Stem Cell Research

Final Patient Treated In Geron's Landmark Stem Cell Therapy Trial

The patient, who is the second to be treated at Stanford and Santa Clara Valley Medical Center, was enrolled in the trial before Geron announced on Nov. 14 that it was discontinuing the clinical trial. The patient elected to undergo the procedure after being informed of the trial’s status, a decision which would seem to say a great deal about the hopes of trial participants.

“The procedure went smoothly and the patient is doing extremely well,” said Stanford neurosurgeon Gary Steinberg, MD, PhD. “Although the decision by Geron to discontinue the trial was disappointing, I am confident that stem cell science will continue to move forward as we and others work to translate promising laboratory findings into clinical benefits for patients.”

Reflections On The Geron Decision To Abort The First Embryonic Stem Cell Therapy Clinical Trial

A few days ago Geron, while still undertaking the first clinical trial testing an embryonic stem cell therapy, decided to end further involvement, at least at the trial level, with embryonic stem cell research, announcing they would look for a partner to take over for them. The company's stated reason was the high cost of such undertakings given the present economic environment.

I wonder if they also asked themselves what might happen if they were successful with the clinical trial for spinal cord damage. I don't think this was a new question to Geron. As a private company they would have been considering potential markets and profitability. That would mean scaling production of what would have been described within certain concerned constituencies, such as the Catholic Church, as a production line of potential human beings sacrificed in the name of medical  treatment. Along with the heavy cost of clinical trials I can easily imagine the company may have envisioned ethical attacks on several fronts in the event of the trial's success. That must of seemed daunting, for one of the traits of ideologues is their relentless, uncompromising pursuit.

In fact there is an argument to be made that suggests the size and determination of the ethical uproar might be, or might have been, in direct proportion to the success of the clinical trial. It's hard to imagine a private company facing that sort of relentless scrutiny and condemnation as they began to scale up and approach the market.

The reaction drawn by certain of our once prestigious financial institutions may also have served as one factor in Geron management's decision to abort. While I happen to believe that financial innovation and even chicanery in the name of profit without regard to systemic impact was the primary cause of the housing bubble and subsequent financial crisis, as well as the recession to end all recessions, I cannot find an ethical reason why Geron should be condemned for research at the primary level with an aim toward improving therapeutic outcomes and saving lives.

Biotime Inc. and Advanced Cell Technology, two of our Stem Cell Sector Companies, continue to work toward therapies at the embryonic stem cell level. I wish them luck. It could easily be that due to Western ideological biases embryonic stem cell therapeutic advances will be relegated to nations not dominated by Western religions. If it happens, it will be our loss.

Geron Discontinues Further Development Of Embryonic Stem Cell Programs

For years some observers have believed Geron's future was centered in the development of its oncology research. In these uncertain economic times it seems the company has come to the same conclusion.

Geron today announced that effective immediately the Company will focus on its first-in-class oncology programs and will discontinue further development of its stem cell programs.

The company will be seeking partners with both the financial and technical expertise to continue the stem cell programs.

Mesoblast Partners With Lonza Group To Produce Off The Shelf Allogeneic Mesenchymal Precursor Stem Cell Therapies

Mesoblast Inc. is an Australian company (MSB.AX) that has had some success in clinical trials with its allogeneic mesenchymal precursor stem cell therapies. Mesoblast has a market capitalization of over 2 billion dollars and is entirely alone at that lofty level among stem cell companies. Geron, for example, has a current market capitalization of $282 million, while Osiris, which has a broad patent on mesenchymal stem cells from bone marrow, has a market capitalization of $171 million. Whether Osiris's patents and Mesoblast's are in conflict is unclear and is a question which may rise in the future of the two companies.

Mesoblast describes it's stem cell therapy technology platform as follows:

Embryonic Stem Cell Therapy For Paralysis Given To First Patient In Western United States

The most recent patient was treated Sept. 17 as part of the Geron Corp. clinical trial using embryonic stem cells.

In May, Geron received a $25 million grant from the California Institute for Regenerative Medicine to continue and extend the trial to include a greater proportion of spinal cord injuries. The most recent patient was treated at the Rehabilitation Trauma Center at Santa Clara Valley Medical Center with cells prepared for injection at Stanford University.

Stanford neurosurgeon Gary Steinberg, MD, PhD, (see post below) implanted the cells. Three other patients have

Induced Pluripotent Stem Cells: Human Skin Cells Induced To Become Nuerons

In late May we posted about Stanford University research wherein human skin cells were converted directly into functional neurons in a period of four to five weeks with the addition of just four proteins.

In this recent research, Dr. Sheng Ding used two genes and a microRNA to convert a skin sample from a 55-year-old woman directly into brain cells. (MicroRNAs are tiny strands of genetic material that regulate almost every process in every cell of the body.) The cells created by Dr. Ding’s experiments exchanged the electrical impulses necessary for brain cells to communicate things such as thoughts and emotions. Using microRNA to reprogram cells is a safer and more efficient way than using the more common gene-modification approach. In ensuing experiments, Dr. Ding hopes to rely only on microRNAs and pharmaceutical compounds to convert skin cells to brain cells, which should lead to more efficient generation of cells for testing and regenerative purposes.

Allogeneic Mesenchymal Stem Cells Enter Phase III Trial For Bone Marrow Regeneration

Mesoblast Inc., an Australian company, we've posted about in the past, including here, appears to be winning the race over all American companies for an allogeneic stem cell therapy that meets the drug company model for an off-the-shelf stem cell treatment solution. At least it is at the moment as shown by its market capitalization of $2.3B which substantially exceeds that of Mesoblast's competitors.

Harvest Technologies, A Privately Held Stem Cell Medical Device Manufacturer, Sold To Terumo For $70 Million

Terumo Americas Holding, Inc., a U.S. subsidiary of Japan's Terumo Corporation -- one of the world's leading medical device manufacturers with $3.4 billion in sales and operations in more than 160 nations -- closed the purchase of all outstanding shares of Harvest Technologies Corporation on April 29,2011. The acquisition was a stock for stock transaction.

Harvest Technologies, a privately held company in the nascent stem cell medical device sector, has two primary products: SmartPRep2APC and SmartPRep 2 BMAC. The company has been working to commercialize what both Terumo and Harvest have characterized as the world's first point-of-care technology that allows physicians to derive highly concentrated autologous, adult stem cells from their patients in just 15 minutes.

While as a private entity Harvest has not been included among our stem cell sector companies, both of the above products have FDA approval (probably a major factor in the sale) and compete directly with our sector company Thermogenesis' new product, the Res-Q 60 BMC.  Thermogenesis (KOOL) has  filed a form 510(k) with the FDA seeking market clearance for use of the Res-Q System technology in the preparation of PRP from peripheral blood. The Res-Q 60 BMC is a US FDA article 21 cleared device for the removal and preparation of bone marrow aspirate.

2010: An Important Year In Both Stem Cell Therapy Advancement And Stem Cell Sector Growth

With several companies entering clinical trials with potential stem cell therapies, there seems to be some question about which company is betting on what therapy. How similar are the products being tested? What are the differences? We'll attempt to sort out the answers to these questions here.  But first some numbers.

Our 21 sector companies increased in market capitalization during 2010 by over $708 million, or 40% during 2010.  $708 million, however, is still lower than the $725 million value of the largest stem cell company in the world in terms of market capitalization. Mesoblast is an Australian company working in adult stem cells and is not included among our stem cell sector companies because American companies traded on American exchanges was an original sector-inclusion criterion. We'll talk more about Mesoblast below.

Here are the 2010 Stem Cell Sector numbers:  

• By Largest Market Capitalization

• By Greatest  % Increase in 2010 Market Cap.

Mesoblast Limited, a publicly listed company in Australia, originally obtained an exclusive, worldwide license to develop the platform Mesenchymal Precursor Cell (MPC) technology for orthopedic applications from the Hanson Institute in Australia where the technology was first developed.

Angioblast Systems Inc. acquired a similar license for all other applications of MPC technology. Upon raising capital in December 2004 through a public offering on the Australian stock market, Mesoblast acquired an approximate 33% interest in Angioblast which subsequently has been increased to 39.2%..

Under a cost-sharing agreement among the parties, Mesoblast and Angioblast share costs associated with various development efforts related to the shared MPC platform technology.

Mesoblast on its own or through Angioblast has several trials under way using a stem cell therapy based on Mesenchymal Precursor Cells.  But they are not alone. There are two companies in our Stem Cell Sector alone that are basing their future on some variation of Mesenchymal Stem Cells from human bone marrow: Osiris Therapeutics with Prochymal; and Athersys Inc. with Multistem. Mesoblast claims the following:

 

Plant Stem Cells Could Be Excellent Source Of Low-Cost Cancer Drug

Researchers have isolated and grown stem cells from a yew tree whose bark is a natural source of the anticancer compound paclitaxel. The development could enable the compound to be produced on a commercial scale at low cost, with no harmful by-products.

Scientists and engineers behind the development say the drug treatment – currently used on lung, ovarian, breast, head and neck cancer – could become cheaper and more widely available. The study was carried out by the University of Edinburgh and the Unhwa Biotech company in Korea.

Currently, an extract from yew tree bark is used to industrially manufacture the compound paclitaxel. However, this process is expensive, requires supplies of mature trees, and creates environmentally damaging by-products.

Patent Granted For Umbilical Cord Blood Stem Cell Technology To Improve Treatment For Neurodegenerative Diseases

The new technology administers the neuroprotective effect of human umbilical cord blood (HUCB) stem cells along with mannitol (a sugar-alcohol compound) to permeabilize the blood-brain barrier and allow for the increased entry of therapeutic growth factors.

While transplanted HUCB containing stem cells may benefit several neurological diseases, getting them past the blood-brain-barrier has presented a problem. The blood-brain barrier separates circulating blood and cerebral spinal fluid in the central nervous system. The newly patented technology is based on mannitol acting as a blood-brain barrier permeabilizer to help get the therapeutic substances secreted by HUCB cells and stem cells past the blood-brain barrier and into the central nervous system. Mannitol, which temporarily shrinks the tight cells that make up the barrier, allows HUCB cells, via their secreted factors, to reach the site of injury or disease.

"Human umbilical cord blood contains a high percentage of stem cells that when intravenously administered can survive and differentiate into neurons in the damaged brain. Equally appealing is their ability to secrete beneficial molecules that potentially promote behavioral recovery," said Dr. Cesar Borlongan, co-inventor and a University of South Florida neuroscientist and professor and consultant for Saneron CCEL Therapeutics, Inc., a biotechnology R&D USF spin-out company which has licensed the technology. "Because the blood-brain barrier regulates the entry of many blood-borne substances into the brain, it may exclude potentially therapeutic substances."

Adapted from the University of South Florida announcement.

Cord Blood: The Market For Cord Blood Stem Cell Therapies, Public And Private Banking Trends

Literally dozens of approaches are being explored by public and non-public companies in the attempt to link cost efficient stem cell therapies with specific medical uses. These vary from companies that develop and sell stem cell lines for use in research, and companies exploring molecular approaches to stimulating stem cells already available in the body, to medical device companies supplying equipment for the extraction, processing and either reintroduction or storage of stem cells for therapeutic use. 

The one area that is not only established, but is enjoying increasing acceptance as the basis for stem cell therapy, is that of cord blood collection, storage, and use in an increasing number of diseases.

Recent studies have shown that cord blood has unique advantages over traditional bone marrow transplantation, particularly in children, and can be life-saving in rare cases where a suitable bone-marrow donor cannot be found. Approximately 50% of patients requiring a bone marrow transplant will not find a suitable donor within a critical period. In certain instances, there may be some medical issues around using one's own cord blood cells, as well as availability of cells, which will require treatments done using cells from another donor, with the vast majority being unrelated donors. However, studies have shown that cord blood stem cells can also be used for siblings and other members of your family who have a matching tissue type. Siblings have up to a 75% chance of compatibility, and the cord blood may even be a match for parents (50%) and grandparents.

Regenerative medicine is a field of medical research developing treatments to repair or re-grow specific tissue in the body. Because a person’s own (autologous) cord blood stem cells can be safely infused back into that individual without being rejected by the body’s immune system - and because they have unique characteristics compared to other sources of stem cells - they are an increasing focus of regenerative medicine research.

That said, using one's own (autologous) cord blood cells might not be wise or effective, especially in cases of childhood cancers and leukemia.  Children who develop an immunological disorder often are unable to use their own cord blood for transplant because the blood also contains the same genetic defect. Nearly all of the transplants using privately banked cord blood have gone to relatives with pre-existing conditions, not to the donors. For this reason primarily, the policy of the American Academy of Pediatrics states that "private storage of cord blood as 'biological insurance' is unwise" unless there is a family member with a current or potential need to undergo a stem cell transplantation. Similarly, the American College of Obstetricians and Gynecologists does not recommend private cord blood banking. The emphasis here is on private.  Virtually everyone in the medical world recommends donation of cord blood to public storage banks.

Thus it was particularly interesting to note an event that took place under the media radar. A group of world renown cord blood researchers are forming a PRIVATE cord blood bank under the auspices of their own public cord blood bank called CORD:USE. Apparently these prominent members of the research and academic communities are ahead of the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists on the potential value of cord blood to the individual who donated it. And since the two medical groups are bureaucracies run by committee, it would be expected that researchers in the field would be more advanced in their thinking. Cord:Use is a non profit public bank that according to its website provides its cord blood storage services as follows:

CORD:USE operations consist of the collection, processing, storage and subsequent delivery of hematopoietic (blood-forming) stem cells found in cord blood to transplant centers worldwide for their patients' needs. CORD:USE collects donated umbilical cord blood, customarily discarded as medical waste following the delivery of an infant, to help treat anyone in need of a potentially lifesaving stem cell transplant. CORD:USE processes these cord blood units at Duke University Medical Center under the supervision of Dr. Joanne Kurtzberg, a pioneer and a world leader in cord blood stem cell transplantation.  Dr. Kurtzberg is the Medical Director of the CORD:USE Cord Blood Bank at Duke University. CORD:USE stores its cord blood units in the BioArchive® state-of-the-art, cryogenic freezer distributed by GE Healthcare, until they are needed for use in a transplant. 

Our note: The BioArchive is a product of our sector company Thermogenesis Corp.

The world renowned team of researchers includes Drs. Hal Broxmeyer, Joanne Kurtzberg, John Wagner, Eliane Gluckman and Alan Levine. You can read about a short summary of their qualifications here.

As far as we know, this is the first researcher prompted private cord blood bank.

Global cord blood stem cells market for 2010 is estimated at about US$4.5 billion. The market is further projected to register a robust Compounded Annual Growth Rate of 27.3% during the period 2006-2015 to reach US$15 billion by 2015.

Today China Cord Blood Corporation (NYSE: CO), China's leading provider of cord blood collection, laboratory testing, stem cell processing, and storage services reported a fiscal year 2010 increase in revenue of 34.4% and a 30.5% increase in subscribers.

Adapted from various sources including the PR Newswire announcement.

Neostem, Cytori, Biotime: And The Public Relations Stem Cell Therapy Prize Goes To...

The relationship between investor money and progress in a nascent field such as regenerative medicine is an imperative every company must deal with.  Sadly, there is more money to be raised if the prospect of a successful therapy or application can be made to sound closer rather than further away, appealing not to niche markets but rather the broadest possible.  Given the competitive market for new capital once a company has gone public, the years between stock market listing and successful therapy, which in truth can exceed the years played in the major leagues by a hall of fame third baseman, have got to be compressed if possible in the collective investor psyche through good old fashioned public relations.

Until about six months ago, our vote for the top public and investor relations prize would have gone to Cytori Therapeutics with Biotime Inc. and its charismatic leader, Dr. Michael West coming in a close second.

Of note from an investment point of view regardless of public and investor relations by a company: There is still only one widely used stem cell therapy, the use of bone marrow generated stem cells to replace an immune system destroyed by chemotherapy in various blood cancers.  We'll talk more about where the other broad approaches seem to be, relative to broader or less broad applications, in future posts. But for now it's sufficient, for example, to note that Cytori, which has a current market capitalization of 185 million at this writing (down from about 260 million about a month ago) has yet to demonstrate that the therapy for which its adipose stem cell extraction and processing machine is designed works in the long term better than alternative approaches. 

But the real prize, the big winner, in the pure business, marketing and public relations approach to potential stem cell therapy is a company called Neostem, which as a result of a recent reverse buy out is basically a Chinese drug company now listed on the American stock exchange.

Not that there is anything necessarily wrong with Chinese drug companies except that the standards against which they work and the transparency of the development process are not the best in the world by any stretch. And this is enough to suggest a careful approach without even mentioning the involvement of the Chinese government in all things stem cell within its borders.

In 2009, Neostem, listed on the American Stock Exchange, acquired a OTC listed company called China Biopharmaceuticals Holdings, Inc.  With this acquisition came a 51% interest in Suzhou Erye Pharmaceuticals Company Ltd., a Chinese drug manufacturer.  The other 49% of Erye is owned by Suzhou Erye Economy and Trading Co. Ltd.. The effect of this acquisition, which looks a bit like a reverse merger, was the movement of 51% of a Chinese pharmaceutical company -- even at 51% of Eyre, it is much larger than Neostem -- to the American Stock Exchange.  In the process of accomplishing that and as a direct result of the 'acquisition' by Neostem,  Eric H.C. Wei and a company controlled by Mr. Wei, Rim Asia Capital Partners, own approximately 53% of Neostem.

And what was Neostem (current market cap: $118 million) doing prior to this acquisition of a Chinese drug company? The company was building investor and market confidence by providing few results in two areas:

1. They owned and continue to own the world wide rights to something called VSEL technology.  What is VSEL technology, you ask?  It is something described only as very small embryonic-like stem cells found in bone marrow. The company suggests great promise for these cells.  But in the years since the licensing, as far as we can tell very little has actually been done with the cells, with the result that very little has been shown or accomplished.

2. Neostem owns and is expanding adult stem cell collection centers in the U.S.  They are the only company in the business of collecting adult stem cells and there is probably good reason for that. While embryonic stem cells are pluripotent, adult stem cells are not.  Additionally, no one knows whether the use of a person's own stem cells collected at age 25 are one whit better than those collected at  age 35 or when the procedure requiring autologous stem cells becomes necessary.  Additionally, there is the possibility of using induced pluripotent stem cells which are embryonic-like stem cells made from adult stem cells of any age.  So the question has to be asked: why store adult stem cells?

But in the process of publicizing these approaches while generating precious little revenue, Neostem has even managed to get the blessing of the Vatican:

May 26 /PRNewswire-FirstCall/ -- In a press briefing in New York, Reverend Tomasz Trafny of the Vatican's Pontifical Council for Culture announced what he characterized as the Vatican's first-ever contractual collaboration with an outside commercial venture to advance stem cell research – adult stem cell research. Reverend Trafny also revealed that the Pontifical Council for Culture through its charitable foundation STOQ International, is making an economic commitment of one million dollars to start its collaboration with NeoStem (NYSE Amex: NBS), an international biopharmaceutical company with operations in the US and China.  Dr. Robin Smith, CEO of NeoStem, made the announcement along with Reverend Trafny.

Who are we to argue with this.  We do suggest, however, that any investors reading this use caution here and read the 10k with great care.

Fate Therapeutics Expands Potential Stem Cell Therapy Approach Through Verio Therapeutics Acquisition

Fate Therapeutics is a privately owned company approaching stem cell regenerative applications by exploring the use of conventional pharmaceuticals to modulate key stem cell pathways. The premise of this approach is to intervene using small molecules and biologics, modulating stem cell biology for a desired outcome such as cell proliferation and differentiation for therapeutic benefit. As each year passes, more stem and progenitor cell populations are being identified in adult tissues, and myriad proof of concepts for treating diseases have emerged on the basis of activating stem and progenitor cells.

Fate Therapeutics was recently named one of the 50 most innovative companies in the world by MIT’s Technology Review. The Company is combining leading expertise in adult stem cell biology with the most advanced induced pluripotent stem cell (iPSC) technology to recreate adult stem cell niche environments for the discovery of “stem cell modulators,” small molecule or biologic compounds that guide cell fate in vivo for therapeutic benefit.

Fate Therapeutics is currently conducting a Phase 1b clinical trial of its lead stem cell modulator, FT1050, a small molecule drug that is administered during the normal course of a dual umbilical cord blood transplant and is designed to enhance hematopoietic stem cell proliferation and homing. In general, Fate has been a leader in the stem cell modulator approach to stem cell therapies in the United States as Verio Therapeutics has been in Canada.

Now Fate Therapeutics has announced a definitive agreement to acquire Verio Therapeutics Inc., a privately held biotechnology company based in Ottawa, Ontario, which is developing drug candidates targeting the activation of endogenous stem cells.

2009, The Year Big Pharma Bought The Idea Of Mesenchymal Stem Cell Therapy

In November of 2008,  Genzyme Corp. and Osiris Therapeutics (one of our Sector Companies) announced a "strategic alliance for the development and commercialization of Prochymal and Chondrogen." Prochymal and Chondrogen are both biologic drug candidates. Prochymal is a preparation of mesenchymal stem cells (MSCs) formulated for intravenous infusion. Chondrogen is a preparation of MSCs formulated for direct injection into the knee. The mesenchymal stem cells n these products are taken from the bone marrow of healthy young adult donors. Both product candidates are allogeneic and scalable, two important qualities from Big Pharma's perspective.

Osiris's deal with Genzyme made it the Sector Company with the highest market capitalization at December 31, 2008, a distinction that returned to Geron Corp. after Osiris suffered clinical trial setbacks in 2009.  Following Genzyme and Osiris came a deal for an autologous biologic drug product between Opexa Therapeutics (a Sector Company) and Novartis.

The latest deal is Phizer's purchase of Athersys, Inc.'s stem cell research. Athersys, one of our Sector companies, has 18.9 million shares outstanding with a float of 14.5 million shares.  Athersys' deal with Phizer was announced on the 21st of December.  During that week, roughly 110 million shares changed hands, and that includes a short trading day on the 24th and no trading on the 25th.  So basically 110 million shares traded hands in three and one half trading days.  It seems a substantial amount of money is on the sidelines waiting for anything positive on the stem cell front.

Breast Reconstruction And Adipose Stem Cell Therapy

Stem cell treatments and/or therapies represent the back bone of regenerative medicine.  That said, no one yet understands exactly how stem cells do what they do, only that in trials they seem to do it to one extent or another.  So, for example, it is extraordinarily difficult to visualize how bone marrow derived stem cells can repair damaged heart tissue as studies have shown they can. Visualization is much easier when we're talking breast reconstruction with small amounts of the woman's own fat and stem cells.  That difference in visualization ability may be the key to Cytroi Therapeutics' recent dramatic increase in Market capitalization.

Cytori Therapeutics (CYTX), one of our Sector Companies, reported interim results of its European Restore II study on breast reconstruction last weekend.  The headline of that report was as follows:

• Cytori's RESTORE 2 Interim Data Demonstrate High Level of Patient and Physician Satisfaction

Here is the reported evidence:

• The study reported a high degree of patient (73%) and physician (82%) satisfaction at the interim six-month observation period with the overall outcome after a single treatment in difficult to treat breast reconstruction patients. On a scale of zero to five (five is extremely satisfied and zero is extremely dissatisfied), mean patient satisfaction scores improved from 2.8 at baseline to 3.9 at six-month follow up. Mean physician satisfaction scores improved from 3.1 to 4.1. For the 32 patients, there was a mean age of 52 years and a mean defect volume estimated by the investigators of 106 milliliters (a little more than 7 tablespoons - between a third and a half a cup) in 33 treated breasts (one patient had both breasts treated).

The reported evidence is a good attempt at making a cosmetic effect seem as scientific as possible.  We can be pretty certain the patients were biased toward finding any improvement good.  As for the doctors, we're not told what exactly their 'satisfaction' means. 

Fat grafting of the breast, once taboo in plastic surgery as practiced in the U.S., has been recently readdressed as a way to fill in some contour irregularities in breast reconstruction. While Cytori, which makes a machine that extracts and processes stem cells from autologous adipose tissue, has been working to create a market primarily in heart and cosmetic applications for these cells for several years now, we think the company's future is most likely in stem cell cosmetic therapy. 

Since stem cell research is still at the stage where each new basic understanding dictates more questions than it answers, Cytori is fortunate in that it is easy for anyone to visualize fat being deposited to round out a breast deformity caused by the removal of a cancerous tumor.  The problem, the corrective result, and the market available for such therapy, if it is safe and works in the longer term, can be easily understood by almost everyone, something that can't be said for scaffolds, 'patches' and organ regeneration with stem cells.And that may explain why Cytori's market capitalization has increased from $112 million on 8/31/09 to approximately $240 million as of today, an increase of 214% in about 100 days.  

Dr. Michael West, Dr. Robert Lanza, Biotime Inc., Advanced Cell Technology, And International Stem Cell Corp.: Comments, As All Move Forward Toward A Stem Cell Therapy

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:

Harvest Technologies, Thermogenesis, Cytori Therapeutics: Stem Cell Extraction, Processing And The FDA

Harvest Technologies is a private company now competing head to head with our Publicly Traded Sector Company, Thermogenesis (KOOL).  We say 'now' because, while Harvest has been in the bone marrow stem cell point of care harvesting and processing business for some time, Thermogenesis now has an entry in this market as well.

What these three companies have in common is this: Each subscribes to the notion that point of care processing and delivery of autologous stem cells and related growth factors will be superior to existing approaches and to alternative stem cell treatment solutions for certain therapeutic applications.  Each company is supporting one or more clinical tests that use the particular company's stem cell processing device, an approach that feeds the implication that a therapeutic result is tied directly to the use of the device. 

Cytori Therapeutics, Tissue Genesis, Thermogenesis, Stem Cell Therapies, Branding, And Joining Forces

Stem cell therapy is quietly entering areas where it provides improved or alternative therapeutic results. Cytori is showing continually improved study and anecdotal results in breast reconstruction with adipose stem cells, a result which implicitly includes the creation of new blood vessels. If positive results continue, breast reconstruction is going to be an excellent market for Cytori, one already generating the lion's share of its current revenues, and one in which it is clearly establishing a leadership position.

One of the things that has impressed us about Cytori is its reasonably successful drive to brand itself and its Celution machine as THE source of adipose stem cells.  Cytori is trying to identify itself with adipose stem cell solutions, whatever they might be and wherever they might be found.  While research and tests with adipose cells have had favorable results in a variety of areas, there are not yet any broadly accepted clinical applications -- breast reconstruction being the closest.

Cytori's is a broad brush approach to branding and is probably the result of the early partnership with Olympus. which company should soon be the sole manufacturer of the Celution device through their joint venture. Whatever the motivation, the company is to be congratulated for doing an excellent job of identifying itself with potential adipose stem cell therapeutic applications, at least in the eyes of investors, even if occasionally management's eye on branding results in press releases that are a bit of a stretch as to the potential significance of the results.

Because regenerative medicine is an entirely new field of research and therapeutic application, companies are following many different avenues to get from the laboratory to the doctor's office or operating room.

Some go the FDA clinical trial route.  Others go after the easier to obtain CE Mark in Europe.  Still others affiliate with Asian companies for therapuetic application in Asia.  Some culture cells with a variety of growth factors to create scalable products. Others manufacture equipment that extracts, processes, places, or preserves stem cells.  The only point of care products which remove stem cells, process and make them available for immediate therapeutic placement back in the body, whether in a doctor's office or the operating room, are the equipment makers or distributors. Within our Stem Cell Sector, this includes Cytori Therapeutics, Thermogenesis Corp., and BioHeart Inc., all of which distribute and sell a point of care therapeutic device.

First Nine Days Of September Mark Dramatic Change For Stem Cell Company Market Values

Publicly traded companies hoping to derive their primary revenues from stem cell treatments and related activities are at the same place in their history that Columbus was two months into his first voyage across the Atlantic: they still don't know whether they're going to fall off the edge or find India.  And, like Columbus, something different from either possible outcome, something unexpected, will most likely occur.

Research continues on every front in the stem cell arena.  We still do not understand exactly how stem cells construct a body from the merger of a sperm and an egg.  We don't know how they know where to go or what to do in regenerative situations.  Parts of the human body repair with reasonable ease (think cuts or sprains), other parts do not seem to repair at all (think brain and nerves).  While these basics are being studied (and this is one reason we so badly need federally funded embryonic research), adult stem solutions and one embryonic solution are being tested in FDA sanctioned clinical tests.

And currently that's the rub for the sector as a whole: There are two big players at the testing stage and they're being watched by the world.  In Geron's case the FDA stopped it's embryonic stem cell trial, the first of its kind, in mid August while evaluating new information provided by the company.

Liposuction Excess Easily Converted To IPS Cells, Stanford Study Shows

In a finding that independently adds support to the Cellution systems manufactured by Cytori Therapeutics, one of our Sector Companies, and the TGI 1200 System (supplied by privately held Tissue Genesis' to Sector Company BioHeart Inc.), Stanford researchers have found that human fat removed during liposuction conceals versatile cells that are more quickly and easily coaxed to become induced pluripotent stem cells, or iPS cells, than are the skin cells most often used by researchers.

"We've identified a great natural resource," said Stanford surgery professor and co-author of the research, Michael Longaker, MD, who has called the readily available liposuction leftovers "liquid gold." Reprogramming adult cells to function like embryonic stem cells is one way researchers hope to create patient-specific cell lines to regenerate tissue or to study specific diseases in the laboratory.

Novartis Buys Opexa's Multiple Sclerosis, T-cell Immunotherapy For $50 Million

Big pharma is increasingly stepping up to the stem cell line.  In November 2008, Osiris Therapeutics announced a strategic alliance with Genzyme for the development and commercialization of certain Osiris stem cell products. Osiris is to commercialize Prochymal and Chondrogen in the United States and Canada, and Genzyme will commercialize the treatments in all other countries. Under the terms of the agreement, Genzyme will make a $130 million up-front payment to Osiris, with $75 million paid initially and $55 million to be paid on July 1, 2009. In addition, Osiris also has the potential to receive a total of up to $1.25 billion in milestone payments from Genzyme.

The Novartis/Opexa Deal:

Now Novartis and Opexa Therapeutics have announced a product research and development sale that could bring Opexa $50 million.  The announcement was made early in the market day and Opexa closed with a market capitalization of $24.6 million having traded up from $.47 to $2.01 during the day. Under the terms of the agreement, Novartis will acquire the technology described below from Opexa. Novartis will have full responsibility for funding and carrying out all research, development and commercialization activities. Opexa will receive an upfront cash payment of $3 million, plus an additional $1 million as a technology transfer fee to be paid over the course of a six month period. Total payments to Opexa, including the upfront payment, the technology transfer fee and development and commercial milestone payments could exceed $50 million not including royalties.

What Novartis is buying:

July 2009's Stem Cell Sector Stock Price Winners and Losers

As noted in May and June, we've begun adding a comparison of individual company stock price with the prior month's and have included the percentage changes. Sector Companies are then ranked by percentage price change in a downloadable PDF file. You'll find the file following the list of percentage winners and losers.

The notable characteristic during July was the decrease in sector market value of .7% as a whole while the Nasdaq Composite was increasing by almost 8%.  This is the first time in three months where this has happened.  Also, you will notice that Advanced Cell Technology, the largest percentage gainer during June, is the largest percentage loser during July, making it number one on our volatility index, especially given that there was no particular reason for either move.

July's largest percentage stock price increases among our 21 company Stem Cell Sector were:

1. Cryo-Cell International (CCEL.OB) - 70%
2. Biotime Inc. (BTIM.OB) - 45%
3. HepaLife Technologies (HPLF.OB) - 26%

July's largest percentage stock price decreases in our 21 company Stem Cell Sector were:

1. Advanced Cell Technology (ACTC.PK) - (-35%)
2. Biomatrix Scientific (BMSN.OB) - (-11%)
3. Osiris Therapeutics (OSIR) - (-9%)

Comparative 21 Company Stem Cell Sector chart July 31 vs. June 30, 2009:

• Sector Individual Market Values 7-09 vs 6-09

The sector as a whole decreased in value during June as noted above. 

• Sector Selected Market Val by Month 7-09

Fate Therapeutics: A Further Look At Academic Stem Cell Researchers And The Private Sector That Will Market Their Results

Academic stem cell research pioneer entree into the world of markets and profit is always a trend worth watching. Today we're taking a quick look at Fate Therapeutics.

Among our Sector Companies, all of which are publicly traded, typically someone has suggested a possibility that business people see as a probability.  From there the emphasis is on obtaining approvals from public agencies, gaining market position, branding, and developing scalability, all toward the end of profitable sales. 

Examples range from companies that raise and spend public investor money primarily on research and development (such as Advanced Cell Technologies, Geron, Osiris and others) to those companies formed to market an already existing product or discovery (Neostem comes to mind here; the company has signed numerous partnership and license agreements, particularly in foreign markets, but has yet to spend money on research).

As research into regenerative medicine and stem cells progresses, capital will continue to seek knowledge, or vice versa, and new companies will enter the potential market place.  Academic researchers will be involved through actual participation in the formation and ongoing policy of the new entity or in an advisory capacity that most probably includes an ownership interest. 

June 2009's Stem Cell Sector Stock Price Winners and Losers

As noted in May, we've begun adding a comparison of individual company stock price with the prior month and have included the percentage change in individual prices from the end of the previous month to the end of the latest one. Sector Companies are then ranked by percentage stock price change, highest to lowest, in a downloadable PDF file. You'll find the file following the list of percentage winners and losers.

June's largest percentage stock price increases among our 21 company Stem Cell Sector were:

1. Advanced Cell Technology (ACTC.PK) - 63%
2. Aastrom Biosciences (ASTM) - 24%
3. Thermogenesis Corp. (KOOL) - 19%

June's largest percentage stock price decreases in our 21 company Stem Cell Sector were:

1. Medistem Laboratories (MEDS.PK) - (-22%)
2. International Stem Cell Corp. (ISCO.OB) - (-14%)
3. Neostem Inc. (NBS) - (-11%)

Comparative 21 Company Stem Cell Sector chart June 30 vs. May 31, 2009:

• Sector Individual Market Values EOM 6-09 vs 5-09

The sector as a whole increased in value by 11% during June.  Comparatively, the nasdaq composite increased 3.4%.

• Sector Selected Market Value by Month 6-09

Pluristem Therapeutics Awarded $1.9 Million Grant from Israeli Government

Grants have become a major source of short term funding for many of our Sector Companies in recent months.  The latest is Pluristem Therapeutics (PSTI) about which we posted recently.  The company uses placental stem cells expanded in a proprietary bioreactor to address several diseases. 

Pluristem has been awarded a $1.9 million government grant from the Office of the Chief Scientist (OCS) at the Ministry of Industry, Trade and Labor of Israel, as a government participation in R&D expenses for the period March 2009 to February 2010. The OCS awards grants to industry in Israel to foster technological innovations. This is the fourth consecutive year that Pluristem has received this respected grant. The funds will be designated and used by Pluristem to support the clinical trials of the allogeneic placental-derived adherent stromal cell product, termed PLX-PAD, for the treatment of critical limb ischemia (CLI), the end-stage of peripheral artery disease (PAD), as well as for other research and development activities of the Company.

Adapted from the Pluristem Therapeutics announcement.

Athersys To Receive Grant Funds From Ohio's Research Commercialization Program

Following California's lead, and in response to growing acceptance of the benefits of regenerative medicine given sufficient research, more and more states are finding ways to fund research taking place within their borders.

The Center for Stem Cell & Regenerative Medicine (CSCRM), comprised of Case Western Reserve University (CWRU), Cleveland Clinic (CC), University Hospitals (UH), and Athersys, Inc. (ATHX - a Sector Company) has received 5 million dollars from Ohio's Third Frontier Commission under the Research Commercialization Program. The funding will help support new and innovative stem cell technologies including two commercial, four emerging and three pilot projects. This funding will be matched by each of the projects to create a $10 million grant benefiting stem cell and regenerative medicine in Ohio.

Cytori Therapeutics Vs. Thermogenesis: A Fascinating Difference In Market Values

There are many reasons companies entering the commercialization stage of product  development might be valued differently by the stock market.  Some of them are rational, others are not. Thermogenesis (KOOL) and Cytori (CYTX) provide a great case study in market capitalilzation. While the companies are very similar in many ways, the market sees them as substantially different from one another.

Thermogenesis has arguably been a 'commercialization stage' company for almost ten years while Cytori is still arguably not in the commercialization stage even now although it has begun book sales. To some extent the market views Thermogenesis as a mature but unprofitable player in the cord blood processing and storage market and nothing more.  Relative to Cytori, which has yet to prove it has a broad commercial market, this perception of unprofitable maturity has hurt Thermogenesis.

Looking only at revenues, KOOL's were $21.9 million in its last fiscal year and $5.1 million in the March quarter; CYTX revenues were $4.5 million in its last fiscal and $1.9 million for the March quarter.  KOOL had a market value on Monday, June 15, of $41 million while CYTX's market value drifted down to $129 million from $138 million in Friday's trading session. Like KOOL, CYTX continues to lose money. In terms of cash burn, Cytori has less than a year's cash remaining while Thermogenesis projects profitability on a continuing cash basis within the next few operating quarters.

Stem Cell Sector Companies: Who's Doing What On The Road To Workable Therapies?

A variety of approaches are being used by our Sector Companies to generate income (now and/or in the future) from stem cell regenerative medicine. Since the different approaches are difficult to compare, as well as in some cases being difficult to understand, we've put together a spread sheet indicating the various approaches and who's in what arena. The spread sheet is in PDF format:

• Stem Cell Sector Areas of Emphasis

While there are different degrees of business risk in the individual approaches, every one of these companies wants or has an off the shelf, scalable product, either a medical device for the stem cell arena (Cardiogenesis, Cytori, Thermogenesis), a logistical means of selling storage so that stem cells can be easily collected in a medical facility and transferred to the physical storage facility (Biomatrix Scientific, Cryo-Cell, Cytori, Neostem), or a broth containing the company's favorite stem cells, nutrients and other growth factors that can sustain a shelf life for use in a medical facilitlly when needed.

May 2009's Stem Cell Sector Stock Price Winners and Losers

We're starting something new with May's Stem Cell Sector results.  Starting this month we're providing a chart of end of month stock price and company market values as we always have. But now we're adding a comparison of individual company stock price with the prior month and showing the percentage change in individual prices from the end of one month to the end of the next. Sector Company market values are then ranked by percentage stock price change month to month, highest to lowest.

May's largest percentage stock price increases among our 21 company Stem Cell Sector were:

1. Neostem Inc.(NBS) - 121%
2. International Stem Cell Corp. (ISCO.OB) - 113%
3. Cytori Therapeutics (CYTX) - 112%

May's largest percentage stock price decreases in our 21 company Stem Cell Sector were:

1. Hepalife Technologies (HPLF.OB) - (-62%)
2. Biomatrix Scientific (BMSN.OB) - (-43%)
3. Medistem Laboratories (MEDS.PK) - (-20%)

Comparative 21 Company Stem Cell Sector chart May 31 vs. April 30, 2009:

• Stem Cell Sector Individual Market Values: EOM 5-09 vs 4-09

The sector as a whole increased in value almost 20% while the nasdaq composite increased 3.3%.

• Sector Total Market Value By Month

Perspectives On The Cytori Therapeutics Cardiovascular Preclinical Study: Use Of Adipose Stem Cells In Heart Attack Model

Press releases from Stem Cell Sector Companies serve the purpose of raising awareness in both the medical and investing communities.  Stem Cell research, the development of regenerative medicine, and the evolution of commercialized applications are all moving forward.  As with any human endeavor, the forward moves are not always smooth.  Sometimes commercialized applications can actually precede research results.  Such has been the case with our Sector Companies that manufacture and sell medical devices. 

Cardiogenesis, Athersys, Thermogenesis, Bioheart, Cytori Therapeutics, are all companies hoping that research and eventual clinical test results will make the devices they manufacture more in demand in the medical market place.  At times what information is released to the press is expressed in ways to suggest greater results are at hand than might actually be the case.  For the investing public, these announcements always pose a challenge.  Reported results or advances must be placed in a context, something not always easy to do.

Most recently, on May 28th, Cytori Therapeutics (CYTX) issued a press release titled, "Cytori Reports Publication of Cardiovascular Preclinical Study; Adipose Stem & Regenerative Cells Improve Function in Heart Attack Model."

Intellectual Property And The Future Of Stem Cell Research

As stem cell research in private and publicly traded companies moves toward therapeutic applications, the defense of intellectual property covering broad paths of research and application becomes more important to individual business plans.  At least one of our Sector Companies, StemCells, Inc., has carried out a business plan of patenting very basic cells and processes which it clearly intends to defend in order to protect what it sees as lucrative future license fees. One result is an ongoing patent infringement action between StemCells, Inc. (STEM) and Neuralstem (CUR).

According to Neuralstem, another of our Sector Companies, its patented technology enables the ability to produce neural stem cells of the human brain and spinal cord in commercial quantities, and the ability to control the differentiation of these cells into mature, physiologically relevant human neurons and glia.

StemCells Inc., on the other hand, says this about its intellectual property: "StemCells believes that its patent portfolio gives it the dominant intellectual property position in the neural, tissue-derived stem cell field. StemCells has an aggressive program of protecting its intellectual property. The Company also believes that its know-how will provide a significant competitive advantage, and intends to continue to develop and protect its proprietary tools, methods, and trade secrets."  StemCells sued Neuralstem in July 2006 and at this point several other lawsuits have been filed between the parties with the various legal issues remaining to date unresolved.

Cytori and Thermogenesis: The Bad, The Good, and the Ugly Are Becomming More Apparent, With Cytori Shedding Most of the Light

Cytori Therapeutics (CYTX), which has had the difficult task of introducing machines that extract, process, and store adipose (fat) stem cells to a market that had no particular use for adipose stem cells, is to be congratulated on showing initial signs of success through its now several year old business plan.  Cytori just reported sales of 1.9 million in Cellution and StemSource devices for the first quarter ended March 31, a substantial increase over the prior quarter.  No mention was made in the Cytori earnings call (even when the question was asked) of any sales inhibition because of relative strength of the dollar or the general world wide recession.  Thermogenesis management cited both of these as having affected its rather disappointing sales results during the same quarter.

We have written about Cytori and it's comparison with Thermogenesis more than once and it is probably time again for us to reiterate why we have, and are, doing so. The reasons are many, but the main one is simply that these are commercial stage, regenerative medicine, medical device manufacturing companies, and both are looking to the future of regenerative medicine to create revenue growth and income. There are several other relevant comparisons between these two medical device companies that we believe shed light on where the regenerative medicine market is and where it's going.  In order to keep each post fairly brief we will add these additional comparisons in upcoming posts.

Stem Cell Sector Market Cap Increases in April, But That's Not The Story

Markets with willing buyers and willing sellers, both of which groups have perfect information, are said to be rational.  But then you and I both know they're not, at least in the short run, so we'll blame the lack of rationality on the lack of perfect information. 

Our Sector Companies increased in aggregate market cap during the month of April by a whopping 4.4% while the Nasdaq Composite Index was increasing by 12.3%. Here are the numbers:

• Sector Individual Market Values EOM 4-09

• Sector Total Market Value 4-09

Returning to rationality or irrationality, depending on your point of view, Sector market caps as a whole may not have increased dramatically in April but the same cannot be said of the first week in May.  Several of our Sector Companies experienced substantial increases in stock price during that first week and "why?" is a fair question to ask.  Here are the companies, their price increases since April 30, and our best guess as to why:

BioTime Awarded $4.7 Million Research Grant in What Might Be Dr. Micheal West's Greatest Coup Yet

Biotime, Inc. (BTIM), one of our Sector Companies, and its CEO, Dr. Michael West, are to be congratulated.  This $4.7 million grant from the California Institute of Regenerative Medicine couldn't have been better timed if it had been a major part of Biotime's business plan.  The grant will fund research into Biotime's licensed ACTCellerate™ embryonic stem cell technology. The overall objective being to generate tools useful in applying ACTCellerate™ technology to the manufacture of patient-specific therapeutic products, which is where Biotime's business plan was headed anyway except it wasn't clear where the money was going to come from. Until now.

Strides Made In Solving Blood Stem Cell Multiplication Problem

Blood or bone marrow derived stem cells are the only stem cells used in therapeutic applications on a regular basis.  For years they have provided possible solutions to various blood diseases and represent by far the most studied class of adult stem cell.  One of the problems in a broader application of blood and bone marrow derived stem cells has been the difficulty of multiplying them in vitro. The basic possibilities of blood stem cells are pointed out succinctly in the following abstract of a 2008 paper from the Department of Anatomy, Histology and Embryology, Nanjing Medical University, China:

"It is generally accepted that adult bone marrow(BM) contains both hematopoietic stem cells(HSCs) and mesenchymal stem cells (MSCs). Recently, a rare population of stem cells different from HSCs and MSCs were identified in murine BM and human cord blood (CB). Named Very Small Embryonic-Like (VSEL) Stem Cells, these cells are tiny, round, and express markers which suggest the potential for differentiation into all three germ-layer lineages, such as cardiomyocytes, neural and pancreatic cells."

One of our Stem Cell Sector Companies, Neostem Inc., has acquired licenses for VSEL technology.  Here's the quote from their 10K: (Bold is ours to provide context re this post)

Stem Cell Sector Market Value Decreases 2.6% In March

Euphoria struck the Stem Cell Sector in January on the heels of the FDA's approval of the first embryonic stem cell clinical trial for Geron Corp.  Since then it's been pretty much down hill for every company in the sector with Geron, Osiris and StemCells Inc. experiencing the greatest decreases. Even President Obama's lifting of the Bush Administration restrictions on stem cell research didn't help as general market uncertainties washed across the Sector.

Comparing the Sector to the Nasdaq Composite, Sector market value decreased by 2.5% while the Nasdaq Composite Index increased by 11%.  If you're a StemCells Inc. investor you might want to pay attention to the fact that a number of insiders have sold since the beginning of April.

• Sector Individual Market Values EOM 3-09

• Sector Total Market Value 3-09

Thermogenesis Corp., Harvest Technologies, And Point Of Care Devices For Producing Autologous Platelet Rich Plasma (PRP)

There are a number of clinical trials underway involving various applications of PRP (Platelet Rich Plasma). Based not on clinical trial results but on anecdotal information, there seems to be a growing acceptance of the use of PRP in orthopedic injuries and wound healing with momentum being provided primarily in the arena of sports medicine. Both Harvest Technologies (Privately held) and Thermogenesis (KOOL - one of our sector companies) are entering the market with a point of care device that harvests bone marrow stem cells or PRP in 15 minutes. Thermogenesis' product will be called RES-Q. One model of the RES-Q is already available for sale to veterinarians. The model for human point of care use is scheduled to be available for sale in June 2009. In a press release issued today, Thermogenesis announced it will present a company study on the device at the International Society For Stem cell Therapy meeting May 3-6.  The Announcement read as follows:

(Adipose) Stem Cells To Grow Bigger Breasts

And, believe it or not, this isn't a Cytori Therapeutics press release headline.

Before we get yelled at we should point out that this the above headline is not ours either.  It's a headline from no less than the Times of London Health section.  We have used it here only to point out its  true significance. 

This is the first time to our knowledge that Cytori Therapeutic's (CYTX) Celution system for adipose stem cell extraction and processing has been implicitly rather than explicitly referred to in an article about cosmetic enhancement and adipose stem cells. Either the Cytori publicity department is falling down on the job or others at the point of medical application are picking up the baton.

We've been more than a little critical of Cytori's publicity releases and their spin.  Cytori makes the Celution series of machines which extract, process, and, through an additional Cytori product, store adipose stem cells. Cytori, faced with selling a machine that deals in adipose cells, had to promote a usage of the cells.  They have concentrated in cosmetic (post cancer breast reconstruction) and heart disease as their two primary arenas.

International Stem Cell Corporation And "Financial Independence"

Perhaps there is no greater story in the stem cell sector than International Stem Cell Corporation's.  An angel investor (Kenneth Aldridge) looking for a new venture is persuaded to think stem cells by his friend and co-investor in previous deals, a medical doctor (Keller).  The medical doctor has an affiliation with UCLA where a renowned Russian stem cell scientist (Dr. Revazova), who has come to the United States following the death of her husband and child, happens to be working.

The Russian scientist (Dr. Revazova) agrees to become chief scientist of a new venture, International Stem Cell Corporation, which becomes a publicly traded entity through a reverse merger in 2006.  It does so by folding the ownership of International Stem Cell of California and its small cell research subsidiary, Lifeline Cell Technology, into the new entity.

StemCells Inc., International Stem Cells Incorporated, Advanced Cell Technology: Degrees Of Separation In Stem Cell Research On Retinal Solutions

Talk about six degrees of separation, in the retinal field our sector companies are working with more like two. Three of our sector companies are currently working on stem cell solutions for diseases of the retina.  StemCells, Inc. (STEM) is collaborating with the Casey Eye Institute in preclinical studies on retinal degenerative diseases including age-related macular degeneration and retinitis pigmentosa.

Advanced Cell Technology (ACT), which holds many patents but has either contributed them to a new joint venture or licensed its technology, is currently concentrating solely on stem cell retinal solutions. The company is, "focused on using proprietary technologies to generate stable cell lines including retinal pigment epithelium (RPE) cells for the treatment of diseases of the eye, including macular degeneration."

Here's what ACT has to say on its web site about its pre-clinical research:

Geron Corporation Market Capitalization: Rational Thoughts In An Irrational Market

A truth about the small cap market is this: There is much less relationship between the intrinsic value of a company's tangible and intangible assets, the quality and quantity of its revenue growth and its prospects for earnings, than exists in larger cap, more mature (and therefore predictable) companies with established brands.  There is good reason for this. After all, how do you value a company like Geron that raises investor capital and uses it for research that may or may not produce tangible, steady streams of revenue at some point.

One of the ways is simply to guage how much investor capital it raised initially and how much a particular company has been able to raise over time.  Advanced Cell Technology, another Sector Company that has been generally respected for its research, has licensed its technology in troubled financial times, occasionally with very low caps on milestone payments to be paid and continuing royalties of 3% to 12%.  The short term capital raised through technology licensing in times of financial need totalled in the hundreds of thousands of dollars, not a marvelous return on ACT's $2.0 million to $12 million in annual R&D.

By contrast, Geron has $163 million dollars in cash and equivalent on its balance sheet as of 12/31/2008 and under $8 million in total debt.   That cash and more has been invested based on a level of confidence in Gern's research.  2008 revenues were $2.8 million with R&D expense of $54 million, a relationship indicative of how far the company may be from profitability.  In terms of investing and a perception of risk versus potential return, where Thermogenesis is a bet on the pass line, Geron is a bet on a hard eight.  So, again, how does an investor decide what to pay for a company like Geron?  One way to determine a price is simply to make a judgment about the quality of R&D that has been done, and, yes, what the investor community has thought of it when new funds were needed. Another way, the one more often used, is what someone else will pay for a share of the company's stock today.

Advanced Cell Technology Enjoys Greatest Sector Market Cap Percentage Increase Over Year End

We have reported Sector Individual and Total Market Cap changes on a monthly basis.  For a variety of reasons we're skipping a comparison of February valuations to those enjoyed by the sector at the end of January. Comparing February EOM market capitalization of Sector Companies to year end totals, Sector Capitalization actually decreased by approximately $90 million.

A new feature being started this month will show our sector companies according to the percentage change in market capitalization relative to individual market capitalization at Year End 2008.  The largest increases were enjoyed by Advance Cell Technology (294%), Pluristem Therapeutics (156%), and International Stem Cell (150%).  The entire list of sector companies and their relative percentage changes from year end are shown in the following PDF table:

• Sector % Changes in Market Capitalization Dec 2008 - Feb 2009

A number of news stories are suggesting that President Obama will lift the ban on funding for embryonic stem cell research on Monday.  Apparently as a result, after market trading on Friday was wild and wooly to say the least.  We'll be watching with interest what happens to individual and Sector market capitalization as a result of President Obama's announcement.

Canadian Researchers Find Alternative Approach To Produce Induced Pluripotent Stem Cells

Human Induced Pluripotent Stem Cells have been around since November 2007.  They were produced originally using retroviruses to deliver reprogramming proteins into adult skin cells. From the beginning researchers seemed to agree that the retrovirus technique had to go.  Perhaps now it has.  The research, lead by Andras Nagy of Mount Sinai Hospital in Toronto, was described in today's Washington Post as follows:

"Nagy and his colleagues in Toronto and at the University of Edinburgh in Scotland used a sequence of DNA known as a transposon, which can insert itself into the genetic machinery of a cell. In this case, the researchers used a transposon called "piggyBac" to carry four genes that can transform mouse and human embryonic skin cells into iPS cells. After the conversion took place, the researchers removed the added DNA from the transformed cells using a specific enzyme.

'PiggyBac carries the four genes into the cells and reprograms the cells into stem cells. After they have reprogrammed the cells, they are no longer required, and in fact they are dangerous," Nagy said. "After they do their job they can be removed seamlessly, with no trace left behind. The ability for seamless removal opens up a huge possibility.'"

"Now You See It, Now You Don't" - The Latest Cytori Press Release

Cytori Therapeutics, one of our Stem Cell Sector Companies, has demonstrated a solid business plan and excellent (or we presume so, since few details are yet available) partnering agreements with the likes of Olympus Corporation and Green Hospital Supply. In fact these partners have provided a major portion of Cytori's operating cash requirements while it goes through the process of either waiting for, or creating, a market for its Celution System.  The Celution System extracts, processes, and, if necessary, stores adipose stem cells.  Cytori is attempting to create a market for Celution by supporting and/or tracking various tests using adipose derived stem cells.

International Stem Cell Corp. (ISCO): The Technology - License Agreements With Advanced Cell Technology and Biotime, Inc.

Geron is getting the publicity of late as a result of the FDA's approval of a trial to determine the safety of its spinal cord embryonic stem cell application.  However, three much smaller (in terms of their market caps) firms in our stem cell sector may have research results in the embryonic arena equally as interesting.  Two of these firms, BioTime, Inc. and Advanced Cell Technology, have Dr. Michael West in common.  West was CEO of Advanced Cell Technology from 1998 to 2007 before becoming CEO of Biotime, Inc. These two companies and International Stem Cell Corp. are associated by license and product development agreements.

Geron Corporation (GERN) In The Cross Hairs

We recently posted about Geron's embryonic stem cell application for spinal trauma receiving the first FDA approval and the effect the announcement had on Geron's market capitalization and that of the other members of our stem cell sector.

Geron closed yesterday at $7.77 a share and opened this morning at $6.68, to which we say, "Welcome to the world of Biotech, stem cells and the NASDAQ."  Today's closing price was $6.38. This Thursday closing vs Friday opening value represented a market value decrease of over $86 million, a decrease that occurred while the markets were closed. 

To put this in perspective, on February 6, following a run up in stock price that began with the FDA approval of its first phase trial, Geron's share price closed at $8.05 having increased from a closing price of $5.21 the day before the FDA announcement.

The Challenge Faced By Our Stem Cell Sector Research Companies

Our Stem Cell Sector consists by definition of either small or micro cap companies, most of which are involved in basic research toward producing a scalable, off-the-shelf product, or line of products, developed from adult or embryonic stem cells for use in either direct medical therapies, or in basic research by academic or other corporate institutions.  If they're not doing this, or in some cases even if they are, they're coming up with media and reagents that assist in such product development or research.

Companies researching stem cell therapies, whether from embryonic or adult cells, must cause their chosen stem cell to differentiate (change) into a specific type of cell necessary for the sought after therapy.  This is done by finding the right set of culture conditions (these consist of combinations of proteins, environmental factors, temperatures, salts, etc.) that change specific cell types into cells that cure targeted diseases or effect desired tissue repairs. 

With The First Embryonic Stem Cell Trial Announced, Where Does Stem Cell Research Stand? Where Does Big Pharma Stand?

"Bionic implants that can repair damaged nerves and other tissues in the human body have come a step closer, thanks to Edinburgh University researchers." This according to the Financial Times on Wednesday.  The paper went on to say the Edinburgh team announced it had discovered how to grow nerve cells and embryonic stem cells in detailed patterns on silicon chips.  We've come a long way in a short time, less than ten years. Big Pharma must be looking at developments such as these in a way that's somewhat analogous to a particularly intelligent ape watching an episode of CSI.

Stem Cell Sector Market Capitalization Increases 36% In First Month of 2009

Market capitalization of our Stem Cell Sector companies increased by $530 million or 36.5% in January achieving a total capitalization among the 21 companies in excess of $2 billion for the first time.  This was in the context of a 6.4% decrease in the Nasdaq Composite during the same period.