A few days into his term, President Obama appears to have begun to undo another Bush-era policy.
He hasn't yet formally lifted the Bush-imposed ban on federal funding of new embryonic stem cell research, but Obama's Food and Drug Administration has already set the stage for it.
The FDA, which doesn't even have a new, permanent commissioner, is allowing Geron (NASDAQ:GERN) to do the first test on people of an embryonic stem cell treatment. GERN shares soared on very heavy volume and a handful of other little stocks that play in the stem cell space are rallying as well.
In a "First on CNBC" live interview Friday morning, the CEO of Geron, Dr. Tom Okarma, said:
There's no question that the Bush administration was very instrumental in slowing down the progress in a number of ways. But we have really no direct evidence that that actually influenced the FDA's review. So, we really have no view that there was a political overhang at the FDA.
I think Dr. Okarma is being polite and diplomatic.
I and at least a couple of analysts think the timing of this announcement is more than a coincidence. Joe Pantginis at Merriman Curhan Ford boldly titled his research note to clients Friday, "Bye Bye Bush; Hello New Era for Embryonic Stem Cells; Reiterate Buy." MCF makes a market in GERN. And Steve Brozak at the boutique WBB Securities wrote, "The FDA decision to allow a clinical trial...is a reversal of policy. We predicted that a newly inaugurated president would reverse the clinical trial hold...." Brozak is a Democrat who ran for Congress several years ago.
Whether the FDA's decision is driven by science, politics or maybe both, this is still a significant milestone. When a company moves a drug from the lab to the clinic it rarely, if ever, gets much media attention. Of course, the circumstances here are different and worthy of an exception. But the rules and the odds remain the same: the overwhelming majority of drugs that go into this first stage of testing on people doesn't ever get to market.
I'm not saying that's the fate Geron's experimental spinal cord treatment will meet. I'm only saying that despite all of the excitement and promise surrounding embryonic stem cells today, there's still a long, challenging road ahead.