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Obama Can't Save Stem Cell Companies

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  • Obama Can't Save Stem Cell Companies

    Obama Can't Save Stem Cell Companies

    In 2001, President George Bush hampered stem cell research by restricting government funding on embryonic stem cell research to the then-available embryonic stem cell lines. Today, there's a big buzz in the scientific community because President-elect Barack Obama plans to issue an executive order allowing federal funding for new embryonic stem cell research.

    Unfortunately, that's not going to help existing stem cell companies and their investors all that much. Let me explain.

    by Brian Orelli

    Public funds
    First off, these public funds are likely to go to research institutes and universities. That could result in collaborations with current companies, but those are too difficult to predict to be used as the basis of an investment thesis. That funding could also eventually result in startups that are spun out of universities, but that, too, is difficult to predict. Finally, the money will likely lead to advances in knowledge and techniques, but that is more of a long term result and, again, should not be the basis of an investment thesis.
    In other words, Obama changing the rules is not going to help current investors a whole heck of a lot. At least not immediately.

    That said, an increase in funding could benefit Life Technologies (Nasdaq

    : LIFE) -- formerly Invitrogen -- a supplier of laboratory reagents that help scientists grow stem cells.

    Some stem-cell companies are using stem cells from sources other than embryos. For instance, Cytori Therapeutics is developing therapies using stem cells derived from fat tissue. While government-sponsored research on embryonic stem cells might eventually help scientists better understand all stem cells, it's not likely to help the companies right now.

    And they could use the help: