By Katharine Schildt
A simple signature from a government official created at least $50 million in wealth Monday. It’s about time… because it seems as though government officials had been doing nothing but destroying wealth lately.
On Monday, President Obama signed an executive order lifting the restrictions on stem cell research. As he did that, stem cell research firm, Geron Corp (NASDAQ:GERN) surged 16% on the news. It’s pulled back today, but that may be a good thing for investors.
Leaving it up to science
For our purposes, any political or religious considerations are set aside. We’re only interested in the business of stem cells.
The executive order is not a complete “about face” on Bush-era policies. In its most general interpretation, it allows the National Institute of Health (NIH) more authority in setting stem cell policies based on science rather than politics.
However, decisions on the most politically contentious aspect – using public funding for stem cell research – is going to be left to Congress.
Public funding has been restricted for 13 years under the Dickey-Wicker amendment and Washington insiders expect that overturning the ban would be “difficult, but not impossible.”
Geron's stem cell pipeline
So where does Geron fit into all of this?
Geron’s most advanced human embryonic stem cell (hESCs) product is the GRNOPC1, which is designed specifically for the treatment of spinal cord injury. In previous stem cell trials, animals with injuries showed improved motor ability and use of previously paralyzed legs. It also caused damaged cells to repair themselves, regenerating healthy tissue.
The clinical trials on humans will take place in four to seven medical centers beginning this summer. The hope is to improve mobility so that the patients can participate in physical therapy, improving their mobility and quality of life.
Geron has other hESC-based products coming down the pipeline as well. The need for such therapies, and the real impact on the lives of millions, is why this new era of stem cell research is so exciting and promising.
White House making it easier
The new White House policies suggest that over time, stem cells will become more available and likely more affordable, reducing Geron’s costs and research time.
Now, when analyzing Geron as a business, it’s not really fair to talk about profit margins. After all, they lost $62 million on $2.8 million in revenue for 2008.
Over the long-term, Geron’s success is still a question of science. Can the science provide a result that is profitable enough to sell on the market? It will remain to be seen, as with many new drugs and therapies.
What we do know, is that a government open to innovation certainly makes that science easier to achieve.