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SAN FRANCISCO – Stock in companies doing all types of stem cell research fell Friday as investors puzzled over the boundaries drawn by President Bush. 

In the short term, there’s a fear that Bush’s decision to limit federal funding to research involving existing stem cell lines – preventing the destruction of more human embryos in the name of science – may inhibit U.S. researchers. 

But an infusion of federal tax dollars also could encourage more scientists to join the field, and eventually, new scientific breakthroughs may force the government to reconsider its opposition to destroying more human embryos — and even cloning, executives of stem cell companies said. 

The company losing the most from Bush’s decision is Advanced Cell Technology, which wants to develop stem cells by cloning human embryos using the same technique that created Dolly the sheep. The president explicitly rejected this approach, which the House has voted to criminalize. That bill awaits Senate action. 

“I strongly oppose human cloning, as do most Americans. We recoil at the idea of growing human beings for spare body parts or creating life for our convenience,” Bush said. 

Michael West, CEO of Advanced Cell, a privately held company based in Worcester, Mass., sought to put a positive spin on Bush’s broadside against his work, which remains legal for now. 

He said federal funding involving existing stem cell lines should spur more research, and eventually lead scientists to embrace so-called therapeutic cloning for purely medical and not reproductive uses. 

“I’m thrilled, actually ... millions of lives are going to be saved,” West said Thursday night. “This is the birthday of regenerative medicine.” 

Embryonic cell lines, each deriving from a single embryo, have the ability to divide into an infinite number of biological blank slates. From there, after genetic manipulation they could evolve into differentiated cells and repair ailing hearts, livers, brains and other tissue. 

The one company that stands to benefit most from Bush’s decision is Menlo Park-based Geron Corp., which claims exclusive commercial rights to all the human embryonic stem cells for which the administration has authorized federal funding. 

Geron also claims it owns the sole license for the process used to obtain the stem cells, which are drawn from four-day-old embryos donated by fertility clinics. 

“We expect our stem cell lines to be the gold standard,” Geron CEO Thomas Okarma said Friday in a conference call. 

Despite its apparently strong legal position, Geron’s stock fell 99 cents to close at $13.95 in heavy trading Friday, giving up some of its sharp gains Thursday, when it rose $2.04 to $14.94. Companies working with adult stem cells – which do not derive from embryos and are considered to hold less medical promise – also were down sharply: StemCells Inc. plunged 25 percent, and Aastrom Biosciences Inc. fell 19 percent. 

The market reaction notwithstanding, Geron’s lawyers have put the company in an enviable position to capitalize on research involving existing stem cell lines. 

Geron provided most of the funding that enabled University of Wisconsin researcher James Thomson to first isolate human embryonic stem cells. In return, the company received exclusive commercial rights to the university’s stem cell patent. 

Okarma said Geron has been “very open” with the scientific community and can only benefit by sharing its research with others. But some other scientists say Geron’s demands are so onerous that they’ve been forced to look for stem cell sources overseas. 

Researchers wanting stem cells for purely academic purposes can buy them from the university for $5,000 an order. But anyone wanting to profit from this science must pay for a license, or material transfer agreement, from Geron. And Geron demands commercial rights from its licensees. 

Isivitch said U.S. researchers have obtained stem cells from his clinic. 

U.S. researchers also may look for supplies from stem cell lines maintained in Sweden, India, Singapore and Australia, where BresaGen Ltd., in Adelaide, has developed four stem cell lines. BresaGen also opened a U.S. laboratory in Athens, Ga. seven months ago. 

BresaGen Chief Scientific Officer Allan Robins said his company has been waiting to examine the impact of Bush’s decision before filling any of the dozens of requests from U.S. researchers for its stem cells. 

“Obviously, Geron is another consideration,” Robins said. “Geron does have some strong rights and we are going to have to deal with that.” 

Still, BresaGen shares trading on the Australian stock exchange closed up 13.3 percent on Friday. 

Geron hasn’t tried to enforce its stem cell rights yet, but chief financial officer David Greenwood said they’re prepared to if necessary. “U.S. patent laws govern here and U.S. (researchers) will be subject to that,” he warned Friday. 

The Bush administration also is exploring the impact of Geron’s patent position. 

“We still have some very important proprietary information to work through,” Health and Human Services Tommy Thompson said Friday. 

West, who founded Geron in 1991 and left in 1998 to buy Advanced Cell, said he once thought Geron “had locked up the embryonic stem cell market.” Now, he thinks there “are ways to get around Geron’s patent.”