Duke University is studying the use of cord blood transplants in babies while still in the womb, in order to treat various metabolic disorders. The U.S. Food and Drug Administration has given approval for clinical trials.

Cord blood is blood that comes from umbilical cords, and contains a large amount of hematopoietic stem cells. Specialized cord blood banks are available to store this blood. Cord blood stem cells are considered far superior to stem cells from bone marrow. Many parents have their newborn's cord blood preserved in the event it may be needed at some point in the future for treatment of their child's or the child's sibling's cancer or genetic disease. Close to a hundred diseases have been treated with cord blood. For a lot more detail on cord blood and how it is collected, stored, and used, go to CordBloodStocks.com.

Research on adult stem cells has generated a great deal of excitement. Adult stem cells have already been used successfully with patients: to treat cartilage defects in children; restore vision to patients who were legally blind; relieve systemic lupus, multiple sclerosis, and rheumatoid arthritis; and to serve as an aid in numerous cancer treatments.

Cord blood has been in the news a lot recently. A Florida hospital is waiving the fee for the donation of cord blood. Five cord blood transfer centers in Spain have joined a study for the treatment of lymphoma and leukemia. And a cord blood bank in Texas has added Midland Memorial Hospital to is collection network.

Cord blood is blood that comes from umbilical cords, and contains an extensive amount of hematopoietic stem cells. The blood is kept in depositories called blood banks. Cord blood stem cells are considered far superior to stem cells from bone marrow. Many parents have their newborn's cord blood preserved in the event it may be needed at some point in the future for treatment of their child's or the child's sibling's cancer or genetic disease. Over 75 diseases have been treated with cord blood. For a lot more detail on cord blood and how it is collected, stored, and used, go to CordBloodStocks.com.

The accompanying table below includes 32 companies in the ETF Innovators Emerging Stem Cell Index of U.S.-listed stocks with market caps below $250M. I will maintain the index with these 32 components and track the total market value and stock price changes as an indicator of investor and trader sentiment toward the stem cell and regenerative medicine space.

Below is a list of all 32 companies in descending order by market cap with a total value of $1.27B and an average stock price change of -15% over the past year for the index, as compared to losses of 20% for the Healthcare Sector SPDR (XLV), 4.7% for SPDR S&P Biotech (XBI), 9.1% for iShares Nasdaq Biotech (IBB), and 18.9% for PowerShares Biotech & Genome (PBE).

F4Q08 Earnings Call

September 9, 2008 5:00 pm ET

In early May, ThermoGenesis announced that it received an approvable letter from the FDA for its CryoSeal Fibrin Sealant System. The company's pre-market notification application [PMA] for CryoSeal is seeking FDA medical device approval as an adjunct to hemostasis in liver resection surgeries, and Biomet (BMET) has signed on as the distibution partner for the device. The company stated in its May press release that:

…the letter is confirmation from the FDA that the Company's CryoSeal application is approvable, and will be approved upon satisfactory completion of certain requirements outlined in the letter, including submission of final labeling, !
operator manual, and related documents. . .

Total sales look very promising, and the company also expects to receive word from the FDA sometime in June about its CryoSeal surgical wound care product, which received an approvable letter asking for more information before a final approval is granted.

While I believed the company could finally have its first profitable year sometime in 2008 or 2009, it has yet to show significant signs of lower quarterly losses.

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:

Cord blood is blood that comes from umbilical cords, and contains an extensive amount of hematopoietic stem cells. The blood is kept in depositories called blood banks. Cord blood stem cells are considered far superior to stem cells from bone marrow. Many parents have their newborn's cord blood preserved in the event it may be needed at some point in the future for treatment of their child's or the child's sibling's cancer or genetic disease.

What's going on? For one, the stock seems over-sold. Thermogenesis announced lower than expected numbers in its second quarter financial report, due to an unexpected manufacturing problem, which created a backlog of orders for disposable bags used with the AutoXpress system.

The company could not deliver on GE Healthcare's (GE) orders. But the problem seems to have been fixed, according to the company, and orders should be filled quick enough to reflect on the third quarter report.

The company can now produce as many as 2,000 disposable bag sets per week, or more than 100,000 per year.

In early February, the company released disappointing 2nd quarter numbers. Executives blamed a manufacturing capacity shortfall that caused a large backlog in orders of the disposable bags.

Four other states, Connecticut, Illinois, Maryland, and New Jersey, are also funding stem cell research. California is contributing almost twice as much as the Federal government towards research. Arnold Schwarzenegger, Governor of California, said "Today, we are making history."

According to StemCellsStocks.com, the research into stem cells involves finding out how an organism develops from a single cell and how healthy cells replace damaged ones. This research can lead to cell-based therapies to treat various diseases.

While earnings increased by 19%, net profit dropped by more than $250,000, although on a per diluted share basis, the bottom line was equal to last fiscal year's second quarter.

The company had two excuses for the poor results. First, it had a backlog of $2.5 million from its AXP product line; due to "manufacturing capacity constraints originating at the Company's contract manufacturing organization, shipments of the AXP disposables did not meet market demand."

The company had originally filed the application in early 2006.

CryoSeal is an automated device that could be used to produce fibrin sealants from a patient's own blood during surgery. If approved, the CryoSeal system will add a substantial revenue stream in addition to the company's stem cell collection and processing units.

While Bush is expected to veto the new legislation, critics believe there is enough push in the Senate to override the veto. It is expected that under a Democratic environment biotech stocks in general should perform well over the next few years, especially in controversial areas such as embryonic stem cell research.

Shares of Geron (GERN), StemCells (STEM), Aastrom Biosciences (ASTM), Thermogenesis (KOOL), LifeCell (LIFC), Advanced Cell Technology (ACTC), ViaCell (VIAC), Cryo-Cell (CCEL.OB), and Cord Blood America [CBAI.OB] all gained on the day.

Aastrom, StemCells, Cord Blood America and Advanced Cell Technology all gained by double digit percentage points.

Obviously, shares of StemCells jumped on the news, so did other stem cell companies, including Geron (GERN), Aastrom (ASTM), Thermogenesis (KOOL) and others.

But the excitement cannot be limited to the business community. Science and medicine as a whole will benefit by this pioneering clinical trial.

The developer of cell therapy storage and extraction systems used by umbilical cord blood banks was chosen as a BHI Stock Pick back in October.

During the last quarter, Thermogenesis's distribution partner GE Healthcare, a division of General Electric (GE), became the exclusive distributor of the company's automated cell storage systems to the world's largest cord blood bank, CBR in New York. The agreement ensures the sale of the systems for the next 15 years!

The last couple of years have positioned Thermogenesis to take advantage of the blood stem cell cryopreservation industry for many years to come. The company's flagship products are the BioArchive and the AutoXpress systems.