By Lisa Seachrist
WASHINGTON — News of the discovery of human embryonic stems cells sent Geron Corp. shares rocketing to more than double their closing value from Thursday.
Menlo Park, Calif.-based Geron's stock (NASDAQ:GERN) jumped as high as $24.50 from Thursday's close at $9.875, ending Friday at $17.19, up $7.31, or 74 percent.
The phenomenal rise followed reports that Geron collaborators at the University of Wisconsin, in Madison, and at Johns Hopkins University, in Baltimore, had discovered human embryonic stem cells, which are the source of every cell in the body.
"It's absolutely a great scientific achievement," said Franklin Berger, an analyst with J. P. Morgan Securities Inc., in New York. "[These cells] have been long sought-after. But what does this discovery translate into now? Not so much."
The discovery of the cells offers a shift in scientific paradigm that could lead to a day when replacement tissue will be available to people suffering from such degenerative conditions as spinal cord injuries, Parkinson's disease and heart disease. Researchers have already grown human heart muscle cells that beat in unison in the laboratory dish, as well as dishes of skeletal muscle and neurons.
Scientists, however, can't control the development path that the stem cells will take — a factor that will be vital to creating therapeutic uses for the cells. Perfection of the technology will take many years, and near-term uses for the cells are not readily evident.
Berger said he had no explanation for the market's euphoria surrounding the discovery, but likened Geron's stock explosion to that of Rockville, Md.-based EntreMed Inc., in early May, when reports touting six-month-old preclinical results sent the company's stock soaring from $12 per share to as high as $85 in a single day.
Geron has a history of volatility, largely driven by the fact that much of their stock is held by retail investors. EntreMed, too, has a large number of retail investors, Berger said, but the similarities are not universal.
"I would not connect the dots between what happened with EntreMed in May and [what's happening with] Geron now, and say that there is a new trend working in the biotechnology industry," Berger said, although both companies' ups and downs proved profitable for some.
"Volatility is sought after by certain types of investors, because you make money by moving in and out of a stock for opportunistic reasons," he added.
Berger also speculated about the role of Internet communication and gossip between investors, which could contribute to a stock's volatility. "I don't know how to factor that in, but there is a lot of talk out there," he said. *