Sector Snap: Stem Cell stocks fall on court ruling

NEW YORK

Shares of several stem-cell developers fell Tuesday following a judge's ruling to temporarily block government rules expanding stem cell research.

The Obama administration had expanded the number of stem cell lines created with private money that federally funded scientists could research, up from the 21 that President George W. Bush had allowed to 75 so far. But, a district court judge found that the guidelines may violate federal law.

Federal law forbids use of taxpayer dollars to destroy a human embryo -- and culling stem cells from an embryo does destroy the embryo. The ban, though, does not directly affect most companies in the private sector, as it was against federal funding, not development.

Embryonic stem cells are unspecialized cells capable of turning into a wide variety of other cells. They are collected by cloning embryos in a laboratory, but the embryo is destroyed in the process.

Shares of StemCells Inc., based in Palo Alto, Calif., fell 5 cents, or 6.3 percent, to 80 cents in afternoon trading after touching a 52-week low of 76 cents.

The stock often sways with developments in the stem-cell industry, regardless of whether those developments directly affect the company. The company focuses on adult stem cells, which can be gathered from a person's skin, for example.

Meanwhile, shares of Geron Corp., which is based Menlo Park, Calif., fell 17 cents, or 3.4 percent, to $4.85 in afternoon trading. The company focuses on embyronic stem cells, though it had not been relying on the government for funding.

Geron was the first company in its field to gain clearance from the Food and Drug Administration to conduct early-stage clinical trials. Its focus was treating severe spinal cord injuries.

Other companies lost ground from the latest ruling. Rockville, Md.-based Neuralstem fell 5 cents, or 2.8 percent, to $1.75. Cytori Therapeutics Inc., based in San Diego, saw shares fall 18 cents, or 3.8 percent, to $4.57.

Meanwhile, shares of Aastrom Biosciences Inc., based in Ann Arbor, Mich., fell 5 cents, or 3.3 percent, to $1.45. The company does not focus on embryonic stem cells but on cells gathered from a patient's bone marrow.