Athersys shares fall on judge’s stem cell decision

A judge’s ruling that blocks federal funding for embryonic stem cell research triggered a tumble for shares of Cleveland biopharmaceutical company Athersys Inc. (NASDAQ: ATHX) — even though its business involves only adult stem cells.

A number of other publicly traded stem cell companies, such as Stem Cells Inc., Geron Corp. and Aastrom Biosciences Inc., felt the sting of the judge’s decision as jittery investors sold off shares. Some nervous traders apparently didn’t care whether the above companies develop adult or embryonic stem cells; they just wanted out.

U.S. District Judge Royce Lamberth issued the injunction late Monday because he found that doctors challenging the federal government’s embryonic stem cell policy likely would succeed. That’s because U.S. law bars embryonic stem cell research that destroys embryos, and the research “clearly” does just that, according to the judge. The ruling doesn’t affect private funding of embryonic stem cell research.

The Obama administration is likely to appeal the decision.