Nobel Prize Validates Recent Stem Cell Headlines

by: Brian Nichols

Recently, one of the most prestigious awards in medicine was awarded to John B. Gurdon and Shinja Yamanaka, the Nobel Prize in Physiology or Medicine 2012. The prestigious award was given for their discovery that mature cells can be reprogrammed to become pluripotent. This award, and the research involved, is yet another win for cell therapy and, furthermore, a huge win that validates the recent developments and the clinical strategy of NeoStem (NBS), and the cell therapy space as a whole.

The two scientists, Yamanaka and Gurdon, performed a study on individual cells from mice and humans by sprinkling four genes on ordinary skin cells. These cells were then reverted back to an earlier embryonic state, which early research suggests is more effective in medical procedures for regenerative therapies. These more effective embryonic cell therapies are also highly controversial, as some have questioned whether or not we would ever see an approved cell therapy due to so many processes that destroy embryos for research purposes. But the reverted cells do not face the same ethical issues as destroying embryos for medical procedures. This "turn back the time" discovery provides hope that any cell could be harvested and then sent back to an embryonic state, and then finally grown into replacement tissue. As you might know, there are many companies working diligently to develop cell therapies to treat a variety of degenerative diseases. This discovery will allow for the effectiveness of embryonic cells without actually using embryonic cells, which could be a huge breakthrough in the future of cell therapy.

The findings of Yamanaka and Gurdon seem a bit like something you'd find in a science fiction movie, rather than in science. However, the theories of these two Nobel Prize winners have been put into action and have been creating waves throughout the space. Just last week the cell therapy leader, NeoStem, announced a publication in Stem Cells and Development that is validated by the Nobel Prize to Yamanaka and Gurdon. The publication was in relation to the company's VSELs (very small embryonic-like stem cells) which are a population of stem cells found in adult bone marrow with potential regenerative properties similar to those of embryonic stem cells. Therefore, NeoStem in some ways has been practicing the theories of Yamanaka and Gurdon, by altering a collection of stem cells that are believed to be just as effective and mirror embryonic cells. Last week, in the company's publication, it proved that the VSELs formed human bone when implanted in the bone tissue of SCID mice. Strangely enough, Yamanaka and Gurdon also examined the connection between mice and human cell development, as many connections in the relationship have been observed.

Much of the premise of VSELs is to avoid the moral dilemmas that arise from using human embryos, which would increase the chances of being awarded regulatory approvals. In fact, the ethical dilemma of using embryonic stem cells has created a natural level of pessimism surrounding the future of this space due to the political and moral ramifications involved. These ethical issues involved are in part responsible for Yamanaka's discovery, the Nobel Prize winner, as he's publicly said on multiple occasions that, although he loved and believed in the capabilities of stem-cell research, he did not agree with destroying human embryos for research. His realization that there is only a small clinical difference between embryonic and other human cells, and then knowing how to alter the cells, could very well change the landscape for future therapies and increase the chances of cell therapies being awarded an approval. NeoStem is doing the same and, with recent data, proves that it noticed this potential and is now developing the cells to succeed without the moral dilemma.

The industry as a whole has seen its fair share of key developments over the last several months, and the Nobel Prize to a pioneer in the space is yet another win. In September, cell therapy company, Neuralstem (NYSEMKT:CUR), announced that surgically paralyzed rats (completely paraplegic) regained some motor function after being treated with the company's NSI-566 spinal cord stem cells.

In 2012 we have seen a huge increase in the valuation of cell therapy companies, as data continues to improve and research funding continues to rise. Neuralstem rose from $0.45 to over $1.40 due to its study; yet NeoStem is priced near even following a very similar study on its VSELs, and will most likely never face any of the moral issues. In addition, NeoStem also announced further evidence that its lead product, AMR-001, appears capable of preserving heart muscle function following a large myocardial infarction. The company announced that, of those patients who have received a therapeutic dose, none experienced deterioration in heart muscle function (if they received 10 million cells or more). However, 30-40% of patients who did not receive a therapeutic dose did experience a deterioration, which shows a clear distinction between the two patient groups. The cells used in this product are CF34+/CXCR4+ and are derived from bone marrow. I think this innovation further shows that NeoStem is developing its products with the latest technology and the perception of cell therapies in mind.

The cell therapy industry continues to innovate, win awards, and progress at treating degenerative diseases. Now, it's time for approvals. Earlier this year Osiris Therapeutics (NASDAQ:OSIR) was awarded the first ever approval with a cell therapy as the main component. Baxter's (NYSE:BAX) cell therapy, also manufactured by NeoStem, is a Phase 3 product that has reached endpoints never before reached, and is created similar to NeoStem's AMR-001. And then small companies such as StemCells (STEM) have done a good job at progressing in the field, with its cell therapy restoring memory and enhanced synaptic function in two animal models relevant to Alzheimer's disease (AD). In my opinion, the Nobel Prize award is another victory, and is a study/data that regulators must honor once it comes time for these therapies to seek regulatory approvals. As an investor, the prize is a direct tie to NeoStem, and the progress it has made in both VSELs and with AMR-001. As a country the United States appears prepared to embrace cell therapy and the regenerative abilities of the space.

Disclosure: I am long NBS. 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.