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GE Healthcare--forging further into the embryonic stem cell market now that the Obama Administration has lifted the ban on Federal funding--says it is partnering with biotech company Geron Corporation in a venture that could tell drug makers early on whether their medicines are toxic or not.

If successful, this technique could replace animal testing, observers say.

Under the agreement, whose financial terms were not disclosed, GE will fund the research and manufacturing and sell any products that result from the partnership to research labs and drug companies.

In turn, Geron will give GE access to its vast library covering the growth and differentiation of human embryonic stem cells. Stem cells can grow into any organ in the body.

GE said it would have the first commercial cells ready by next year. Industry watchers, cheering GE's move and reveling in its deep pockets, say that embryonic stem cells could provide exciting new treatments for cancer, heart disease and scores of other diseases.

GE and Geron say that if successful, the venture could save lives as well as money. Currently, "up to three quarters of toxicity problems are not detected until preclinical or later stages of drug development and this significantly increases the cost of developing new drugs," the companies say. They add, "Earlier detection of toxicity problems could... [also reduce] potentially harmful patient exposure in clinical trials."

Cardiotoxicity and hepatotoxicity are the most common causes of drug safety liabilities and withdrawal of drugs during development, the companies note.

Both Firms Involved in Research

In Geron, GE has a partner that financed its own embryonic cell research, even while the Bush Administration banned it. In January, after Barack Obama became President, Geron received FDA's go-ahead to inject stem cells into people with spinal cord injuries, the first embryonic stem cell trial in the U.S. In March, President Obama ended the ban on Federal funding of embryonic stem cell research.

GE is also a leader in stem cell science. In May, the company said it would commercialize Cytori Therapeutics I StemSource technology in North American stem-cell research markets. The companies also agreed that GE would commercialize Cytori's stem cell products in 10 European countries.

Sources: GE and Geron