Happy, I've been into cell Stem Cell stocks.
May I suggest you join me? After all Ctii has gone from 53c to 16, Gern goes from 9 1/4 to 68, and nexl has gone from 1 to 11.
>There are few areas of biological research as exciting as Stem Cell
technology. This controversial technology is making some bold claims
about potential applications, but the public understands very little about
these "magical" little friends. While many scientific researchers feel
that Stem Cells hold the cure for many of the world's deadliest diseases,
there are some that feel this research is crossing monumental ethical
barriers and should cease immediately. The purpose of this article is not
to take a stand for either side, but rather to attempt to explain what
Stem Cells are, what they can be used for, and to examine some companies
that are hard at work on Stem Cell research.
So, what is a Stem Cell, anyway? By definition, Stem Cells are rare,
undifferentiated cells that can both duplicate themselves and produce
differentiated cell types that constitute the various tissues or organ
systems of the human body. In other words, if they can be isolated and
multiplied, they can be put back into the area of the body having trouble,
and the "good" cells can take over. The potential for manipulating Stem
Cells to repair or replace diseased or damaged tissue has generated a
great deal of excitement in the scientific, medical, and, not
surprisingly, biotechnology investment communities.
There are three primary sources of Stem Cells, each with different
characteristics as to how many different developmental paths they can
follow and how much they can contribute to our understanding of a
functioning organism. Embryonic Stem Cells (ES cells), derived from a
very early embryo, and embryonic germ cells (EG cells), collected from
fetal tissue at a somewhat later stage of development, have particular
promise for a wide range of therapeutic applications because, according to
our present knowledge, they are capable of giving rise to virtually any
cell type. Research on these primordial cells will also provide a unique
opportunity to study human cell biology.
Adult Stem Cells (AS cells), obtained from mature tissues, differentiate
into a narrower range of cell types. As a result, many cells of medical
interest currently cannot be obtained from adult-born Stem Cells. It is
also less feasible to develop large-scale cultures from adult Stem Cells.
However, it is important to note that at this time, it is only adult human
Stem Cells that are well-enough understood that they can be reliably
differentiated into specific tissue types, and that have proceeded to
clinical trials.
When you peruse the list of diseases and conditions that Stem Cell
therapies can potentially cure, it is difficult to suppress a smile.
Researchers from the Washington University School of Medicine in St. Louis
transplanted mouse embryonic stem cells into rats with debilitating spinal
cord injuries.
These cells helped to repair the animals' damaged spinal cords by
replacing the missing nerve cells, enabling the paralyzed rats to walk
again. In human beings, transplants of hematopoietic stem cells (the
cells which eventually produce blood) following treatments for cancer, for
example, have been done for years now. Further, somewhat cruder
experiments (e.g., the transplantation of fetal tissue into the brains of
Parkinson's patients) indicate that the expectation that stem cell
therapies could provide robust treatments for many human diseases is a
reasonable one.
Stem Cells are not a new discovery. The science of Stem Cell research
dates back to the 1960's, and even today, most advanced Stem Cell programs
are in pre-clinical or research stages. The testing has been restricted
to animals, and human applications are still some years away. The promise
lies in the fact that some of the early experiments have been tremendously
encouraging. Furthermore, the companies that are aggressively working
with Stem Cells are becoming better known and are anticipating increased
funding for their research.
Here are brief looks at three companies currently engaged in Stem Cell
research:
CytoTherapeutics, Inc. (CTII, $9)
CytoTherapeutics is now a pure Stem Cell play. In January, they sold
their Encapsulated Cell Technology in order to focus on their Stem Cell
work. A major breakthrough was made recently when they succeeded in
purifying brain stem cells directly from fresh tissue, dramatically
expanding the numbers of these normal, genetically unmodified stem cells
in simple defined cultures. According to the company, the ability to
isolate and harness these cells could open up their potential application
for the replacement of neurons lost due to devastating neurodegenerative
diseases such as Parkinson's and Alzheimer's, genetic disorders that
damage the brain such as Batten's, Gaucher's, and Tay Sach's diseases;
mini-strokes; and perhaps spinal cord injuries.
The glial components derived from these cells, moreover, could open the
door to remyelination of neurons in diseases like Multiple Sclerosis. The
ability to identify human brain stem cells and isolate them directly from
fresh, uncultured tissue is important because it provides a source of stem
cells for transplantation that is uncontaminated by other, unwanted or
diseased cell types. This purification procedure is a critical first step
towards clinical use of neural Stem Cells in humans. Furthermore, it
allows researchers to better understand the properties of these cells, and
how they might be able to manipulate them in order to treat specific
diseases. This discovery puts CytoTherapeutics in a leading intellectual
property position in the field of brain stem cell research and
development. CytoTherapeutics owns Stem Cell patents and they could
potentially license their technology to competing companies for a fee.
Licensing is becoming an increasingly popular method among biotech outfits
to raise capital.
Despite the seemingly unlimited upside an investment in CytoTherapeutics
may hold, there are great risks surrounding the company. One issue facing
CytoTherapeutics is the need for capital. The company has more than $11
million cash on hand and a respectable debt/equity ratio of .25, but
revenues are thin and their cash burn rate should increase as research and
testing intensify. Practical applications for their technology are also
anything but imminent. Unless a partner materializes, CytoTherapeutics
will face financial issues in the near future. They have also had a big
run in price lately, and sit more than 1500% above their 52 week low. On
the plus side, CytoTherapeutics' technology and leadership position in
their field puts them in a strong bargaining position on any financial
deal. They are careful to protect their proprietary technology and keep a
low profile, but given that Stem Cell technology appears to be a wave of
the future, one would almost have to assume that CytoTherapeutics will see
much better days. The firm has a market cap of $180 million.
Geron Corporation (GERN, $70)
Geron differs from CytoTherapeutics in a few ways, the not the least of
which being their use of Human Embryonic Stem Cells. Geron is one of the
more visible companies in this segment and many of the ethical Stem Cell
battles directly surround their work with embryonic samples. Geron is
attempting to conquer the impossible by reversing the aging process.
Geron focuses on telomeres, which are structures at the ends of
chromosomes that they have shown act as a molecular "clock" of cellular
aging, and telomerase, an enzyme that appears to stop the "clock" and
confers cellular immortality. Geron has established that these mechanisms
play a role in age-related diseases including cancer, and believe it has a
broadly applicable, proprietary platform for discovering and developing
novel therapeutics and diagnostics to treat various disorders.
Geron as an investment may sound exciting, but the high risk factor is
sobering. They will continue to face ethical hurdles and opposition from
groups opposed to the use of human embryos for scientific study. The
company freely admits that they have no idea when human testing could
begin and they acknowledge that current revenues will not sufficiently
cover the cost of doing business going forward. Geron needs capital and
if partners do not materialize, they may need to dilute themselves further
by offering more stock. Like many biotech companies, Geron's stock has
shot up enormously since the fall and is now trading up 700% above their
lows. Geron has a market cap of $1.2 billion.
Nexell Therapeutics Inc. (NEXL, $7)
Nexell Therapeutics develops cell therapy toolkits to diagnose cancer and
genetic diseases. Their main source of revenue comes from their Isolex
300i system, which can isolate and purify Stem Cells taken from the
bloodstream for the purpose of being transplanted back into their source.
Unlike chemotherapy, cell selection techniques do not harm healthy cells.
At this time, Isolex 300i is fully approved in Europe, and partially
approved in the United States. Results have shown Isolex 300i to
consistently deplete tumor and T-Cells from the Stem Cell graft, and also
to provide an economical method for supplying the required Stem Cells for
engraftment.
The technology entails two steps: Positive Selection and Negative
Selection. The Positive Selection employs an antibody that removes stem
cells from the blood. This approach reduces the number of contaminating
cancer cells, because over 99% of the tumor cells just pass through the
selection systems. The Negative Selection approach -- currently in Phase
III testing in the United States -- reduces the number of tumor cells in
the purified stems cells by approximately another 100 fold as they are
trapped on a column using monoclonal antibodies directed against molecules
on the surface of the tumor cells.
Given their decent revenue base from existing products, solid cash
position, and the anticipated full FDA approval of its Isolex 300i system,
Nexell makes for a company worth watching. Nexell insiders have also
purchased 823,000 shares (3.3% of float) in the past 6 months. [Note:
Although the price is low, there are 73 million shares outstanding.]
Nexell has a market cap of $530 million.
Stem Cell research also extends to federally funded programs, but it is
important to note that these programs are restricted from using embryonic
samples. Private sector scientists are not subject to the same federal
regulations or ethical requirements, therefore they may be able to advance
quicker than government programs. |
