does not appear to ban funding of stem cell research, but it keeps out the federal funding.  To show why this matters, the National Institutes of Health has invested nearly $400 million in human embryonic stem cell research in the last five years.  The current regulations before yesterday’s ruling had more than 70 human embryonic stem cell lines eligible and it covered stem cell lines that were derived from human embryos created from in vitro fertilization which are no longer needed.

Geron Corporation (NASDAQ: GERN) is down 5.4% at $4.75 versus a 52-week trading range of $4.37 to $7.51.  Geron recently received an FDA lifting of a clinical trial hold involving spinal cord injuries.

StemCells Inc. (NASDAQ: STEM) is down 7.25% at $0.79 and its shares hit a 52-week low of $0.76 this morning versus a high of $1.79.  This one recently had positive paralysis study data.

Aastrom Biosciences, Inc. (NASDAQ: ASTM) is down 4% at $1.44 versus a 52-week range of $1.32 to $4.16.

Cytori Therapeutics, Inc. (NASDAQ: CYTX) is down 4.8% at $4.52 and the 52-week range is $2.93 to $9.50.

Neostem, Inc. (AMEX: NBS) is down by 3.4% at $1.70 versus a 52-week trading range of $1.26 to $3.50.  As we have outlined before, NeoStem is actually tied to adult stem cells rather than embryonic stem cells.

BioTime, Inc. (NASDAQ: BTIM) is down 5.2% at $4.56 versus a 52-week range of $3.02 to $8.42.  BioTime recently noted that a peer reviewed Regenerative Medicine publication showed that the aging of human cells can be reversed.

It was just in late 2009 that the NIH announced the approval of the first 13 human embryonic stem cell lines for use in NIH-funded research under the NIH Guidelines for Human Stem Cell Research adopted in July 2009.

This latest round of news is a preliminary injunction.  It is not a final ruling.  If this ruling were to stand, then stem cell research would be severely hindered in the U.S.  Again, this is a preliminary ruling and there are many steps which will come into play here before any final resolution comes to pass.

You can visit BioHealthInvestor.com for a full review of key developments and major news in STEM CELL research that goes back to 2008.

JON C. OGG

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