Seeking Alpha
Profile| Send Message|
( followers)  

I introduced Athersys through two articles titled, "Athersys: A Significantly Undervalued Stem Cell Company Approaching Key Catalysts" and "A Candid Conversation with Athersys CEO Gil Van Bokkelen."

The stock (ATHX) was trading at $1.34 when the first article was published on January 29, 2013 and now on Friday April 19, 2013 it is trading around 2.10. That's 55%+ increase in price.

In the main article, I gave the IBD trial a 5% chance of success. The trial data is due around June/July 2013.

Which means there is a 95% chance of failure!

Upon failure of the IBD program, we are left with the stroke program. This puts ATHX in the same situation in terms of valuation as Aldagen, which was acquired by Cytomedix for $16.0M and had a stem cell based stroke program at the time of acquisition (Stem cell therapeutics firm Aldagen acquired by Cytomedix in stock deal.)

Also, any failure will bring up the ghosts from the past for MultiStem and the fraud allegations. There are allegations of data falsification in the original MultiStem papers. All the recent bullish articles on ATHX have ignored the past history of the chief scientific founder Catherine Verfaillie and MultiStem. Some articles on the web have gone as far as to call MultiStem data manipulation controversy as the second biggest fraud in stem cell research behind the South Korean cell researcher data hoax.

Which means that ATHX shares are exposed to a fall around $0.80 or less based on reported cash position, current O/S shares and the Stroke Program.

Although a partnership with 5HT2c program can move the stock up significantly, I recommend traders start booking profits and exit the trade.

Don't gamble with almost 55%+ gains, Consider entering into the common shares after the IBD results.

Congratulations to all those who were able bank significant gains.

Trade Smart!

Source: Trading Athersys: Risks And Rewards

Additional disclosure: I have a nominal long position in common shares and long April call options, which should expire worthless. I may short Athersys or go long at any time. I am not a certified financial adviser and you should consult with your personal financial adviser before making any investment decisions. All investments carry risks, including total loss of capital. Trade based on your own risk tolerance.