Stem Cell Research

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.

Convergent Business Plans: BioHeart Inc., Cytori Therapeutics, Harvest Technologies and Thermogenesis Corp.

We changed the title of this post to reflect a quietly announced business plan adjustment made by Thermogenesis Corp. this morning.  Cytori, and Harvest Technologies (Harvest is a privately held company and is therefore not included in our Stem Cell Sector companies) make medical devices that extract and process adipose and bone marrow stem cells respectively.  Cytori also makes a cryopreservation device which is currently sold in Japan.  Bioheart has an agreement with Tissue Genesis that provides Bioheart an exclusive, worldwide right to use and or distribute the TGI 1200 an adipose stem cell extraction and processing device (Bioheart is also involved with cell therapies for direct and indirect repair of heart tissue).  Thermogenesis manufactures devices for the extractions, processing and storage of cord blood stem and related cells. 

Geron Recieves FDA Approval To Begin World's First Human Clinical Trial of An Embryonic Stem Cell-Based Therapy

This is Monday after the Friday morning announcement of the first Phase I trial of an embryonic stem cell therapy.  At this writing Geron's market cap ($645M) is now greater than that of Osiris Therapeutics ($619M).  Osiris is in Phase III trials with Prochymal (not for spinal cord repair), a mesenchymal stem cell therapeutic application derived from adult bone marrow stem cells.  Everything points to Osiris obtaining approval to market Prochymal by the end of 2010.  Prochymal will in all probability be the first stem cell therapeutic application approved for market distribution.

Geron's market cap totaled $415 million at close of market on Thursday.  This morning it hit $650 million before ending the day around $645M.  This $230 million or so increase in market cap is the direct result of the FDA acceptance of the idea (based on the largest investigational drug application - 22,000 pages - ever submitted) that embryonic stem cells are safe enough to test in a small number of human beings (8 to 10 people is the test size).

The Money Raising Sagas Of Advanced Cell Technology Inc.

We write from time to time about the difficulty of raising capital in small and micro cap stem cell companies. This difficulty is especially true in the current economic environment.  Advanced Cell Technology (ACT), like some of our other Sector Companies including Geron and Osiris Therapeutics, began by using investor capital to do basic research.

As a business plan, the patent and license business model followed by ACT is always vague and undefined simply because the company does not know where the research will lead or how soon it will get there. This is particularly so in a nascent industry without existing products or product applications except in very specific and established areas that are not particularly sexy to new entrants (reference here is to the use of bone marrow transplants to cure various blood cancers. Stem cells have for years been the principle players in bone marrow transplants.)

The development of embryonic stem cell lines in 1998 and the demonstration of induced pluripotency in 2007 have been and are the driving forces for most of the new investment in the profit making side of what will eventually be referred to collectively as regenerative medicine.

Burning investor capital through the research phase is expensive enough.  But in some business models that call for moving beyond patent and license and into off-the-shelf products for therapeutical use, you not only have to survive through product development but you've got to finance clinical trials up to and through phase III in order to obtain FDA approval.  This requires very patient investors with very deep pockets or a very optimistic public market place in which to issue and sell additional securities. Both are in short supply in this financial environment.

Osiris Therapeutics Takes Another Giant Step Forward Toward FDA Marketing Approval For Prochymal

FDA approval to market a stem cell product for regenerative applications is a major benchmark yet to be achieved by the nascent regenerative medicine industry. Now, It looks increasingly likely that the first FDA approved stem cell biologic will be Osiris's Prochymal. Prochymal, a formulation of adult mesenchymal stem cells obtained from the bone marrow of healthy adult donors, is designed to provide therapeutic benefit by controlling inflammation, promoting tissue regeneration, and preventing scar formation.  Prochymal is in phase III clinical trials for GvHD and Crohn's disease.

Osiris has announced a successful FDA pre-Biologics License Application meeting for Prochymal in the treatment of graft-versus-host disease (GvHD).  GvHD is a life-threatening immune reaction that can occur in patients following bone marrow transplantation. Steroids are typically used to control symptoms of the disease, although they are only effective in approximately 35% of patients. Mortality can exceed 85% for patients with GvHD that do not respond to steroids.

Genzyme's Mozobil And Results Of British Study Suggest Bone Marrow Stem Cell Numbers Might Be Increased Prior To Extraction

Bone marrow transplants have been used successfully for many years with the result that bone marrow derived stem cells are still the most clinically studied of all non-embryonic stem cells.  A continuing problem in therapeutic application has been the number of cells that could be collected.  This has been an issue with blood-derived stem cells in general.  Thermogenesis, one of our sector companies, and a producer of medical devices involved in blood stem cell retrieval and storage, has introduced (mid year 2006) a product that captures a high percentage of cord blood derived stem cells.  Thermogenesis describes the product as follows:

"The newly developed AutoXpress (AXP) is designed to provide cord blood banks a semi automated means of collecting mono-nuclear cells (a stem cell rich population) from cord blood into a fixed volume (20 ml) within a closed sterile bag set in approximately 30 minutes. Recent Alpha testing demonstrates a recovery of viable mono-nuclear cells of  greater than ninety-five percent."

The stem cell numbers collection problem is the reason Thermogenesis advertises the high collection rate for the AXP.  Very recently bone marrow stem cells have been added to those that can be collected with Thermogenesis products through a modification of the AXP. The new MarrowXpress has recently received CE-Mark and FDA approval and is apparently just now being introduced to the market place.

Bioheart, Inc. And Cytori Therapeutics: The Difference Is In The Business Plan

Bioheart, Inc. and Cytori Therapeutics are included in our small cap sector companies.  Both extract and create a broth of stem and other autologus, adipose derived, regenerative cells (here, as in the medical devices the companies are relying upon, there are proprietary differences) which can be reintroduced to the patient for therapeutic use.  While Cytori (perhaps because of its early partnership with Olympus) has pressed for regulatory approval and market introduction in Europe and Japan, Bioheart has been attempting to gain approvals in the U.S. and European markets.  Bioheart has a market value of 11 million; Cytori's market value is 111 million.

Private Competitors Of Publicly Listed Stem Cell Medical Device Manufacturers: Thermogenesis Vs. Cytori Therapeutics (3)

Publicly traded companies, even small caps like those in our stem cell sector, just don't like talking about their privately-owned competitors.  For us here at Stem Cell Digest the private companies are a problem also.  Our readers can't invest in them, we have no idea how they're capitalized or how widely distributed their products are, and they do not release revenue and profit numbers.

Nevertheless, they are a factor, especially as they impact companies like Cytori Therapeutics that imply through press releases their singular ownership of a particular market. In the case of Cytori, the 'owned' market is adipose (fat) derived stem cells and their applications. In fact what they do is make devices that might or might not be involved in existing or future procedures that utilize the particular type of stem cell in which they specialize.

Stem Cell Sector Market Values Improve In December

After three months of sector downward price trends in the majority of our companies, several companies improved enough in December to raise total sector market values.  Is this a trend for 2009?  We certainly hope so.

Individual stem cell sector market values can be found here.

Sector monthly market values for 2008 compared to changes in the NASDAQ COMPOSITE can be found here.

Wishing You A Happy And Prosperous 2009

Judging from the pace of research development in 2008, 2009 could be a benchmark year for our stem cell sector stocks and for regenerative medicine in general. The first stem cell therapeutic applications could receive FDA approval in the coming year. Watch Osiris Therapeutics.

During 2009 we will be informing you on company strategies and developments to a greater degree than we have in the past.  We continue to believe that success in therapeutic application is a particularly significant measure of our understanding of the underlying biology behind stem cell and regenerative therapies.

So, where possible, we will compare company strategies in the context of research and therapeutic device development strategies and events.  We are watching what will in all probability be the greatest change in medicine since we humans began chewing on medicinal leaves.  The real question is how long the establishment of regenerative therapies will take, exactly what form they will take, and which companies will benefit.

Have a wonderful, warm and productive 2009.

The Thermogenesis (KOOL) Cytori Therapeutics (CYTX) Comparison (2)

As we noted in our previous post, both Cytori and Thermogenesis are in the same basic business.  Both make proprietary devices that extract tissue, separate out stem and other desirable cells, and cryopreserve the result, if desired. Applications requiring bone marrow cells in the area of blood cancers represent a mature but growing application relative to adipose cells.  While theoretically therapeutically applicable, adipose cells are still in a proof of concept phase with various trials taking place.  The advantage claimed by Cytori is that sufficient adipose cells are extracted to make its device Point of Care, whereby cells can be re-administered to the necessary place in the body as immediate therapy. All well and good when a broad market for Point of Care adipose stem cells arrives. MarrowXpress and RES-Q, new products being introduced by Thermogenesis, are also Point of Care devices.

The Thermogenesis (KOOL) Cytori Therapeutics (CYTX) Comparison (1)

Both KOOL and CYTX are medical device manufacturers in the business of extracting, separating, and -- if necessary or desirable -- storing stem cells in single use bag sets, thus providing both companies with the razor/razor blade revenue model.  CYTX removes cells from body fat (adipose tissue), while KOOL removes them from cord blood.  KOOL has added products for peripheral blood (RES-Q) and bone marrow (MarrowXpress) but both are just now in the process of moving to the market. All of KOOL's stem cell products except RES-Q have received FDA approval and approval in Europe. CYTX is seeking additional approvals in Europe and intends to proceed with FDA approval of it's devices in the U.S.

Thermogenesis Corp. (KOOL) and Cytori Therapeutics (CYTX), Two Degrees of Separation

This is an interesting aside to our upcoming review of these two companies, their business plans and products.  Thermogenesis' CEO, William Osgood, recently left Thermogenesis Corp. on virtually no notice, the apparent result of a difference of opinion about the spectrum of new stem cell arenas the company should enter more or less simultaneously, especially given the current general economic uncertainties.  Osgood's departure may also have had, probably also at least partially had, to do with a steadily declining stock price since he became CEO and a second major recall of AXP (AutoXpress) storage bags which are a large and growing part of the company's income stream.

Stem Cell Sector Company Reviews, Business Models, Product Updates

The juxtaposition of the Obama administration's apparent positive view on the future of regenerative medicine, the deteriorating economy, the rapidly accumulating research results in the stem cell arena, and some updated product development time lines in certain of our sector companies, combine to create a prism through which the business models of sector companies can and should be reviewed.So that's what we're going to do.

We will be taking a look at several of sector companies beginning with Thermogenesis Corp (KOOL).  We start with KOOL simply because the company is the first in the sector to have passed the $20 million in annual sales milestone.

KOOL is a manufacturer of proprietary cell processing and storage equipment. Cytori Therapeutics is in exactly the same business, so comparison of the two companies and their approach to the relatively new and rapidly growing therapeutic application of stem cells is revealing.  Cytori will be the second company reviewed here.  Stay tuned.

Cash Infusion Update: Stem Cell Sector Companies

We recently posted about the relative cash and cash vs. debt condition of our twenty stem cell sector companies.  Advanced Cell Technology, Pluristem and Neostem have each raised or added to outside commitments for funds in the last few days.  The new funds and fund commitments are not included in the spreadsheet figures available at the bottom of the post highlighted in this paragraph.

Transition Holdings Ltd, an Irish institutional investor, has increased its committment to cash-strapped Advanced Cell Technology (ACTC.PK) to $1 million in the form of one-year 7% convertible debentures which will be taken down over the next six months.