The stem cell sector is expected to see exponential growth in the coming years. Almost daily there is news about another breakthrough in stem cell research. As traders we look to identify areas of opportunity in markets that will do well and 2013 may be the year of the stem cell stocks. Last year saw many stem cell stocks turn in large returns with StemCells Inc. (STEM) and Neuralstem Inc (CUR) leading the gainers. The following are some stem cell stocks to consider for the coming year.
We previously went over Athersys Inc (ATHX) in our article titled "Athersys Should Gain At Least 50%" in November and why we felt it was undervalued. As of today the stock is up a healthy 25% with further upside expected. The company's lead product MultiStem is an allogeneic stem cell product, which is evaluated in 2 completed Phase I clinical trials and in 2 ongoing Phase II clinical trials for regenerative medicine and stem cell therapy applications. Athersys has a chart breakout at $1.23 with upside to the $1.50 area near term.
Next we have Aastrom Biosciences Inc (ASTM), a stem cell company that used to get a lot of chatter and trader interest but appears to have been forgotten over the last year. The stock has, in fact, shed over half its value in the last seven months despite the interest in other stem cell stocks. We can see information about their lead stem cell product from their website. Ixmyelocel-T, Aastrom's patent-protected technology selectively expands mesenchymal cells, monocytes and alternatively activated macrophages, up to several hundred times more than the number found in the patient's bone marrow, while retaining many of the hematopoietic cells collected from only a small sample (50ml) of the patient's bone marrow. Ixmyelocel-T has several features that are critical for success in treating patients suffering from a complex, multi-factorial, severe and chronic diseases such as critical limb ischemia ((CLI)) or dilated cardiomyopathy ((DCM)).
Aastrom currently has a Phase 2 and Phase 3 trial for critical limb ischemia (CLI), the most severe form of peripheral arterial disease (PAD) caused by chronic inflammatory processes associated with atherosclerosis that result in markedly reduced blood flow to the legs, feet and hands. There are an estimated 10-12 million people with PAD in the United States and over 1 million people with CLI. This is a huge market for Aastrom. Dilated cardiomyopathy is the other indication Aastrom is working on with three Phase 2 trials underway. DCM is the most common form of heart failure ((HF)). The American Heart Association estimates that 4.9 million people in the Unites States have heart failure.
As you can see Aastrom has indications in markets with large revenue potential that are pretty far along in the developmental pipeline. The stock warrants much higher prices based on its peers. The stock has a symmetrical triangle breakout at $1.40 with a target of $1.80, the 200 day moving average.
Neuralstem Inc has been receiving most of the trader interest and price appreciation over the last several months. The company focuses on the development and commercialization of treatments for central nervous system disease based on transplanting human neural stem cells and the use of small molecule drugs. Its stem cell technology enables the isolation and expansion of human neural stem cells from various areas of the developing human brain and spinal cord enabling the generation of physiologically relevant human neurons. Looking at the Neuralstem chart we see a breakout looming at $1.40 with confirmation over $1.57. Above this level there is no resistance until $2.
Lastly we have StemCells Inc. The stock has been consolidating its early summer rampage under its 50 day moving average currently at $1.77. A break above the $1.90 area will quickly bring focus back here. The company's product candidate HuCNS-SC cells has completed a Phase I clinical trial for the treatment of infantile and late infantile neuronal ceroid lipofuscinosis, a neurodegenerative disorder of the brain, and completed a Phase I clinical trial for the treatment of Pelizeaus-Merzbacher disease, a fatal myelination disorder in the brain. It also engages in developing HuCNS-SC cells, which are in Phase I/II clinical trial for the treatment of chronic spinal cord injurym and HuCNS-SC cells that are in Phase I/II clinical trial for the treatment of dry age-related macular degeneration.
Conclusion: The interest in stem cell stocks should continue to grow in 2013 as more positive trial data is released. Many of these stocks could turn in large returns in 2013. We have focused more on Aastrom as it has lagged the large moves already seen in the other stocks but the sector as whole should continue to garner trader interest going forward. Athersys is looking to break out of a cup and handle formation today at $1.23. StemCells has formed a flag on its daily chart with an upside breakout likely in the coming days. Neuralstem is also poised to continue here.
Disclosure: I am long ASTM.