Tooling up for stem cell stocks
In the stem cell gold rush, it might pay to avoid the diggers and invest in the companies that sell the shovels.
Biotechs working on cell treatments seem poised to profit from President Obama’s decision to lift the ban on federal funding for embryonic stem cell research and the $15 billion in stimulus money marked for scientific research. But for investors, the best way to play the sector might be the companies that make the tools used by biotechs.
A lot of biotech companies are developing stem cell-related treatments, but only a few of them have been tested on humans. It could be at least a year before one of these therapies is ready for the market. Meanwhile, biotechs will burn through cash on research and development that may not lead to viable products.
The stimulus money is unlikely to flow directly to biotechs anyway. The bulk of the funds will go to the National Institutes of Health, which will receive about $10 billion. The NIH traditionally distributes grant money to universities, government labs, and non-profits.
…more…