How to Profit from Stem Cell R&D - Barron's

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COVER STORY: Stem Cells' Powerful Promise by Kopin Tan

Summary: Stem cell research has already garnered the attention of big investors and major drug producers. Companies like Genzyme (GENZ) say they are on the lookout for small, promising companies to buy: Merck (MRK) is funding Geron (GERN). GE (GE) bought the rights to ThermoGenesis' (KOOL) stem cell extraction/storage devices. And Boston Scientific has a joint venture with a private heart disease treatment developer. Investors playing the sector should be wary of one-trick companies that over-pump developing technologies to secure funding. Some promising names:

• StemCells (STEM), which got the first FDA test approval for human neural stem cell research for its Phase 1 Batten trial (see the article for a description of the disease and a thus-far successful test). The disease affects only four in a million, so blockbuster potential is zero, but the company says it could have substantial impact on other research areas. At $2.50, downside risk is somewhat capped; Batten results aren't due out until late 2008.
• Osiris Therapeutics' (OSIR) bone-regeneration treatment already brought in $8.3 million in revenue in 2006, but test costs mean they are still losing money. Its heart-disease and Chron's disease treatments have had promising early test results. One analyst says shares are worth $19-22 based on 2011e earnings because of the broad potential of heart treatment. At a current $15, some of this has already been factored in.
• Geron is sponsoring promising research and may get the first FDA approval on testing with human embryonic stem cells, but the company already trades at a steep price.
• Companies that facilitate stem cell research may be less risky bets, such as KOOL, which may ultimately be acquired by GE or Biomet (BMET). Cytori Therapeutics (CYTX) hopes to get U.S. approval for a machine that extracts stem cells from fat.

Related Links: Geron, StemCells, and Aastrom Gain On Stem Cell Study • Osiris: Promising Stem Cell Research, Questionable Management • Osiris and Aastrom: the Best Stem Cell Plays • Stem Cell Stocks Jump on New Congress Promise

Comments

[Tom B]

Glad to see some activity on the stem cell horizon, with all the interference from pea-brained Republicans.

[garykline]

Most of us can appreciate--entirely from personal experience--all that neural stem cell therapy will be able to do. Abeit, for older injuries, extensive physical therapy will be required, NSC therapy will be able to resolve injuries from strokes, surgeries-gone-wrong, blindness, and many other ills that cost the economy <B>$billions<... These United States have lost 6 years ... but not so with the rest of the world!

[Tom B]

"These United States have lost 6 years"

Moreover, biotech companies face a country where they have to worry about legislators gratuitously cooking up all kinds of ill-considered bans or regulations. Congress has already chimed in on human cloning, without a clear understanding of what "human cloning" actually means, and without considering 1) the potential benefits 2) the fact that less regulated countries like India, China, Korea, and Singapore could pull ahead of us.

[garykline]

Sadly, it is not only the biotech firms, but law enforcement folks, as well as whoever is concerned about the health and welfare of lives, not to mention property and decades of work lost. --I'm reminded of the unversity research building that was destroyed by the "left" radicals. Given the raging ignorance on the "right" it's lucky there hasn't been more chaos. How many people really understand any biology at the blastocyte level? Certainly few in our political arena. Until more people are capable of rational thought, we're all in trouble.

[p. smith]

KOOL is the early Cisco System of stem cell research and therapies, its products are with the highest quality and CE and FDA approved.

KOOL under the leadership of Bill Osgood has been a very different company, they have solved the disposable bag problem, increases supply sources to 3 and most of all, they have got the CE and FDA approval for their killer product - the Marrow Xpress.

For all you have lost money investing in KOOL, you have got to come back, this time it'll be different.