UPDATE 4-GE teams up with Geron for stem-cell research

* To focus on human embryonic stem cells

* Products would be used to test developing drug safety

* Technology is controversial in United States

* Geron shares surge (Adds quote, paragraphs 12-13)

By Scott Malone

BOSTON, June 30 (Reuters) - General Electric Co (GE.N) is teaming up with U.S. biotech company Geron Corp (GERN.O) to use stem cells to develop products that could give drug developers an early warning of whether new medicines are toxic.

The venture is the largest U.S. conglomerate's most direct attempt to make a commercial products from human embryonic stem cells. Scientists say the cells hold great medical promise, but their use has been highly controversial in the United States.

Embryonic stem cells are the body's master cells and can grow into various types of human tissue, such as skin or internal organs.

GE and Geron aim to use an existing batch of stem cells to develop sample human cells that drug companies could use to test the toxicity of new drugs early in the development process, before they are ready for animal testing or human clinical trials.

The venture would not sell actual stem cells, but rather heart or liver cells derived from stem cells, said Konstantin Fiedler, general manager of cell technologies at GE Healthcare.

"This could replace, to a large extent, animal trials," Fiedler said in a telephone interview. "Once you have human cells and you can get them in a standardized way, like you get right now your lab rats in a standardized way, you can actually do those experiments on those cells."

Fiedler emphasized the products are still in an early development stage. GE estimated it would have the first commercial cells ready next year.

Geron shares surged 15 percent after the news of its deal with the Fairfield, Connecticut-based company, which has made expanding its healthcare operation a major push this year.

POTENTIAL, CONTROVERSY

Scientists say that research on embryonic stem cells, which are the most malleable, has enormous potential to develop treatments for cancer and other diseases [ID:nN08329064].

But using stem cells derived from days-old human embryos has been controversial in the United States, where opponents say the destruction of any embryo is wrong. The Obama administration in March lifted a Bush-era decision that had forbidden federally funded researchers to work with the embryonic cells.