Stem cells Bioscience report-FYI
September 13, 2000
AXXel's Bioscience Newsletter
Stem Cell Research and the companies on the leading edge
ASTM, CRA, GERN, NEXL, INCR STEM
"Stem cells - cells that have the ability to divide for periods in culture and to give rise to specialized cells"
Using, AXXel Knutson's
VTAR™
["Volume Trade Analysis Research"™]
"Manage the risk…the profits will take care of themselves"
"In this business, being right is not as important as making money…consistently, and one of primary tenets of the quest is the avoidance of the 'obvious risk'"
Securities offered through
First Allied Securities, Inc.
Member NASD & SIPC
197 Mountainview Road - Warren - NJ - 07059
Email: axxel@blast.net or tradingweapon@aol.com
Telephone: 908.647.5750 FAX: 708.585.6185
First Allied is registered in all states. Mr. Knutson is registered in all states
TradingWeapon™ VTAR™ [Volume Trade Analysis Research™] TradingWeapon & TradingEngine is Trade and service marked by and owned by Axxel Knutson.
© 1999-2000 all rights reserved, Axxel Knutson
["Tradingweapon.com" is the business name for AXXel Knutson, who is a Registered Principal of an independently owned office of Supervisory Jurisdiction [OSJ] with First Allied Securities, Inc. TradingWeapon.com offers all of its securities business through First Allied Securities, Inc., a member of the NASD/SIPC. Bear Stearns Securities Corp. is the clearing agent for First Allied. Securities. Inc.
Genetic analysis is moving from academia to commercial applications and this transformation, almost at light speed, is of crucial importance to investors because we believe that this frontier offers very measurable opportunity. Tony L. White, the Chairman of Perkin-Elmer in 1998 said it best: "…computers made the transition from being intimidating instruments locked behind doors to being commonplace necessities of everyday life. That transition took place by driving costs down, expanding the uses of computers, and integrating applications to make systems easier to operate." [Perkin-Elmer Annual Report, 1998].
We doubt that stem cell technology will find it's way into Aunt Edna's kitchen anytime soon…but it will get there…it will.
Even Mary Tyler Moore gives the group a push and visibility:
"WASHINGTON, Sept. 13 /PRNewswire/ -- Mary Tyler Moore, International Chairman of the Juvenile Diabetes Foundation (JDF), will testify Thursday, September 14, before the Senate Appropriations Subcommittee on Labor, Health and Human Services and Education in support of the government providing federal funding for stem cell research. Ms. Moore and JDF applaud the recently released National Institutes of Health (NIH) guidelines that will enable this to happen.
Stem cell research offers hope to the more than 16 million Americans who suffer from diabetes because of the potential ability for scientists to turn stem cells -- the most basic building blocks of the human body -- into insulin-producing cells.
"Supporting stem cell research with federal dollars is vital, and it's timely," Ms. Moore said. "With the pace of today's promising scientific advances, this research could finally open the door to the cure for diabetes."
Who can argue with Mar? Certainly not Lou Grant.
Stem Cells…
U gottem…U needem
Stem cell research is upsetting the bioscience apple cart [I saw one of those carts upset last week on the Long Island Expressway [Exit 51]. You can see just about every manner of life on the LIE including bioscience apple carts.
"Stem cell research is upsetting the long-held view that in animal embryogenesis,
position is everything. The idea that a cell's fate is sealed when it becomes part of endoderm, mesoderm, or ectoderm--the primary germ layers of the embryo--was close to gospel. Generations of developmental biologists meticulously derived "fate maps" tracing the trajectories of cells in forming embryos. Refuting that notion are recent observations that brain (ectoderm) can become bone marrow (mesoderm), that bone marrow can become liver (endoderm), and other altered fates not yet published. "The language of developmental biology simply doesn't fit anymore. In the embryo, liver is derived from endoderm, and bone marrow from mesoderm. One shouldn't be able to turn into the other, but mesoderm can become endoderm," says Neil Theise, an assistant professor of pathology at the New York University School of Medicine." [Ricki Lewis article in The Scientist 14 [5]:1 March 6, 2000].
Here is a useful discussion of stem cells and what they can potentially accomplish: by Nobuko Uchida, PhD., leader of the stem cell research team at StemCells, Inc. [STEM] from the Keystone Symposium 1.21.00:
"Stem cells are rare, undifferentiated cells that can both duplicate themselves ("self-renew") and differentiated (functionally specialized) cell types that constitute the various tissues or organ systems of the human body.
The ability to isolate and culture normal human brain stem cells is a breakthrough that could open the way to utilizing these cells to replace or repair diseased or damaged tissue in a patient with
neurological or neurodegenerative disorders," Dr. Uchida said. "Highly purified normal stem cells, which have not been genetically modified with cancer genes to make them grow, may be very suitable for transplantation and may provide a safer and more effective alternative to therapies that are based on cells derived from cancer cells or from an unpurified mix of many different cell
types." Of this there is little doubt…it has already happened.
"The researchers additionally reported that, in animal models, they were able to take these purified and expanded stem cells and transplant them back into intact host brains, where they engraft and grow into functional neuronal and glial cells. As long as seven months later, the transplanted human cells still survived and had migrated to specific functional domains of the host brain, with no
sign of tumor formation or adverse effects on the mouse recipients. This finding shows that in some relevant respects, the implanted cells act like normal cells."
Finding and isolating human brain stem cells
Additionally, Dr. Uchida continues,
"Although scientists suspected that the human brain contained stem cells, they had not previously been able to purify the stem cells directly from fresh brain tissue. The reason for this inability, Dr. Uchida explained, could be attributed to technical hurdles of sorting cells from brain tissue, which would have hampered the ability to rapidly identify suitable surface markers on these cells.
Working in collaboration with Drs. Fred Gage (The Salk Institute) and Irving Weissman (Stanford Medical Center), two internationally recognized leaders in stem cell research, the StemCells team was first to succeed in identifying antibodies to surface markers on human brain stem cells. By using an antibody approach and state of the art instrumentation, the scientists were able to purify the stem cells away from other cells in the brain tissue.
Potential applications of isolating human brain stem cells
Neurodegenerative diseases such as Parkinson's and Alzheimer's disease, stroke and epilepsy, affect more than 5 million people in the United States alone, and currently no effective long-term therapies are available. The transplantation of human neural stem cells could potentially provide a way to repair tissue damaged by such diseases and injuries that affect the central nervous system.
The ability to isolate human brain stem cells directly from fresh, uncultured tissue is important for several reasons. First, it provides a source of genetically unmodified, normal stem cells for
transplantation that is uncontaminated by other unwanted or diseased cell types. Second, it opens the way to better understanding the properties of these cells and how to possibly manipulate them in order to treat specific diseases. For example, the stem cell derived neural cultures can be genetically modified to secrete needed proteins for the brain. Finally, the efficient engraftment of these non-transformed normal human stem cells into host mouse brains means that the cell
product can be tested for its ability to correct deficiencies, in mouse models, of various human neurological diseases. This technology could also provide a unique animal model for the testing of drugs that act on human brain cells."
Some Groups Look on Stem Cell Technology as a Frankenstein. "…the University of Nebraska Medical Center in Omaha felt the sting when right-to-life groups learned that researchers were using stem cells obtained from an abortion clinic, they alerted the governor, who asked the president of the university to halt the practice. Developmental biologist, L. Dennis Smith, informed the governor that fetal cells had been so used in research since the 1950s, and they had made polio vaccines possible." [same article]. Those who wish additional information on this aspect of the science can go to: www.nhgri.gov/ELSI.
"National Human Genome Research Institute." Additionally, information of interest is at www.nih.gov.
This Announcement Moved the Stocks off in August -
NIH Publishes Final Guidelines for Stem Cell Research
The National Institutes of Health (NIH) today put on display at the Federal Register its final Guidelines for research involving human pluripotent stem cells. The Guidelines detail the procedures to help ensure that NIH-funded human pluripotent stem cell research is conducted in an ethical and legal manner.
Such research promises new treatments and possible cures for many debilitating diseases and injuries, including Parkinson's disease, diabetes, heart disease, multiple sclerosis, burns and spinal cord injuries. The NIH believes the potential medical benefits of human pluripotent stem cell technology are compelling and worthy of pursuit in accordance with appropriate ethical standards. The NIH has developed the Guidelines for stem cell research in a careful and deliberate way to assure that the ethical, legal, and social issues relevant to human pluripotent stem cell research are addressed prior to NIH funding of that research.
Human pluripotent stem cells hold great promise for advances in health care because they can give rise to many different types of cells, such as muscle cells, nerve cells, heart cells, blood cells, and others. Further research using human pluripotent stem cells may help scientists generate cells and tissue that could be used for transplantation to treat many diseases; improve understanding of the complex events that occur during normal human development and of what goes wrong to cause diseases and conditions such as birth defects and cancer; and change the way drugs are developed and tested for safety and potential efficacy.
The Guidelines prescribe the documentation and assurances that must accompany requests for NIH funding for research using human pluripotent stem cells from human embryos or fetal tissue. The Guidelines state specific criteria for informed consent and establish a Human Pluripotent Stem Cell Review Group to review documentation of compliance with the NIH Guidelines.
In addition, the Guidelines delineate areas of research involving human pluripotent stem cells that are ineligible for NIH funding.
Requirements for Investigators Applying for Funds
A request for NIH funds for research using these cells must include a signed assurance that the cells were derived from human embryos in accordance with the Guidelines and that the institution will maintain documentation in support of the assurance.
This assurance must also affirm that:
The human pluripotent stem cells to be used in the research were, or will be, obtained through a donation or through a payment that does not exceed the reasonable costs associated with the quality control, processing, transportation, preservation, and storage of the stem cells.
The proposed research is not a class of research that is ineligible for NIH funding.
Investigators must also submit:
A sample informed consent document, with patient identifier information removed, and a description of the informed consent process along with documentation of IRB approval of the derivation protocol.
An abstract of the scientific protocol used to derive human pluripotent stem cells along with a title of the research proposal that proposes the use of human pluripotent stem cells.
Ensuring Compliance with the Guidelines
Investigators requesting NIH funds for research using pluripotent stem cells will need to provide documentation that they are in compliance with the Guidelines prior to receiving NIH funds for this class of research. Submitted documentation will be reviewed by
a newly created NIH working group called the Human Pluripotent Stem Cell Review Group (HPSCRG).
Members of the working group will:
Review documentation of compliance with the Guidelines for funding requests that propose the use of human pluripotent stem cells
Advise the NIH Center for Scientific Review Advisory Committee (CSRAC) of the outcome of their review, which, if appropriate, will be approved by the CSRAC. This decision will be forwarded to the funding Institute or Center.
Hold public meetings when a request proposes the use of a line of human pluripotent stem cells that has not been previously reviewed by the HPSCRG.
In no event will NIH fund research or allow existing funds to be used for research using human pluripotent stem cells derived from human embryos or human fetal tissue until the derivation protocol has received HPSCRG review and CSRAC approval. Continued compliance with the Guidelines is a term and condition of the NIH award.
More detailed analysis of stem cells is at:
nih.gov
And here are useful definitions:
DNA - abbreviation for deoxyribonucleic acid, which makes up genes.
Gene - a functional unit of heredity which is a segment of DNA located in a
specific site on a chromosome. A gene directs the formation of an enzyme or other protein.
Somatic cell - cell of the body other than egg or sperm.
Somatic cell nuclear transfer - the transfer of a cell nucleus from a somatic
cell into an egg from which the nucleus has been removed.
Stem cells - cells that have the ability to divide for indefinite periods in culture
and to give rise to specialized cells.
Pluripotent -capable of giving rise to most tissues of an organism.
Totipotent - having unlimited capability. Totipotent cells have the capacity to specialize into extraembryonic membranes and tissues, the embryo, and all postembryonic tissues and organs.
Source: NIH.
NOW THE STOCKS
AASTROM BIOSCIENCES INC (NASD: ASTM-$ 2.59. 52 Week range. $0.31 - 9.06. Shares O/S: 30.785 M. Market Cap: $79.856 M. 24 Frank Lloyd Wright Drive
Ann Arbor, MI 48106
ASTM is engaged in the development of automated clinical systems designed to enable therapeutic procedures using living cells in the treatment of cancer and other diseases and in the restoration of normal tissue. Leading product is the AastromReplicell System.
From the company most recent 10Q: "
Aastrom Biosciences, Inc. is developing its products to address the growing number of diseases potentially treatable by cell therapy. In addition to stem cell therapies used in cancer treatment, many emerging cell therapies are being developed at academic centers and other companies. The AastromReplicellTM System is designed to enable the transition of these often highly technical laboratory procedures, into practical medical treatments with greater availability to patients. The AastromReplicellTM System is intended to mitigate current cell quantity limitations in cell therapy procedures, and enable hospitals to directly produce cells for treatment, a capability previously hampered by technical difficulties.
Aastrom Biosciences, Inc. is pioneering the development of proprietary clinical systems including the AastromReplicellTM System, a first of its kind product, to enable physicians and patients greater accessibility to cells
used for therapy. Aastrom has received patents covering methods and devices for the ex vivo production of human
stem and other types of cells, as well as for the genetic modification of stem cells. The AastromReplicellTM System is under development, and is not available for sale at this time in the U.S., except for research and investigational uses."
It is very capable of movement-just note the following:
"Aastrom shares rocket 50
percent
By Debra McGarry, CBS MarketWatch
Last Update: 4:50 PM ET Mar 15, 2000
ANN ARBOR, Mich. (CBS.MW) -- Aastrom Biosciences
shares rocketed 50 percent Wednesday after the company announced positive results for human stem cell transplant
research in breast cancer patients.
The Ann Arbor, Mich.-based company (ASTM) develops clinical systems to enable therapeutics
procedures using living cells in the treatment of cancer and other diseases. Shares advanced 2 9/16 to close at 7 5/8 on volume of 22.5 million shares.
Aastrom along with Loyola University Medical Center published the results in the March 15 edition of the journal Blood.
Stem cell transplantation can be used after cancer patients receive chemotherapy or radiation therapy to help restore healthy bone marrow and re-establish normal blood and immune system function.
The human stem cells used for transplantation were produced using AastromReplicell(TM) Cell Production
System.
"The results from this study represent a significant advancement in stem cell transplantation as they demonstrate that transplantation of ex vivo produced stem cells can effectively restore a patient's blood and immune
system as well as offer a procedure that may reduce or eliminate the re-infusion of contaminating tumor cells," said
Dr. Patrick J. Stiff, Director of the Bone Marrow Transplantation Program at Loyola University Medical Center. "
We rate the stock a "Speculative Buy" based upon its long-term merit but cautioned by continued losses and its burn rate vs. its cash position. We believe that the company will be able to acquire investment going forward but perhaps at a cost to existing shareholders relative to dilution. We remain cautious, but believe speculators can begin to acquire particularly upon any break of $2.00 even.
aastrom.com. Aastrom chart below-à
Chart is courtesy of www.clearstation.com
PE CORP CELERA GENOMICS (NYSE:CRA-$98.75) 52 week range is a staggering $15.19 - 276.00. Shares O/S: 57.141 M. Market Cap: $5642.707 M
Engaged principally in the generation, compilation, sale, and support of genomic information and related information management and analysis software- discovery, validation, and licensing of proprietary gene products and genetic markers. Although, not specifically gene cell by any stretch, this company is still so important as to make it crucial to include.
Chart is courtesy of www.clearstation.com
We suggest accumulation under $100.
GERON CORPORATION (NASD: GERN: $29.875). 52 week range: $9.25 - 75.88. Shares O/S: 21.577 M Market Cap: $652.701 M
Geron is a biopharmaceutical company focused on discovering, developing and commercializing therapeutic and diagnostic products for applications in oncology, drug discovery and regenerative medicine. Geron's product development programs are based upon three patented core technologies: telomerase, human pluripotent stem cells transfer. [according to GERN]
Chart is courtesy of www.clearstation.com
As is true with most biotech firms, it is a constant battle to obtain funds at rational rates or with minimum dilution. GERN is no exception, but that now appears to be in the stock and GERN has been successful in acquiring funds. See: biz.yahoo.com
Recommendation: We continue to suggest accumulation, particularly under $30 when possible, as the intermediate-term base is in the twenties. The spike of $75.88 is, of course an attractive target but attainable only if the levels of speculation remain modest. Positions taken in the $30's represent value and quite acceptable as entry points. We will see. Stay tuned.
INCARA PHARMACEUTICALS (NASD:INCR - $ 3.50). 52 week range another massive $.50 - 11.00. Shares O/S: 7.284 M. Market Cap: $ 28.685 M
Incara Pharmaceuticals Corporation (www.incara.com) is developing a diversified portfolio of proprietary therapies oriented to major advances in treatment of diseases afflicting large patient populations. The Company's three current programs include liver precursor cell therapy for the treatment of liver failure, an ultra-low molecular weight heparin for the treatment of inflammatory bowel disease and catalytic antioxidants for treatment of stroke and chronic bronchitis.
It is also losing money.
From the most recent quarter:
Incara reported a net loss of $2,944,000, or $.41 per share basic and diluted, for the three months ended June 30, 2000, and a net loss of $4,481,000 or $.75 per share basic and diluted for the nine months ended June 30, 2000. The nine-month period for fiscal 2000 included a one-time gain of $9,751,000 for the sale of a division in December 1999 and a noncash charge for purchase of in-process research and development of $6,664,000 incurred with the acquisition of the minority interests of two subsidiaries in March 2000. comparison, the Company reported a net loss of $4,119,000, or $.56 per share, for the three months ended June 30, 1999 and a net loss of $16,416,000 or $2.24 per share for the nine months ended June 30, 1999. As of June 30, 2000, Incara had cash and marketable securities of $8.6 million.
Chart is courtesy of www.clearstation.com
Speculative investors that think Incara is capable of staying ahead of ultimate doom can buy, of course, but those buy points had better be for trading purposes and only with risk assets. We like the fact that it did not move in concert with other stocks on the NIH announcement and that puts the stock ahead technically at the moment. We are constructive technically around the $2.30 range and neutral/negative fundamentally based only on the balance sheet. We will monitor the financial statements for improvement but that is where it stands.
Incara's take on liquidity: "Liquidity and Capital Resources
"At June 30, 2000, we had cash and cash equivalents and marketable securities of $8,644,000, an increase of $3,684,000 from September 30, 1999. Cash increased due to the receipt of $11,000,000 from the sale of IRL, offset by operating costs for the nine
months. We believe we have adequate financial resources to fund our current operations at least into calendar 2001."
Well, 2001 is about 90+ days away.
NEXELL THERAPEUTICS INC (NASD: NEXL-$ 10.63. 52 week range: $4.00 - 67.00. Shares O/S: 18.841 M. Market cap: $ 205.380 M. Originally out of Baxter International, Inc. [BAX-81] and still own about 35% of the company.
Is an early commercial stage biotechnology company that is engaged in the development, manufacture, marketing and distribution of specialized instruments, biologicals, reagents, sterile plastics sets and related products used in ex vivo cell research and therapies. NEXL is able to take stem cells from blood, avoiding bone marrow harvesting, by coating magnetic beads that contain an antibody that is recognized by antigens on cells to isolate cells via magnet and to further recognize healthy cells, grow them and re-introduce those stem cells, with no cancer cells. Since the patient is receiving his/her own cells there are few rejection problems. This is highly attractive to those involved with high dose chemotherapy because the cells re-entering the patient are "cleaned" of cancer cells and are the cells of the patient resulting in nearly nil rejection problems.
Approval for the technology has just recently been approved for use in the United States and represents the launch phase for NEXL's major market and we can likely expect 50%+ growth in sales and the same numbers and perhaps more for the following years.
NEXL's stem cell selection process is the state of the art and is the leader. The company is rated by us as a buy and would transit to a "Strong Buy" upon a break of the even decade number of ten.
We suggest you listen to the www.radiowallstreet.com interview with
L. William McIntosh, President and COO and you will get an excellent overview of NEXL's basic business and the technology of stem cell research in general. Highly recommended. radiowallstreet.com
You may also wish to listen the writer's interview relative to stem cell companies on Radio Wall Street at
radiowallstreet.com. [recommended, but not highly].
Chart is courtesy of www.clearstation.com
STEMCELLS INC (NASD: STEM-6.40) 52 week range $1.00 - 20.00. Shares O/S: 19.613 M. Mark cap: $136.073 M
StemCells is focused on the discovery, development, and commercialization of stem cell-based therapies to treat diseases of the central nervous system, pancreas, and liver. The Company's stem cell programs seek to repair or repopulate neural, pancreatic, and liver tissue that has been damaged or lost as a result of disease or injury. On May 23, 2000 the name of the Company was changed to StemCells, Inc. from CytoTherapeutics, Inc
Chart is courtesy of www.clearstation.com
STEM is one of the more exciting, and volatile, of the companies we follow. The stock is capable of strong moves in any direction and market makers do not "stand and deliver" supply stock on the upside or providing liquidity on the downside. So what else is new…this is not a specialist system a la the NYSE, now is it?
The cash position of STEM has improved. Note the following:
"
The change in the Company's focus to its platform stem cell technology has not yet resulted in revenues from collaborative relationships, compared to $2.5 million in the comparable quarter in 1999. Total expenses in the current quarter were $1.9 million, down $2.5 million or 56% compared to the same period in the prior year. Net loss was $.03 per share, compared to $0.10 per share for the second quarter of 1999. Cash, cash equivalents and short-term investments totaled $5.5 million on a consolidated basis at the end of the second quarter, compared to $11.8 million one year ago. These numbers do not include the effect of the recently announced purchase of $4 million of the Company's common stock by a major investment fund."
Here is the detail on that transaction:
"The Fund purchased the Company's common stock at $4.33 per share. The Fund will be entitled to receive additional shares of common stock on eight dates beginning six months from the closing and every three months thereafter. The number of additional shares to which the Fund will be entitled on each date will be based on the number of shares of the common stock the Fund continues to hold on each date and the market price of the Company's common stock over a period prior to each date. The Company will have the right, under certain circumstances, to cap the number of additional shares by purchasing part of the entitlement from the Fund. The Fund also received a warrant to purchase up to 101,587 shares of common stock at $4.725 per share. This warrant is callable by StemCells at $8.6625 per underlying share. In addition, the Fund has the option for twelve months to purchase up to $3 million of additional common stock."
DISCLAIMER
Investment decisions should not be based solely on our proprietary indicators, which are intended as an adjunct to your additional analysis. Please accept these comments as market commentary. We do not intend these comments to replace detailed fundamental analysis. We urge you to accomplish that additional research via your contacts on the Internet or through a trusted financial advisor. If you want additional information on any of the securities discussed within, we will give it upon your request.
This report has been prepared from original sources and company data we believe to be reliable, but we make no representation as to its accuracy or completeness. This report is published solely for information purposes. It is not to be construed either as an offer to buy or sell or the solicitation of an offer to buy or sell any security or the provision of or an offer to provide investment services in any state where such an offer, solicitation or provision would be illegal. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice and we may not update that change to you. The opinions expressed are that of AXXel Knutson and are not necessarily representative of First Allied. First Allied Securities, Inc., its affiliates and subsidiaries and/or their officers and employees may from time to time acquire, hold, or sell a position in the securities mentioned herein.
The author of this report, Axxel Knutson, does not invest in any of the securities mentioned in this report nor does his immediate family unless such securities are included in mutual funds or index options. Equity investment involves risk of capital loss. We recommend that your portfolio be diversified by company size, industry group, and geographic region and by currency. |
