StemCells Inc: CEO Martin McGlynn Is Building A Blockbuster Company

 |  About: StemCells, Inc. (STEM), Includes: ATHX, CUR
by: BlackbirdAnalytics

In September 2012 I started sharing my biotech company trades on Seeking Alpha. Since then, I have recommended three names- Allon Therapeutics, Athersys and OncoGenex.

Why just three companies in eight months? Because my due-diligence philosophy is "inch wide and mile deep."

A common pattern among these companies is that they were under-followed, misunderstood, or both. Allon Therapeutics and Athersys were trades until the valuation got to a reasonable rNPV.

In other words, the EV (Expected Value) of the bet was near zero. Then I recommended that traders take the risk off the table, no matter how big the potential upside might still be left on the table.

We are traders not gamblers!

Below is the stock performance based on my buy and sell articles.


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My next name is NOT A TRADE!

StemCells Inc. (NASDAQ:STEM) is a company you need to consider. I believe there are greater than even odds that this company will be a 100 bagger, if you hold it for five years and buy any dips. It simply has the right stem cell, too many shots at the goal, too good a scientific pedigree, and just the right targets in the clinic.

I have spent a considerable amount of time researching stem cell companies, such as ATHX, CUR, ASTM, PSTI, OSIR, etc. After a thorough review, I am convinced that even though one of these names might be a big mover, I think their odds of success are small.

I can't say the same thing about Stem Cells, Inc. If you wish to have a shot at a 100 bagger, this is a company you should consider holding for the long haul. As they say, "you have to be in it, to win it."

Below is an exclusive interview with StemCells Inc. CEO, Martin McGlynn. Enjoy and Learn!


Sam: Martin thanks for taking the time to speak with me today.

Martin: Thank you, Sam, happy to do it.

Sam: Then let's get right to it. How did you get involved with StemCells? What's your medical back ground.

Martin: First of all, I'm not an M.D. I'm a business guy. I graduated from University College, Dublin, many, many years ago with a Bachelor of Commerce degree which is focused on business, finance, and economics. I then went on to pursue professional qualification in Industrial Engineering while I was with BD.

Prior to joining StemCells, I had spent over 30 years working in the pharmaceutical/healthcare space with multinational companies such as Becton-Dickinson (NYSE:BDX), Abbott Labs (NYSE:ABT), BOC Healthcare and after 30-odd years of doing that, it started to feel like the same old, same old. I was searching for the next "big thing" in health care, i.e., something that really had the potential to address the underlying cause of disease, rather than just treating the symptoms.

Towards the end of 2000, I had an opportunity to meet with Dr. Irv Weissman, who was one of the co-founders of a California-based stem cell biology company and he showed me the galleys for a paper that they had submitted to PNAS disclosing the discovery, by scientists at the Company, of a highly purified, expandable population of human neural stem cells. I distinctly remember his excitement as he showed me a sagital section of a mouse brain in which transplanted human neural stem cells had engrafted, migrated throughout the mouse brain and had differentiated in a site specific way into the three building blocks of the central nervous system, namely astrocytes, oligodendrocytes and neurons.

After a long conversation with Irv, I became convinced that this human neural stem cell technology, if it could be harnessed, could literally transform how we go about addressing severe disorders of the central nervous system. In December of 2000, I agreed to join Stem Cells, Inc. as President and CEO, and in January of 2001 I reported for duty! I've been here now for over 12 years, and it has been an incredibly exciting experience and a very, very enriching one so far.

Sam: Tell our readers more about purified HuCNS-SC®. How did you discover it, and what makes it unique?

Martin: The HuCNS-SC® cells are a unique population of purified, expandable population of human neural stem cells. They were discovered at StemCells, Inc. by a team led by Dr. Nobuko Uchida, using a similar approach that was successfully employed many years prior in Irv's lab at Stanford, where they first prospectively isolated the mouse hematopoietic stem cell, and subsequently the human version of that cell at a company called Systemix. Unfortunately for Systemix, and Novartis who had acquired them, was the fact that they were unable to find a cell culture system to expand the hematopoietic ex vivo, which meant that the business model, at that time, would be restricted to a patient specific approach, something that Novartis decided would not work for them.

In the case of these neural stem cells, our scientists begin with donated human brain tissue, which is enzymatically digested and put into a cell suspension. The cells are then tagged with proprietary monoclonal antibodies to cell surface markers, which enable the prospective isolation of the particular cells of interest from the cell suspension. A painstaking iterative process is involved until such time as they find a cell with the stem cell properties they are looking for using a variety of in vitro and in vivo assays. Apart from the biological properties of these cells in the various assays, very importantly they grow like weeds in our cell banks and maintain their "stemness" until such time as they are transplanted into an animal or into a human patient. Consequently, unlike Systemix, we are able to pursue a product based commercialization strategy.

What we end up with, essentially, is a highly purified population of cells that grow like weeds which can be preserved in cell banks for many, many, years. The cells in the cell banks essentially provide us with a platform from which we can derive multiple different products. The actual products that will emerge over time will be defined by the manufacturing process used to derive the patient doses, the number of cells that are transplanted, the target organ, the route of administration and the allowed label claim under which the product may be marketed.

There are other important differentiators here. Firstly, the cells are derived from brain tissue and transplanted back into the brain, the spinal cord or the eye…the three essential components of the CNS, without modifying them ex vivo in any way. Secondly, because the cells come from the brain in the first place, they are "hard wired" to become only those cells that are naturally found in the CNS. Lastly, the cells are not derived from the patients who are going to receive them, so they can be used to tackle all kinds of CNS disorders for any patient for whom they are prescribed, including inherited disorders.

The most obvious advantage of the allogeneic approach is that, with stem cells in a bottle, the cells can be transplanted into any patient, and not just the patient from whom the tissue was derived. While the organs of the CNS are generally considered immune-privileged, out of an abundance of caution we do employ a temporary course of light immunosuppression to give the cells the best possible chance to engraft and survive in their new home.

StemCells Inc.'s business model is product-focused. The cells are produced just like any other pharmaceutical product might be , within tightly-controlled environments, manufactured under cGMP, evaluated in the clinic under cGCP and all regulated, of course, by sophisticated regulatory agencies like the FDA. The "stem-cells- in-a-bottle" approach allows us to ship product all over the world as needed, and to target their use for thousands, if not millions, of patients with various CNS disorders.

Sam: Do you ever have to "train" the HuCNS-SC®? If so, how?

Martin: The short answer is no. We use what's called the homologous approach. That is to say, the cells come from the brain, which is part of the central nervous system. We extract the cells from the brain tissue and just purify them, expand them in cell banks and then put them back into the brain or the spinal cord or the eye, part of the central nervous system, without any kind of modification to the cells ex vivo. We do not have to pre-differentiate these cells before we transplant them, which is something you have to do with progenitor cells derived from embryonic stem cells or from cells derived from an iPS platform.

As I have previously stated, Sam, these cells are "hard-wired" in a way that, when they go back into the system of origin, they're immediately welcomed in that system by the host which recognizes them as cells of that organ system, Thereafter, the host and the donor cells begin a process of communication.

For example … here's a really exciting observation. When you transplant these human cells into the mouse brain, the mouse controls the biological activity of the human cells. The human cells are submissive to the mouse host, they do what the mouse host instructs them to do, yet they maintain their human phenotype throughout.

Of course when the human cells are transplanted into the human host they too are tightly and naturally regulated by the human host.

Sam: I have done deep due diligence on other stem cell companies. They all have warts on their history of their cell in some form or fashion. Yours is the only company I've found that's a darn clean story. Am I right?

Martin: Well, to date we have done all of the heavy lifting that's required, in our view, to ensure that the cell population that we're going to transplant into a human patient is stable, highly purified and extremely well characterized, not only in vitro, but also in vivo. We firmly believe that without such data, it becomes hard to argue that whatever results you are seeing in the animal models or, more to the point, in the clinic, are due to the specific phenotype of your candidate product or to some other extraneous material in the cell population.

It is also critical to ensure that your manufacturing process and procedures are strictly in compliance with good manufacturing practices, and are robust and reliable. It is also critical that you employ predictive potency and purity assays to give you and the regulators confidence that you are transplanting what you stated in your regulatory filing, but that they are also viable and biologically able to do what they are supposed to do. For that reason, we have invested a significant amount of shareholders' money to hire people with the expertise and know how to do all these things and to do everything we reasonably can to ensure patient safety and give the cells the best chance we can to convey clinical benefit to the patients who will one day receive the cells.

Sam: You have four pretty significant programs: Spinal Cord Injury, Pelizaeus-Merzbacher Disease, PMD for short, the dry form of AMD, and Alzheimer's. What's the common theme among them that makes HuCNS-SC® a logical candidate to treat these diseases?

Martin: First and foremost, you have to start off with the fundamental premise that these neural stem cells give rise to the building blocks of the central nervous system. The diseases that you named are just some of the terrible diseases that affect the brain, the spinal cord or the eye, but they're all part and parcel of the central nervous system However, another common link relates to what we see what we see in the various animal models of different CNS disorders.

If you just stand back and think of what we've observed to date, with these cells in various animal models involving disorders of the CNS, it is truly amazing. These cells restore lost motor function in animal models of spinal cord injury.

In animals that have lost hind limb function due to a crush injury to the cord, the transplanted cells, not only restore the lost function but their continued presence are essential for the restored function to endure.

In animal models of centrally mediated Lysosomal Storage Disorders, the cells preserve the functionally impaired neurons of the animal by producing enough of the missing housekeeping enzyme that the host neurons are incapable of making, that is essential for the preservation of neurons. The defective host neurons take up the enzyme that is produced in sufficient quantities by the donor cells thus keeping the defective host neurons alive.

In another animal model, where the animal is born without the ability to generate myelin needed for the proper functioning of its nerve axons, we've seen how these same cells get the cues from the animal that its nerve axons lack myelin. The healthy transplanted cells get the cue and say, "Okay, well, we need to become oligodendrocytes," which they do, and then they attach to the hypomyelinated nerve axons and they start producing layer upon layer of functional myelin.

When we transplant the cells into the eye, of an animal that is going blind, the cells preserve the visual acuity of the animal pretty close to normal. Untreated animals go blind.

One of the most astounding results we've seen to date is in two animal models of relevance to Alzheimer's disease.

The cells have been shown to preserve hippocampal neurons and restore lost memory in animals that have the hallmark pathology of the disease…. plaques and tangles. Our collaborators at UC Irvine observed that the treated animals had significant increases in synaptic density in the hippocampus, compared to the animals that did not receive the cells. It's an intriguing observation. This work was conducted in collaboration with Dr. Frank LaFerla at UC Irvine, and the work in spinal cord injury was conducted in collaboration with Dr. Aileen Anderson and her colleagues, also at UC Irvine.

The common preclinical theme here is that these cells are, in fact, the building blocks for the central nervous system, and once transplanted they are recruited by the host and put to work to do nature's bidding.

Sam: Let's start with the untamed beast, Alzheimer's. You have made quite a splash at Alzheimer's Association International Conference last year in Canada (AAIC). What was the buzz about?

Martin: Essentially the buzz was that … with Alzheimer's patients, by the time they have the correct diagnosis, they already have the plaques and tangles in their brains, combined with the fact that there have been a number of well-publicized failures with strategies designed to reduce the plaque burden in the brain. The excitement here was that these cells restored lost memory in a plaque-riddled brain; in other words, with the pathology already evident. It appears that the plaque is not toxic to the cells as the cells were able the go into that kind of a hostile environment and have a beneficial biological effect.

So, what this means is that these cells can transplanted into patients who already have the pathology in the brain. We may not have to be too concerned about intervening before the plaques and tangles have already developed.

You talk about the untamed beast … you know, 60 to 70% of elderly Alzheimer's patients live at home, and over half of the Alzheimer's population are in the moderate to severe stage which is the stage that we're interested in targeting with our technology. As you move into the moderate to severe stage of the disease, that requires increasing levels of daily care, and as you advance to the final stages of the disease, the patients require extensive institutionalization.

A recent study, published in the New England Journal of Medicine on April 4th of this year, discussed the monetary costs of dementia in the United States, and there's some absolutely mind-blowing statistics to consider. It appears that the total cost of dementia in 2010 in the United States alone is estimated to be somewhere between $157 and $215 billion, and the nursing home care is 75-84% of that. So you're looking at $118 to $181 billion of cost associated with nursing home and home care. Can you imagine the value proposition, of being able to delay institutionalization of patients by even a year or two? I mean, it would have an extraordinary effect, not only in the quality of the life of the patients and their families, but it would have an extraordinary effect on reducing the cost of care.

That's what all the buzz was about. These cells offer the prospect, in the moderate to severe Alzheimer's patient population, of stopping or slowing the progression of the disease and in turn, delaying the institutionalization of these patients into very high-cost-of-care environments.

Sam: Martin, I think the FDA will lower the bar on Alzheimer's-related disease. Do you really think that HuCNS-SC® can be part of the solution? Why?

Martin: Well, yes, I do believe that HuCNS-SC® can be part of the solution for a number of reasons. Number one: I just explained the intriguing observations that have been made already with these cells in two different relevant animal models of Alzheimer's; but secondly, we have demonstrated that we can safely transplant up to a billion neural stem cells into the human brain , we know they endure for years and, as a result of the PMD clinical trial, we now know that the cells are biologically active and having a clinical effect.

As to the regulatory environment: I don't think the FDA will ever agree to allow sponsors compromise patient safety, but given the nature of the challenge and the health care tsunami that's building with Alzheimer's, I do think the FDA and our healthcare agencies will be looking for innovative solutions, such as the one we are postulating, provided that a reasonably good human safety profile has been demonstrated.

I am very excited about our collaboration with Dr. LaFerla and his colleagues at UC Irvine ,and I am delighted that we have successfully concluded negotiations with the CIRM and have accepted an award from them for $19.3 million to help fund our efforts to get to file an IND for Alzheimer's here in the US within four years.

We will be working very diligently to meet that goal, and I can assure you, if we can get into the clinic earlier than four years, we will. This is a very exciting technology and this could be a very exciting application for it.

Sam: Are there any next key milestones for Alzheimer's that come to your mind right now?

Martin: As I said, we have very good, robust data in two animal models already. We're looking at other animal models to see if we can add additional data to our knowledge base. We're already engaged in preparing for a possible IND, and we intend to engage the FDA very early in the discussions so that we can understand what is, in fact, a viable pathway to the clinic for what would become the world's first clinical trial to evaluate the safety and efficacy of human neural stem cells in Alzheimer's patients.

Sam: Spinal cord injury. I call it the "graveyard of drug development." What gives you confidence you can succeed here?

Martin: Well, apart from the population of cells that I keep on hammering home, the short answer is the very encouraging data that we've already seen from the first three patients who have completed our trial in Switzerland.

This first cohort of patients can best be described as the "worst of the worst" patients, in that they have absolutely no function or sensation below the site of the injury to the thoracic region. Given the severity of the injury and the delayed timing of intervention with the cells, experts in the field will tell you that you do not expect to see any improvements in their condition.

The first cohort consisted of three patients in this "worst of the worst" category. The primary goal was to ensure that the intervention did not exacerbate their condition in any way. Thankfully, everything was superb in the safety department, however to our surprise, at the six month time point, two of the three patients reported multi-segmental gains in sensory function below the site of injury. These gains were sustained at the 12 month time point, however, one of those two patients actually converted from an AIS A classification, given to patients who have complete injuries who have no sensation below the injury, to an AIS B classification that is used to describe a patient who has incomplete injury and has partial sensation below the site of the injury. In fact there is evidence that this one patient has sensation all the way down to the bottom of the spinal cord!

We are very optimistic that we're on the right path, and quite honestly, our goal now is to complete the study as fast as possible and publish the results.

Sam: What are the next key milestones for the trial here with spinal cord injury?

Martin: Well, the goal for us is to complete enrollment in the study. There are 12 patients to be enrolled in this study. We want to do it as quickly as we can, and that's job one for us. As soon as we have done that, we'll look at the data, and in the meantime, we'll report interim data as we receive it. The longer term goal for us is to move up the spinal cord from the thoracic region up into the cervical spinal cord region. That's where the majority of injuries occur. Most of the traumatic spinal cord injuries occur to the neck area as a result of a sports injury or an automobile accident.

The fact that we are seeing multi-segmental gains in the thoracic spinal cord region is exciting for those who have chest level injuries, but think of it from the point of view of somebody who has an injury in the cervical spinal cord region. This is the Christopher Reeves kind of injury. Those folks have absolutely no function and no sensation from the neck down but if you can get a couple of segments of improvement in the neck area, this could translate into significant functional improvements such that you could actually start thinking about the prospect of giving these patients some use of their hands or their arms.

When people talk about spinal cord injury, they think of finding a cure. The expectation is that once you transplant the cells into the cord, the patient is expected to be able to abandon the wheelchair. That's not the mindset that we are approaching this with. We are approaching this from the point of view that even very small gains in function and sensation can go an awful long way towards improving the quality of life of these patients, and possibly reducing the burden on their caregivers. Typically, spinal cord injury patients are young males who have survived the original injury, and face the prospect of a life of attendant care. Therefore, anything that we can do to improve the quality of their lives, restore some of the lost function, restore a degree of sensation, would be a very significant contribution to the spinal cord injury community, and we're very enthusiastic about delivering the full potential of this technology to the spinal cord injury community.

Sam: That's very well said Martin, certainly something that the broader public needs a better awareness of, of how the patients are looking for answers even though they might be incremental; so thank you for sharing that.

Tell our readers about PMD and hypo-myelination. What is the typical patient profile here? This is an extremely rare disease, right?

Martin: Yes, this is a rare disease. It primarily affects young male children, who are born with a genetic mutation. They can usually be diagnosed at birth. The nerve axons in the brain are intact at birth, however, their nerve axons are hypomyelinated, i.e., the nerve axons lack myelin. Thus the communication highway in the CNS becomes dysfunctional and in time, the axons will wither and die. Typically these patients do not survive past the first decade of life.

Why are we doing these clinical trials in this population? Well, recall that when I was talking about the observations in the animal world, we determined that these cells, when transplanted into that kind of an environment, the neural stem cells produce oligodendrocytes, the cell that produces myelin. So we discussed those observations in the animal model, known as the Shiverer Mouse, with the folks at the Myelin Repair Foundation, and we talked to folks in the MS community who all encouraged us to evaluate the ability of the cells to myelinate the hypomyelinated axons in PMD patients. They also recommended that we try using MRI to detect the presence of any new myelin

We conducted this proof of principle study here at the University of California San Francisco (UCSF) and here is the great news: We dosed four patients in the trial, and we were able to image brand new myelin on their nerve axons of all four, contrary to what is expected with the natural progression of the disease.

What is also very intriguing, is the finding that three of the four patients in the study were shown to have improved neurological function, while the fourth was clinically stable. We reported the results of the study in the peer review journal Science Translation Medicine.

By the way, we have enrolled all four patients in an independent four-year observation study, and we plan to periodically announce how the kids are doing.

Our next step is to engage in discussions with the FDA regarding the design a Phase II trial, and to gain consensus on what a registration pathway for PMD would look like.

As a result of the PMD trial we've shown for the first time, a biological effect of the HuCNS-SC® in the human brain. We have also shown a biological effect in the spinal cord. Next up is the eye! We have a Phase I/II clinical trial underway in dry AMD at The Retina Foundation of the Southwest's Anderson Vision Research Center in Dallas, Texas and at the Byers Eye Institute at Stanford. The goal of this trial is to demonstrate the safety and preliminary efficacy of the cells to preserve vision in patients who have the dry form of Age Related Macular Degeneration or AMD, which is the #1 cause of vision loss in the elderly, and for which there is no approved therapy.

Sam: Martin, another question I may have is just around the centers that you have pegged, like UCSF. Aren't they just the best world-class facility who understand and know these diseases extremely well? Aren't you working with the best of the best?

Martin: Correct. The groundbreaking, first-into-man nature of the trials that we are engaged in, demands that we recruit the best-of-the-best in a broad range of fields of expertise. This includes scientists and clinicians who are experts in the pathology of the targeted disease or disorder, physicists who are world leaders in imaging technology, rehabilitation experts in spinal cord injury and the neurologists and neurosurgeons who interface with the patients in the clinics and operating rooms. That's why we are conducting our clinical trials at such renowned institutions as UCSF , Stanford, Balgrist Hospital in Zurich, Switzerland and the Retina Foundation of the Southwest, which is one of the leading independent vision research centers in the United States.

Sam: Switching gears, why dry AMD? Isn't the real money in wet AMD?

Martin: Well, that's a great question. Dry AMD accounts for 90% of all Age Related Macular Degeneration and there's no cure for it. The wet form of AMD is the most severe form of the disease, and is treated with anti-vascular endothelial growth factor, or VEGF. The anti-VEGF market is a multi-billion business today.

Now start thinking in terms of the 90% number, for whom no treatment exists; then start thinking of the market opportunity for a cell based therapy that might slow down the progression of the disease from the dry to the wet form. Remember, in the Royal College of Surgeons rat, a model of retinal degeneration, which is used by pretty well everybody in the field … we have shown that the cells stopped the animals from going blind.

This is a very, very misunderstood opportunity for this technology. I don't think the market understands it, to be quite honest with you. The transplant procedure, skin-to-skin as the surgeons say, from the incision to closing up the incision, is 60 minutes in total in an outpatient setting. So the procedure is relatively simple and can be conducted in an outpatient setting, such that the surgeon could do four, five, six of these procedures a day. Moreover, because the eye is an external organ, the clinicians can relatively easily measure clinical effect in a noninvasive way.

Sam: Thanks for clarifying that for me. It beats having an injection in your eye every six to eight weeks then?

Martin: Absolutely, and thank you for reminding me. The thing I forgot to mention is that because the cells are stem cells in nature, we should look for an enduring effect form a single intervention with the cells!

Sam: What's the next catalyst here for dry AMD?

Martin: Complete the trial and publish the results. We have a 16-patient clinical trial underway in two centers, and we plan to open more. We have a couple of cohorts. The first cohort is comprised of patients who are severely vision impaired. Quite honestly, we're not expecting to see a lot of benefit in terms of improved visual acuity in that first group, but you never know. We didn't expect to see much in the first spinal cord injury cohort, and we didn't expect what we found in PMD either, so who knows.

Sam: Moving on to patents, you have an ongoing litigation with Neuralstem . You think they infringe on your IP?

Martin: Absolutely we do. I'm not going to say a lot more about that because there is a lawsuit underway, but we're very confident that, when we get our day in court, we will be able to establish infringement.

Sam: Moving on to financials. I was looking at your cash burn for the last three years. That is quite a burn rate. Explain.

Martin: Well, Sam, earlier on you asked me a question about what distinguishes StemCell, Inc. from other approaches in the field, and this is not a criticism of other approaches; it's more just to explain to our investors our philosophy and where we're spending their money.

We have done all of the heavy lifting since the cell was first discovered back in late 1999. We have done all of the work to characterize the cells, to understand their biological characteristics in vitro and in vivo. We have spent a lot of time, effort, and money in figuring out how to reproducibly produce these cells in a fashion that meets all of the regulatory standards, and we have invested in the clinical trials that I have just described to you, two of which have been completed, and two others are is underway in spinal cord injury and AMD. We have made considerable investments in the HUCNS-SC technology platform, in order to understand it's capabilities and limitations to the best of our ability prior to putting cells into patients.

So to date, having done all of that crossing the of the t's, and dotting the i's, doing all of the very difficult diligent scientific and preclinical work, we've now finally reached the stage, where we're starting to pull in the lobster pots and we're starting to look at the catch. The money has been well spent and I would argue that the results to date are very encouraging, to say the least.

As we look to the future and try to gauge what impact our progress to date might have on our future burn, it's a double-edged sword. The more successes we achieve in the clinic, the stronger the rationale to advance to later stage clinical endeavors and those successes, in turn, would in all likelihood increase our future appetite for cash. On the flip side…the more compelling the clinical data, the greater the likelihood that we would be able to attract a development partner.

In my opinion, investors now have a tremendous opportunity to step into this story and leverage the$ 250 million plus of investment already made in the Company to get it where it is today. I would argue that the human data that we are seeing now, is proof of the pudding, that money has been well spent to date. We now need to finish the job.

Sam: What's your fully diluted share count outstanding? Can you reach critical milestones without significant dilutions to shareholders?

Martin: Our outstanding share count is approximately 38.9 million.

Our existing shareholders have an opportunity to look at our progress and say, "Well, do I like the progress to date?" and I would argue that the answer should be a definitive "Yes." Then the next question is, "Do I want to stay in the story?" and I think the data would argue in favor of another definitive "Yes." Moreover, new investors have an opportunity to leverage a quarter of a billion dollars' investment made since the discovery of the human neural stem cell, and to ride the wave to shore.

Sam: Do you think your stock will be a hundred times the current valuation in five years? Why?

Martin: First of all, I am firmly of the view that, if you just look at Stem Cells, Inc.'s current valuation today, we are significantly undervalued relative to our current comps. We're anywhere from 2Xto 4X times undervalued, so view just closing that gap, there's a 2-4X opportunity for shareholders.

It's hard to determine what our future a valuation will be, but I'll just say this … our valuation in the next five years will be a function of how well we execute our translational agenda in spinal cord injury, in the brain, in the eye with age-related macular degeneration, and in Alzheimer's.

Within five years, we will have a lot of answers in the clinic. The valuation will be a function of how meaningful and how relevant the clinical data will be. I'm confident that within the five years … I don't know which month or year it will happen … but, we will reach the tipping point in terms of clinical evidence that we are onto a real winner here.

I don't know whether the data from one of our trials alone will be sufficient to tip the scales or whether it will require a composite of data from all of the trials that will be completed along the way. However, in my opinion, I am confident the tipping point will come.

Sam: Thank you, Martin.

Martin: I'll just add one other thing, Sam. Valuation will also be affected by whether or not the data entices potential partners to step into the story and help us complete the registration trials that will be required to bring the products to market. There's no question that we are a very attractive investment opportunity. I don't know whether the multiple will be 2x, 4x, 40x or 100x but I really believe, with the market's support and patience to allow us execute our game plan, our investors will be well rewarded.

Sam: Once again, many thanks, Martin

Disclosure: I am long STEM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a certified financial adviser and you should consult with your personal financial adviser before making any investment decisions. All investments carry risk, including total loss of capital. Trade based on your own risk tolerance.