Developments in the stem cell world are starting to get very interesting.

On Tuesday, General Electric ( GE) signed an exclusive license and alliance pact with Geron ( GERN) to develop and commercialize cellular assay products derived from human embryonic stem cells for use in drug discovery, development and toxicity screening. Financial terms of the deal weren't disclosed, but investors clearly saw the deal as a major positive for Geron after the shares soared more than 18% on the news.

This is a very big step for stem cell research development and shows that big firms such as GE are eager to get into the business by partnering up with existing stem cell companies, instead of launching their own stem cell divisions. The implications of this move by GE could force other large companies that want to get into stem cell research to look at partnering up with established players in the sector.

Some of the companies that could see new business flow their way include Aastrom Biosciences ( ASTM), Life Technologies ( LIFE) Osiris Therapeutics ( OSIR) and Neuralstem ( CUR). Some of these firms are far from profitable or lack a single stem cell based drug or product that is currently on the market.

But now is probably not the time for investors to focus on the lack of earnings or a product. Most of the firms that operate in the stem cell space are still very early into the development stage considering that the controversial practice was banned for more than eight years by former President George Bush. Thanks to the Obama administration, that ban on new embryonic stem cell research and federal funding was finally lifted back in March, so now government money is open to flow into the sector. The potential for stem cells is enormous and now that the political climate has changed the future is starting to look even brighter.

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