NEW YORK (Dow Jones--The Food and Drug Administration's clearing the way for Geron Corp. (GERN) to conduct the first human trial of an embryonic stem cell treatment is just the beginning of a long journey for the company and the entire field of stem cell research.

The move signals that such therapies are moving forward, easing investor concerns about political resistance and lifting shares of Geron - by more than 50% Friday - and other stem cell companies. However, the realization of such therapies and their hoped-for regenerative properties still will take years, if not decades, and face a tough road to get to the market.

"We view this as a significant achievement for Geron and believe it will prove to be a major catalyst to stem cell research," said Lazard Capital Markets analyst Joel Sendak.

Geron shares recently rose $2.72, or 52%, to $7.93 on heavy volume. Other stem cell-related companies are getting a boost, too, including Stemcells Inc. (STEM) shares up 54 cents, or 25%, to $2.69, Neuralstem Inc. (CUR) up 17 cents, or 12%, to $1.60 and Aastrom Biosciences Inc. (ASTM) up 14 cents, or 28%, to 66 cents.

Despite rallying on indications of a friendlier regulatory environment, those other stem cell companies may not necessarily gain a direct benefit from the FDA's decision.

"You can't copy off of other people's homework," Needham & Co. analyst Mark Monane said, noting that those companies will have to work with the agency in getting products into trials.

Embryonic stem cells are building-block cells that differentiate into more specific cells, and their use is hoped to regenerate cells that can't be replaced because of injury or disease.

Geron's drug, called GRNOPC1, contains living cells that help restore nerve fibers and myelin, which is a protective sheath that protects nerves in the central nervous system. Repairing the nerves could lead to restoration of sensory function or use of extremities.

To be sure, Geron's treatment is still in the very early stages and has many hurdles before reaching the market or even being proven effective.

The Phase I study is intended to study the safety of the drug in humans and will be given to eight to 10 patients with recent severe spinal cord injuries. As a secondary measure, the data will measure effectiveness of the drug, which has shown effectiveness in rats.

In a conference call Friday, Geron said it hopes to add one patient per month, beginning in the early summer.

"The clinical development is tough. It is going to be a very long course to go forward," said Monane, who upgraded the stock to buy with a $9 price target. He believes that Geron's preclinical research is strong, but that the company won't be able to conduct early pivotal trials that allow for application of marketing approval, because it is an entirely new class of treatment.

"Now it is an execution story," he said, noting that Geron's platform is the type of technology that could attract the interests of a large pharmaceutical company.

Thomas Okarma, president and chief executive of Geron, said the company is always in conversations with potential partners but stressed it isn't interested in partnering its products prematurely before their clinical value is fully demonstrated.

In the call, Okarma said the FDA's move likely surprised many in the industry, specifically pointing to larger pharmaceutical companies, who thought that human testing was five or six years away.

He said that those same companies also were slow to realize that monoclonal antibodies - which are antibodies mass-produced in the lab to recognize an individual molecular target - could be a marketed therapy.

Such drugs, including Genentech Inc.'s (DNA) Avastin and Eli Lilly & Co.'s (LLY) Erbitux, which both fight cancer, have proven to be blockbusters in recent years.

The FDA's decision also was surprising because Geron's application was put on clinical hold in May.

Rodman and Renshaw analyst Ren Benjamin said the quick resolution of the hold is a "testimony to Geron's expertise in the field of embryonic stem cells and highlights the company's close working relationship with the FDA."

He notes that both factors will be helpful in moving such a pioneering therapy through the clinic and getting cleared by regulators. Benjamin also upgraded Geron to outperform with a $9 price target.

WBB Securities analyst Stephen Brozak believes the previous clinical hold was driven by influence of the Bush administration, though the company asserts that the timing is only coincidental.

Congress banned the use of federal funds to create or destroy human embryos solely for research purposes since 1996. In 2001, President Bush loosened the restriction slightly by allowing federal funds to be used for research on a few then-existing stem-cell lines. Those limits were still viewed as restrictive to research by many in the field.

Brozak expected the new administration would create a regulatory environment more conducive to Geron.

"Though we anticipated that a new presidential administration would reverse the FDA obstruction of [embryonic stem cell] therapies, we never imagined the decision would come within three days of the presidential inauguration," Brozak said.

Being first has its advantages for Geron, but it also has its pitfalls.

"It is a two-edged sword," Monane said. "It is a new opportunity, a new platform, but on the other hand the rules are being written as they are going along, and that is the challenge going forward."

-Thomas Gryta; Dow Jones Newswires; 201-938-2053; thomas.gryta@dowjones.com

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