Shares of StemCells ( STEM) climbed Tuesday after the company said it had sought federal regulators' permission to conduct an early-stage clinical test of transplanted human brain stem cells as a treatment for a rare, fatal disease.

The stock gained 50 cents, or 12.1%, to $4.61. Trading volume for the first two hours was 11.4 million; average daily trading for the last three months is 9.1 million.

The Palo Alto, Calif.-based company said that if the Food and Drug Administration approves the test, it would be first FDA-supported clinical trial "to use a purified composition of human neural stem cells as the potential therapeutic agent."

The test would determine how well the therapy worked on Batten Disease, a rare and always-fatal genetic disorder that affects the central nervous system of children. It would be conducted at the Stanford University Medical Center.

"Our pre-clinical research has shown great promise and this filing with the FDA is an essential step in discovering how to translate those pre-clinical results into treatment" for fatal disease, said Martin McGlynn, the company's chief executive. "It is only a first step ... from which we hope to learn about the behavior of cells when they are transplanted into a human recipient. There will be many other steps to take before we arrive."