By Jeffrey M. O'Brien, contributor

Stem cells stored in liquid nitrogen at Advanced Cell Technology in Marlborough, Mass.

FORTUNE -- Imagine yourself the proud but rueful owner of an ancient Jaguar. Every day you dread the uncertainty that comes with trying to get from here to there -- there, more often than not, being the shop. No sooner does one ailment find repair than another appears. At best, it's a slow, uncomfortable ride. Lonely too. There's really no one around who fully understands your plight.

That is how Patricia Riley describes life in a 95-year-old body. Riley, who reached that milestone birthday last St. Patrick's Day, lives alone in the same 1,100-square-foot house in Plainfield, Conn., that she's called home for 64 years, having survived her husband (heart disease), a daughter (breast cancer), and every friend she ever had. "All the people I knew have all gone, Jeffrey," she says in a quivering voice laced with melancholy. "They've all died. I go to church and I never see people my age." Her remaining family includes two daughters, five grandchildren, and eight great-grandchildren, including my two young sons. In a nod to her French-Canadian heritage, we call her Mme.

Mme attributes her longevity to good genes, but she clearly owes a debt to modern medicine. Over the years she's had a cholecystectomy, a hysterectomy, esophageal surgery, a stroke, and ulcerative colitis. Lately she relies on a cane and a walker, and her daily regimen includes pain pills for arthritis, two inhalers for asthma, high-blood-pressure meds, a statin, vitamins, digestion aids, and an anti-anxiety drug that she calls "my nerve pill." Her vision also comes courtesy of medical science. Three years ago Mme was diagnosed with a form of age-related macular degeneration, or AMD, a disease of the back of the retina that is the leading cause of vision loss in the developed world. The ophthalmologist gave her a choice: a needle into her eyeballs every six weeks, or blindness. Mme opted for the injections and now receives shots of an off-label cancer drug called Avastin, which has demonstrated efficacy in halting the progress of her type of AMD. Holding the ailment at bay is all she can hope for. "I'll have to go for as long as I live," she says. "It's just a treatment -- it's not a cure."

Treatments, not cures. This, in a nutshell, is the MO of our health care system, and it's precisely the reason that regenerative medicine -- and stem cell therapy in particular -- has been the subject of so much hope and hype over the past decade or so. Stem cell therapies promise to empower a body to fight ailments by enabling it to build new parts. Think about growing new neurons or heart tissue. Think about the difference between perpetually slathering that old Jag with Bondo and having it heal itself overnight in the garage.

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While stem cells have ignited plenty of religious outrage and political grandstanding, behind the headlines the underlying science has been advancing the way science often does -- by turns slowly and dramatically. To be clear, the earliest stem cell therapies are almost certainly years from distribution. But so much progress has been made at venerable research institutions that it now seems possible to honestly discuss the possibility of a new medical paradigm emerging within a generation. Working primarily with rodents in preclinical trials, MDs and Ph.D.s are making the paralyzed walk and the impotent virile. A stem cell therapy for two types of macular degeneration recently restored the vision of two women. Once they were blind. Now they see! Some experts assert that AMD could be eradicated within a decade. Other scientists are heralding a drug-free fix for HIV/AIDS. Various forms of cancer, Parkinson's, diabetes, heart disease, stroke, and ALS have already been eradicated in mice. If such work translates to humans, it will represent the type of platform advancement that comes along in medicine only once in a lifetime or two. The effect on the economy would be substantial. Champions of stem cell research say it would be on the order of the Internet or even the transistor.

The obstacles along the road from lab rat to human patients are many, of course, but the biggest by far is money. With the dramatic events in the lab, you might think that a gold rush would be under way. That's far from true. Long time horizons, regulatory hurdles, huge R&D costs, public sentiment, and political headwinds have all scared financiers. Wall Street isn't interested in financing this particular dream. Most stem cell companies that have dared go public are trading down 90% or more from their IPOs. Sand Hill Road is AWOL. The National Venture Capital Association doesn't even have a category to track stem cell investments.

Big Pharma would seem to be the most obvious benefactor. The drug companies understand the complexities (and billion-dollar outlays) involved in bringing therapies to market. A few drug companies have kicked the tires on stem cells over the years, but waiting for them to undo the current model is akin to banking on Big Oil to rethink energy. They may do it, but it's unlikely to be by choice. Which leaves stem cell researchers begging for state and federal grants at a time scientific funding is under siege.

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The great stem cell dilemma