Clone Frenzy Getting Tired

Hot air inflates debate and the prices of obscure stocks.
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The reaction to this weekend's human cloning news had all the spontaneity of a banquet of the Supreme Soviet in '72 Moscow.

Stocks of obscure and unrelated biotech outfits dutifully rose in unison, politicians dusted off religious texts, and libertarians rushed to defend embryo research. All on news that wasn't even that new.

The frenzy erupted when Advanced Cell Technology released a paper saying it used unfertilized donor eggs to produce early-stage human embryos. Those have the potential to generate stem cells for treatment of diseases such as Alzheimer's, cancer and AIDS.

Hoopla

The company was very upbeat about its findings in a press release. "These are exciting preliminary results," said Robert P. Lanza, vice president of medical and scientific development at Advanced Cell and an author of the paper. "This work sets the stage for human therapeutic cloning as a potentially limitless source of immune-compatible cells for tissue engineering and transplantation medicine."

But at least one analyst speculated the announcement might be a publicity stunt aimed at getting more financing for the project.

"The company is being a little bit sensational," said Anne Anderson, biotech analyst for Atlantis. "This current effort on their part to generate attention may be related to fundraising. It's nothing different from the summer. They've just moved it a little further along," she said.

Back in July, Advanced Cell announced it had been working to clone human stem cells for a year, using donor eggs. A month later, President Bush approved the use of previously existing lines of embryonic stem cells for federal funding. Congress also has banned federal funding for any research that involves destroying human embryos, including the kind performed by Advanced Cell.

And on July 31, the House voted to outlaw all human cloning, both privately and federally funded. The events of Sept. 11 relegated cloning to the back burner, however, and the Senate hasn't voted on it.

The embryos Advanced Cell created in its latest procedure didn't survive long enough for stem cells to be extracted, and some scientists called the research a failure. None of the clones developed beyond the six-cell stage, which requires about three days of growth in a laboratory. Stem cells are usually extracted from five-day-old embryos with between 100 and 150 cells.

Publicity stunt or not, the paper still managed to revive the loud debate about the ethics of human cloning. Outcry issued from Capitol Hill, with the White House repeating President Bush's opposition to all forms of human cloning. Sen. Sam Brownback, a Kansas Republican, and Rep. David Weldon, a Florida Republican, said they would seek a six-month moratorium on cloning human embryos for any reason, to allow time for debate in Congress. Antiabortion groups also said they would lobby Congress to stop the research.

Usual Suspects

As is also becoming standard, stem-cell companies with unrelated methodologies saw their stocks rise steadily throughout Monday's session.

StemCells

(STEM)

gained 9.23%,

Aastrom Biosciences

(ASTM)

climbed 8.91% and

Geron

(GERN) - Get Report

tacked on 7.66%.

Cryo-Cel International

(CCEL)

rose 1.04%.

Unlike Advanced Cell, StemCells, Aastrom and Cryo-Cel grow stem cells using adult cells, such as those from umbilical cords, as opposed to embryos. Of that group, only Geron uses embryonic cells, ones from already established lines of cells that are being reproduced as colonies -- the kind approved by President Bush for federal funding.

Analysts laid the blame for the froth with retail investors who have a habit of confusing the technologies at issue.

Partly because of the complex nature of cloning research, the companies are thinly covered by analysts, making good information hard to come by. This also keeps the institutions away, says one analyst. "The expertise necessary to legitimately evaluate the science takes time to tackle," says Stephen Brozak, biotech analyst for Vanguard Capital. "And there aren't a lot of institutions that have taken the trouble to do that."

That makes for plenty of volatility.

"It's just retail guys buying and selling this stuff at random, and they don't know very much. Advanced Cell Technology does something, and Stem Cells goes up, which doesn't really make sense," said Carl Gordon, analyst at Orbimed. Brozak agreed. "The biotech market is volatile, but stem-cell stocks are exceptionally volatile," he said.