10 Biotechs in Stem Cells that Could Profit Under the Democrats

Editor's note: This article was corrected on June 1.

Democrats and stem cells -- a budding romance. Pundits opine that this will be the year of the Democrats, at least as far as Congress is concerned. Conventional wisdom holds that pharmaceutical stocks suffer under the Democrats due to concerns over pricing and liberal drug importation.

However, one subset that may do well under the Democrats is biotechnology companies that deal with stem cells. This is based on the rationale that Democrats may be more favorably inclined to this line of therapy than Republicans since they are not as opposed to stem cells.

Stem cells are progenitor cells that, at least in theory, can differentiate into any cell type in the body. This ability to become whatever is needed is an invaluable resource where regeneration of the original tissue or organ is important. Examples include intra-articular tissues for osteoarthritis, heart muscles for heart failure or heart attacks, and neural tissues for various neurological disorders including Parkinsons Disease.

There are two sources of stem cells: adults and embryos. There are several differences between adult stem cells [ASC] and embryonic stem cells [ESC]. Embryonic stem cells are pluripotential, meaning that they can differentiate into any cell type. This makes them an excellent starting point, but can lead to problems if cells differentiate into unwanted tissue. For example, stem cells implanted into the brain of an Alzheimers patient could differentiate into muscle or bone instead of neural tissue (giving new meaning to the phrase bone head or muscle head, but I digress). However, unregulated and uncontrolled proliferation of embryonic stem cells could lead to cancer--something that concerns the FDA and clinicians alike.

In contrast, adult stem cells are mutlipotential, differentiating along their lines of origin. So neural ASCs would only form neural tissue, though not always the exact neural tissue required. Another difference is that ASCs, unlike ESCs, cannot proliferate for long periods outside the body without differentiating. This limits manufacturing options for ASC, but not for ESC.

The table below lists the status of some ASC companies:

Aladgaen, not listed above, is an ASC company in the clinic, and is about to file an IPO. I was not able to obtain sufficient information on it - hence it is not listed above.

Some companies involved in ESC research include:

Of the companies mentioned above, Osiris (OSIR) is the most advanced, with marketed products, a deal with Genzyme (GENZ), a large grant from the Department of Defense for acute radiation sickness, and a marketing deal for osteocel. It has done better than most other stem cell companies that have lost up to 70% of their value over the past year. Still, Zacks rates it a hold.

Before buying any company, one must do one's own due diligence. Important factors to take into account include ASC versus ESC, technology, cash reserves, burn rate, stage of development, and management. Pay particular notice to management - a bad management team can destroy a good product. It is particularly important in this industry, so look at what the management has done in the past and how successful they were at it before they became senior management at the company you're considering. My picks to consider seriously would include OSIR and ASTM.

Disclosure: I have consulted for Athersys in the past. In order to avoid a conflict of Interest I have not included it in my picks to consider seriously.

Comments

[CLH:]

These companies will not do well under either party. After many years absolutly no new therapys have been discovered using stem cells. The fact that democrates have a religious belief in stem cells will not help. The government can't help science. If something comes out of this science, it will be from private labs.

Giving billions to companies for science is the same as flushing taxes down the toilet.

I have a Phd in life sciences.

2008 May 27 07:01 AM

[sheepshead:]

The message the article wants to bring is pretty old and stale- also doubtfull that it has any merit.

However, the research on the companies mentioned is an absolute disgrace. It has many pertinent errors- for instance Bioheart´s Myocell is a Phase III development. Osiris sold Osteocell several weeks ago. Cytori markets their Celution system in Europe already in the PCS market.

Would one trust the recommendation accordingly?

Thats a rhetoric question really.

2008 May 27 07:27 AM

[chizzik1:]

Richard Garr CEO of Neuralstem(CUR) wrote in his CEO Blog of May 19th,

"The first thing to remember, is that our cells are “committed” neural precursors. That is, they are already programmed by nature to “turn into” the cells of the central nervous system, and ONLY the central nervous system. This is a crucial distinction. The “turning into” process, we call differentiation. And the way we characterize this process is to say that we have completely “controlled” differentiation. The cells only, and always, become what we want them to become. We have a completely controlled differentiation, and we have never seen any tumors in any of the studies we have conducted with the cells; both in chemically immune suppressed animals or in genetically bred immune suppressed animals, nor in healthy animals".

As you can see, this blog has Neuralstem catagorized incorrectly.

BTW, Neuralstem expects to file an IND to treat ALS this fall.

2008 May 27 09:05 AM

[kharrin49:]

If any of you took the time to watch the recent hearing held in the capital discussing stem cell use andapplications you would have heard first hand from those in the know that the BIGGEST obstacle to stem cell research is lack of Goverment Backing.I am not talking just funding either. One expert pointed out how investment and research into alternative energy soared once the goverment was behind such programs. Not being in either I was taken back by just how much of a difference and how many ways having the Goverment behind any particulat research really means. What use to be considered third world counties ( south american countries ) now with the backing of a friendly goverment lead the US is use and development of alternative energy. Fact. This was one of many examples used to show the effects of goverment backing. I agree. Lastlt just yesterday I saw a five year old african american boy who spoke in front of a hearing held in DC. This little boy suffered from sickle cell anemia. he was treated with stem cells and NO LONGER suffers from this terrible disease. That my friends is an example of the wonderful break throughs awaiting us when we have industry partnered with goverment ...

2008 May 27 09:19 AM

[kharrin49:]

sheepshead. It is my understanding that this ssite is used for information only. If one was to use alpha to make stock investments than of course they would be in trouble. Yes some of the information here is old and yes even stale however just as posted one is told to do due dilligence before investing. This site provides a starting point for investors and in the case of Osiris although they sold the right to osteocell the fact it was developed into a valuable product says alot. I suggest you step back and see the bigger picture trying to be brought into focus by this posting.Unfortunalty when it comes to stem cell research there are those who still believe the retoric from right wingers even in the senate up until about a year ago who mislead americans to believe that ALL stem cell research destroys life. Many of those republicans are now stepping back from those lies as people are now questioning what is truth from them.

2008 May 27 09:27 AM

[sheepshead:]

I did listen to some of the testimonies, which did not contain anything I wasnt aware of. I also know the political discussion, but believe none of the 10 company names mentioned would benefit in anyway by government backing of academic research. The market judges those names on likelyhood of actually bringing a product to the market and its likely financial success there once there, like any other biotech or other company that cannot be judged on financial performance at present.

From this perspective it is vital that if you write a article and want to give pointers to your readers on where to do DD, those pointers should at least be correct.-which they certainly are NOT.

Since I have done DD on all (and a few more) I can tell that Osir is a good pick. They actually sold Osteocell to get the funds in order to have a good chance in reaching the market with their Crohns and GvHD therapies with Prochymal.

ASTM though is laying off 27 (1/3 of workforce) employees to strech their money and face delisting with all consequences for access to capital markets.

There is now actually just one outfit left that makes meaningfull revenues in 2008 and certainly 2009 & beyond. Is adding employees to their work force and as only stemcell company has strong partners.

Did your own DD get that far to tell us which company that is?

2008 May 27 01:01 PM

[in4thelonghaul:]

Other criteria one should consider before investing in these companies is cash on hand to burn rate, and patents...most stem cell plays are on very shaky financial footings. GERN is an exception, they are well funded. GERN's sh/pr has recently taken a 20% hit due to the FDA placing a clinical hold on its experimental treatment for spinal injury. The stock has recovered a bit from already, but likely will regain the $5.00 level when the FDA comes to its senses or Bush is booted out of office. Expect McCain to be as, or nearly as favorably disposed towards stem cell research as the Democrats...he isn't exactly beholden to or a champion of the views held by the religious right. GERN has a rather large collection of patents holdings as well...I suspect BP would like to acquire these on the cheap. Jan. calls on GERN are my bet.

2008 Jun 01 03:55 PM

[Medici:]

I can answer the debate whether the names above would be viable if a democrat took office:

They are a "Physcological Trade"

For a brief minute the masses would believe that these stocks would be the proper play amid the election of a Democratic President.

The rally would be swift and then falter, the stocks mentioned above would rally on cursory research, but would eventually and most probably fall lower than where they were previous to their rally.

Then and only then should any of these stocks be judged and strictly on their merits if any-

2008 Jun 01 09:14 PM

[kharrin49:]

Lets go back to when the democrats took over the majority in congress. Lets see what happenned ? Without even going back to check I can tell you with a good amount of certainty that ALL of these companies took a good jump in share price. Now does that mean they are good investments certainly not. However the truth of the matter is that the chances of most stem cell companies seeing their share price rise with the democrats taking over is a fair guess. I belive the heading was companies that would stand to profit from democrats We have had right wing republicans spout lies to the american public for far to long. To listen to a senior senator who happenned to be a doctor lumping all stem cell research together as killing human life was exactly what the american people were getting from our goverment..And yes I believe all these companies if they are still around will benifit from democrats taking control...Out of the mentioned companies I do own Osiris and have in the past one year or more going back owned others mentioned.

2008 Jun 02 08:35 AM

[kharrin49:]

I agree jefferey

2008 Jun 02 08:35 AM

[User 95455:]

what about Opexa?

2008 Jun 02 10:49 AM

[montyman:]

I just read a story about how stem cell therapy (autologous from liposuction) is now approved for dogs with knee osteoarthritis. It is reported to greatly ease the symptoms. Also, such treatment has been available for horses since 2003. But nothing even close for people? WHAT THE HELL???????

2008 Jun 03 01:59 AM

[User 309060:]

I have a PHD in kiss my ass..your post is very ignorant...ACTC and stem cells in general will be huge.


On May 27 07:01 AM CLH wrote:

> These companies will not do well under either party. After many years
> absolutly no new therapys have been discovered using stem cells.
> The fact that democrates have a religious belief in stem cells will
> not help. The government can't help science. If something comes out
> of this science, it will be from private labs.
>
> Giving billions to companies for science is the same as flushing
> taxes down the toilet.
>
> I have a Phd in life sciences.

2008 Nov 29 12:34 AM

[lesamis:]

"One technology is believed to treat a variety of disease"; "It's the biggest breakthrough (in this technology) in a decade"; "Many view the creation of (these) cells as regenerative medicine"; "The world-changing breakthrough company alliance is valued at potentially $1 billion- a way to cure, rebuild, and repair the human body" using shots and pills- "the reprogrammed cells seemed capable of becoming any of the 200-plus cells tyes in the human body" ".........(company)" said Thursday it has signed patent-liscensing agreemets with ...(research)...."

Who abd what would this be about?
can anyone tell me?

Jan 19 04:40 AM

[ozark580:]

On Jan 19 04:40 AM lesamis wrote:

> "One technology is believed to treat a variety of disease"; "It's
> the biggest breakthrough (in this technology) in a decade"; "Many
> view the creation of (these) cells as regenerative medicine"; "The
> world-changing breakthrough company alliance is valued at potentially
> $1 billion- a way to cure, rebuild, and repair the human body" using
> shots and pills- "the reprogrammed cells seemed capable of becoming
> any of the 200-plus cells tyes in the human body" ".........(company)"
> said Thursday it has signed patent-liscensing agreemets with ...(research)...."
>
>
> Who abd what would this be about?
> can anyone tell me?

It sounds to me like a reference to Osiris (OSIR) and their product called Prochymal. Osiris and Genzyme signed a collaborative agreement for over a billion dollars. And, Prochymal is a breakthrough technology.

Jan 24 12:20 PM

[kool:]

best investment in this stage of stem cell research and therapies is investing in the leader of stem cell processing and storage devices maker Thermogenesis (KOOL).

plenty of cash, no debt and very likely to become profitable from this quarter on (june-august, 2009).

check it out.

Aug 04 11:08 AM