Both Biotime Inc. (BTIM) and International Stem Cell Corp. (ISCO.OB) have licensed extensive patent rights from Advanced Cell Technology (ACTC.PK), all in the stem cell research and stem cell therapy arenas. Both continue to move toward product development while adding intellectual property to that licensed from ACTC, making the combined intellectual property of the three entities easier to evaluate than that of the individual companies.
Advanced Cell Technology, motivated by the need for operating capital, licensed most of its rather broad stem cell intellectual property -- mostly developed by Dr. Robert Lanza -- to ISCO and BTIM over a period of years. Then, about a year ago, ACTC took the next step which was to find a joint venture partner, a South Korean Company. ACTC contributed its remaining intellectual property to the joint venture, all except that pertaining to stem cell research for eye diseases. The company has recently filed an Investigational New Drug (IND) Application with the US Food and Drug Administration (FDA) to initiate a Phase I/II multicenter study using embryonic stem cell derived retinal cells to treat patients with Stargardt’s Macular Dystrophy. Advanced Cell Technology's market capitalization is approximately $75 million.
Both Biotime and International Stem Cell follow a business model that calls for the sale of cell culture products to researchers in the stem cell research arena in order to promote the development of proprietary stem cell treatments.
Dr. Michael West, CEO of Biotime, is one of the early rock stars of stem cell research. He has not only been around a long time (a founder of Geron and a former CEO of Advanced Cell Technology), he is one of a small group in the field that can increase the market value of his company -- if only momentarily -- by giving a speech at a conference. He has managed to accomplish several things for Biotime this year. These things have little to do with product development but have a lot to do with the business structure of Biotime as it sets itself up for the development of anticipated stem cell therapies. This business structuring has also had a lot to do with the market capitalization of Biotime Inc., particularly the actuality and future possibility of raising capital directly in the subsidiaries. Since September 30th of this year Biotime's market capitalization has increased by $30 million or roughly 30%.
This is what has increased Biotime's market capitalization:
- Biotime formed a subsidiary, BioTime Asia, Limited, for the purpose of developing and marketing therapeutic stem cell products in the People's Republic of China, and marketing stem cell research products in China and other countries in Asia. Biotime will license proprietary technology to this subsidiary.
- Biotime formed a subsidiary, OncoCyte Corporation, for the purpose of developing novel therapeutics for the treatment of cancer based on stem cell technology. Biotime will license some of its technology to OncoCyte as well. A private party has invested $2 million at the onset.
- Biotime's securities trading has moved from the Nasdaq to the American Stock Exchange.
Embryome Sciences specializes in serving the needs of researchers studying ES cell differentiation and embryomics. The company provides cell culture media optimized for the growth of human embryonic progenitor cell types.
At a current market capitalization of $130 million, the consolidated entiries of Biotime Inc. reported total revenue of $447 thousand for the three months ended September 30 vs. $427 thousand for the same three month period ended September 30 last year. Included in that revenue was $225 thousand in royalty revenue from the sale of Hextend which was a substantial decrease from the $341 thousand in royalties earned during the three months ended September 30, 2008. This decrease in Biotime's revenue took place while its market capitalization was increasing. Non-royalty product revenue, mostly that provided by Biotime's Embryome Sciences subsidiary's sale of cell cultures, was approximately $222 thousand for the three months ended September 30.
International Stem Cells product revenue from the sale of cell cultures for the same 2009 three month period was $299 thousand, or $77 thousand greater than Biotime's. Nevertheless, Biotime's market capitalization is $128 million compared to $28 million for International Stem Cell.
Perhaps part of the reason for the difference in market capitalizations is the change in CEO's. ISCO brought in an investor in 2008 by the name of Andrei Semechkin. He is now the CEO, as well as the largest shareholder, as of about a month ago. ISCO has added to the parthenogenic stem cell intellectual property licensed from ACTC by developing its own patents. The idea now is to create a bank of parthenogenic stem cells, along the lines of existing blood banks, that would be available to all without nearly the risk of immune rejection that may result with embryonic stem cells.
ISCO has a subsidiary, Lifleline Cell Technologies that sells cell culture products to the research market. The company anticipates that within two years Lifeline may be able to fund the consolidated cash needs of the two entities.
Is Biotime's intellectual property, business plan, existing subsidiary Embryome Sciences, or its new subsidiaries that have yet to produce results, along with its new listing on the American Exchange, worth a market capitalization roughly four times greater than that of International Stem Cell with its revenue producing subsidiary, Lifeline Cell Technologies? We will leave this for you to decide.
Comments