Analysts and investors alike have been speculating about stem cell companies making a meaningful impact on the biotechnology industry for the past few years. It’s looking like the industry is passing its tipping point and shifting to the other side of the fulcrum with the buzz getting louder and advanced companies commanding higher prices.
In the news of Tuesday was Stem Cells, Inc. (Nasdaq: STEM), listed on The Wall Street Journal as a “U.S. Hot Stock” after announcing that 12-month data from the first patient cohort in the Newark, California-based company’s Phase I/II clinical trial of its proprietary HuCNS-SC® product candidate (purified human neural stem cells) for chronic spinal cord injury continued to demonstrate a favorable safety profile. Further, two of the three patients in the cohort retained gains in sensory function at the one-year mark that were demonstrated at a six-month assessment. One patient even converted from a “complete” to an “incomplete” injury and the third patient remains stable, according to a statement by Stem Cells.
While simultaneously urging caution in interpretation because of the small patient population in an uncontrolled trial, Martin McGlynn, President and Chief Executive at Stem Cells, believes, “this is the first time a patient with a complete spinal cord injury has been converted to a patient with an incomplete injury following transplantation of neural stem cells.”
The assessment at twelve months completes the trial that is being hosted at Balgrist University Hospital, University of Zurich. The cohort will now be followed for a long-term observation.
Shares of STEM started to lift from around 60 cents last June when it initially reported positive interim safety from the trial. After peaking at $2.67, shares retraced waiting for additional word on the trial, which has shot shares ahead by about 25 percent to over $2.00. Going forward, investors will be continuing to watch for data from additional cohorts.
There probably hasn’t been a hotter stem cell play in 2013 than Athersys, Inc. (Nasdaq: ATHX). Headquartered in Ohio, just down the street from the Cleveland Clinic, the developer of MulitStem® is up more than 55 percent already this year as institutions are jumping into the stem cell company with both feet. Volume, which only averaged less than 200,000 shares per day in 2012, has surged in the past three months to more than 600,000 shares a day.
According to a recent article on BiotechStockTrader.com http://biotechstocktrader.com/athersys-athx-jumps-55-ytd-amid-growing-investor-interest/, “Recent SEC filings indicate that large funds such as First Eagle Investment Management, Sabby Capital, Pappas Ventures, and Aspire Capital have each established greater than 5% ownership positions, with other large established healthcare funds also establishing meaningful ownership.” The website also cites company sources as saying institutional ownership now tops 40 percent of the outstanding shares of ATHX, a percentage far higher than many peer companies.
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The company has been garnering large amounts of attention surrounding the prolific nature of its adult stem cell product, MultiStem, and its partnership with Pfizer, Inc. (NYSE: PFE). Pfizer has commenced a Phase II clinical trial in Inflammatory Bowel Disease with topline data expected later this year. As often is the case, stocks begin an ascent as investors start to anticipate clinical data. Being in a partnership with the world’s biggest drug maker (whom happens to have a stack of cash and a thin pipeline), has the spotlight on Athersys to produce promising mid-stage results.
Further, the investment community seems to be becoming more cognizant about Athersys’ partnership with RTI Biologics, Inc. (Nasdaq: RTIX) that has netted Athersys more than $5 million in licensing and milestone payments to date. RTI has licensed the MultiStem technology to isolate and preserve cells from organ and tissue donors for research on its Bone Allograft product.
In addition to the aforementioned research and clinical trials that Athersys has sponsored and completed itself on acute myocardial infarction and ischemic stoke, the rumor mill is also turning as the investment community postulates about Athersys partnering to advance MultiStem as a possible new therapeutic for obesity.
Even passive biotechnology investors are aware of the run for Arena Pharmaceuticals (Nasdaq: ARNA) and Vivus, Inc. (Nasdaq: VVUS) as their obesity drug candidates maneuvered down the regulatory pathway to eventual FDA approval, despite some safety concerns still being present. With a similar mechanism of action and better safety profile to date, it is possible that Athersys could have a blockbuster on their hands targeting that indication as well.
It’s not difficult math and the investment community is adding it up as developments continue to manifest potential success at Athersys. Even with the recent share appreciation, Athersys still is only toting a market valuation of $90 million, leaving exponential headroom for growth and providing a decisive reason whythis stock will continue to stay in the crosshairs of investors.
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