Stem cells represent one of the keys to life as we know it and despite ethical concerns and intense scrutiny from the FDA there are many companies working hard today to take stem cell technology to the next level. To most investors, investing in stem cell companies is taboo or similar to buying lottery tickets. However, the more you read up on them and see what some of them are doing, the more hopeful and attractive they become. Stem cell technology is less about tackling symptoms, like many traditional pharmaceutical endeavors, and more about taking away disease, shortening recovery from disease or trauma and essentially fixing the problem. If stem cell technology meets critical study endpoints, traditional medicine might change and any investments you currently have in biotechs might change along with it.
The following stem cell companies might not be making waves any time soon, but for a little investment today the potential for a nice profit down the road can be well worth the wait. The books are typically out of whack and the losses are usually quite extreme, but investment in stem cell companies is more about potential and less about how much money will be made in the current year. Here is a look at five prospective companies all with some of that "potential" to offer investors.
Osiris Therapeutics, Inc (NASDAQ:OSIR) Share Price: $ 11.00 (open 3/21)
Osiris is already generating some revenue and does have two products out with Grafix for soft tissue and wound repair and Ovation for orthopedic applications. Their approach has been to focus on the inflammatory, cardiovascular, orthopedic and wound healing markets with their stem cell therapies. Osiris primarily uses adult bone marrow to develop biologic stem cell drug candidates. It has also made a breakthrough with mesenchymal stem cells in its biological drug candidate Chondrogen for treating osteoarthritis in the knee. Osiris is far along with its lead biologic drug candidate, Prochymal, which is already approved for use in Canada and New Zealand for patients with acute graft versus host disease (GvHD), Crohn's disease, acute myocardial infraction, type 1 diabetes and GI injury. Prochymal stands as the first ever approved stem cell therapy and approval in the US is pretty close at hand. Osiris has collaboration agreements with Genzyme Corporation (GENZ) for the development and commercialization of Prochymal and Chondrogen. Osiris has done a good deal of work to advance Prochymal to where it is now and should be able to secure FDA approval within the next year or so. If or when that happens, Osiris will still have so much more left in its tank.
Pluristem Therapeutics, Inc (NASDAQ:PSTI) Share Price: $ 3.19 (open 3/21)
Pluristem has a lot tied into its proprietary PluriX three-dimensional process for growing placential adherent stromal cells in a natural environment. Pluristem develops placenta expanded cells (NYSEMKT:PLX) and peripheral artery disease cells with this process. The peripheral artery disease cells are in a phase II trial for treating intermittent claudication, critical limb ischema and Buerger's disease. The PLX product has many more treatment possibilities with muscle injury, bone marrow diseases, inflammatory bowel disease, pulmonary disorders and even multiple sclerosis. Pluristem also has a licensing agreement with United Therapeutics (NASDAQ:UTHR) for use of PLX cells to treat pulmonary arterial hypertension. The phase II trial of PLX cells to rehabilitate the gluteus medius muscle tissue following hip replacement surgery has so far shown no adverse effects to the treatment. The other phase II trial for intermittent claudication is about two years behind and shouldn't be completed until sometime in 2015. Hip replacement surgery often comes with a very long uncomfortable recovery period due to the muscle and tissue damage. Proving viability here will surely move PLX cells to other applications but with over 800,000 hip and knee replacement surgeries performed each year, short term prospects are not looking too bad.
Neuralstem (NYSEMKT:CUR) Share Price: $ 1.14 (open 3/21)
Neuralstem is a stem cell company that is tackling some major issues in the way of spinal chord injury, ALS and ischemic stroke. Neuralstem has very little revenue with only a license to Q Therapeutics for using its floating cannula spinal chord injection platform and some funding from a DOD contract with Loma Linda University for treatment of cancerous brain tumors. Their lead candidate, NSI-566 is targeted to generate human neurons from the brain to the spinal chord. Phase I trial results have proven NSI-566 to be safe but efficacy remains the hurdle for phase II and Neuralstem is in discussions with the FDA to try to increase the dosage for better potential results in phase II. These trials are for patients suffering from ALS. Additionally, the FDA recently approved a trial with NSI-566 for chronic spinal chord injury patients with a phase I trial expected to start in a few months. Neuralstem also has developed NSI-189, a neurogenic small molecule compound for the treatment of major depressive disorder, chronic traumatic encephalopathy, Alzheimer's disease and even post traumatic stress disorder. The NSI-189 compound is in a phase 1b trial for patients suffering from major depressive disorder. Results are due out in the third quarter of this year and with such potential to treat a variety of conditions, the expectations are for Neuralstem to look for a larger partner to help fund NSI-189 to the commercialization stage. As positive as NSI-566 might be, Neuralstem needs a partner for NSI-189 to help fund its operations and advance it further.
Neostem, Inc (NBS) Share Price: $ .63 (open 3/21)
Neostem is pursuing stem cell therapy with autologous stem cells from the patient's own bone marrow. Neostem has a major candidate in, AMR-001, a chemotactic hematopoietic stem cell product with cells derived from a person's own bone marrow that are enriched to improve potency and infused back into the patient. Neostem plans to use AMR-001 for heart attack victims to fix damaged heart muscle, vascular injury due to vascular insufficiency, progressive myocardial injury and more. Neostem has a phase II PreSERVE trial for AMR-001 to save and repair damaged cardiac tissue in patients who have suffered a heart attack or any similar cardiac event. Neostem also provides contract development and manufacturing services to other members of the regenerative medicine field including adult stem cell collection and storage services. This manufacturing segment grew by 100% last year and continues to produce. Neostem has passed the second safety review in the PreSERVE trial and also has expanded its intellectual property to include ischema-induced congestive heart failure for AMR-001. If things go well with Neostem and their trial on the heart there is no telling what else they can accomplish with AMR-001 and other issues.
Advanced Cell Technology (ACTC.OB) Share Price: $ .07 (open 3/21)
Last month I wrote about one of the stem cell pioneers, Advanced Cell Technology . ACT is using human embryonic stem cell (hESC)-derived retinal pigment epithelial cells (RPE cells) to treat patients with two distinct vision disorders, Stargardt's Macular Dystrophy (SMD) and dry age-related macular degeneration (dryAMD). ACT's stage II studies have included doses of 50,000 and 100,000 cells which have been proceeding according to plan. They have experienced positive results with safety (of far) and efficacy. The data and safety monitoring board (DSMB) has authorized ACT to proceed with trials utilizing 150,000 RPE cells. ACT has added two extra cohorts of patients to each trial in order to test patients with better vision or at earlier stages of the diseases. ACT is hoping that testing patients earlier in the progression of each disease will lead to better results and a higher percentage of test subjects achieving a successful endpoint in each study. Results of these phase II trials should be out in less than a year and this will be a pivotal point for the company. ACT has an intellectual property portfolio for more widespread applications of their stem cell technology and achieving positive results with dryAMD and SMD will only open the floodgates to even more profitable markets if these trials are successful.
Each of these companies is still pretty far from any significant payday and for each, all the potential in the world can't help the bottom line. These are the riskiest of all biotechs as companies like Geron (NASDAQ:GERN) can attest to when they exited out of this fairly crowded field. Stem cell advancement requires an inexpensive and ethical source of stem cells, patience with the FDA, the finances to get through all the trials and then finally what all biotechs require, results. ACT has a good cell source and is ahead of the pack, Osiris is just about ready to go to town with Prochymal and Neostem seems to be in the battle for the long haul with IP rights galore and contract services. Investing in this arena is less about the books and balance sheets and more about the hope and the steps taken to realize it. As a reminder, with high risk does come high reward.
Disclosure: I am long ACTC.OB. 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 starting to watch Neostem very closely as the current valuation is hard to beat and the company has built a solid foundation, has sound leadership and a well developed business model.