Miracle Improvement In ALS Patient Could Force Big Pharma To Get Serious On Stem Cell Therapy

Includes: ATHX, CUR, GE, GSK, JNJ, PFE
by: Troy Bayer

For over a decade, major pharmaceutical companies have tip-toed around stem cell therapy due to ethical concerns and the high investment risk of unproven treatments in the earliest stages of development. While companies like Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) have tested the waters and invested nominal amounts into stem cell research, there has yet to be a game-changing catalyst to truly catapult the stem cell therapy industry. However, the miraculous improvement of ALS patient Ted Harada may be exactly the trigger needed to change the way pharmaceutical leaders think.

Harada's case has been well documented by media outlets such as Fox, CNN, and USA Today, among others. In August 2010, doctors diagnosed 38-year old Harada with amyotrophic lateral sclerosis (ALS), or Lou Gehrig's disease; the fatal degenerative disease that leaves most victims with a life expectancy of three to five years. Hence, it came as no surprise that Harada's condition deteriorated quickly. Soon after the diagnosis, he was forced to quit his job, walk with a cane, and barely could muster the energy to play with his children. Harada's worsening condition convinced him to join a clinical study led by doctors at the University of Michigan and Emory University, and sponsored by the Maryland-based biotech company Neuralstem, Inc. (NYSEMKT:CUR).

The premise of the clinical trial was to safely deliver stem cells into the lumbar, or lower region, of the spinal cord. The surgery was performed by Dr. Nicholas Boulis, the associate professor of neurosurgery at Emory School of Medicine. Dr. Boulis also designed the device used to inject the stem cells into the spinal cord, a tool that Neuralstem has purchased exclusive licensing rights to.

Results of the study, published in April 2012, validated the safety of the procedure as none of the twelve patients' bodies rejected the stem cells, nor was there any evidence of long-term complications. In the case of Harada, the procedure yielded positive results that allowed him to walk without a cane and helped improve his breathing. This August, Dr. Eva Feldman, a neurologist at the University of Michigan, surprisingly declared the stem cell therapy had essentially stopped the progression of the disease. The encouraging results have led to U.S. Food and Drug Administration (FDA) concurrence to inject stem cells in the cervical, or upper region, of the spinal cord.

Harada's sudden and unexpected improvement begs several questions on the investment front; what impact will there be on the stem cell industry and will capital from major pharmaceutical companies start to flow more rapidly? First, expect biotech companies to explore less conventional and more daring regions of the body to inject stem cells. The Neuralstem project is one of the only medical procedures that utilized the spinal cord as the entry point for stem cell injection. Second, Harada's improvement may diminish some of the public's aversion to stem cell treatments due to ethical concerns. The vast potential of stem cell therapies to cure humanity's worst ailments and disorders will ease opposition to its use, creating a window that major pharmaceuticals could use to invest more resources into the industry.

Many of the major pharmaceutical companies have invested in stem cell research and biotech companies to a marginal degree. For example, Pfizer has partnered with Athersys (NASDAQ:ATHX) to use stem cell therapy to treat inflammatory bowel disease (NYSEARCA:IBD). The drug, derived from stem cells found in bone marrow and based on Athersys' Multistem commercial product, is currently in FDA phase 2 clinical studies. Pfizer is also working with the University College of London to develop a stem cell-based treatment for macular degeneration.

Johnson & Johnson has teamed up with Novocell, Inc to develop stem cell therapies to treat diabetes and cancer. Advanced Cell Technology (ACTC.OB) is using embryonic stem cells in an attempt to treat Stargardt's macular dystrophy and age-related macular degeneration, two diseases that cause blindness. Neuralstem is developing stem cell treatments for strokes, Alzheimer's, spinal cord injuries, and Parkinson's disease. GE Healthcare (NYSE:GE) has also advanced stem cell research through its cell technologies R&D department. Stephen Minger, the head of this department, captured the evolving stem cell industry perfectly: "When you see companies like Pfizer, GlaxoSmithKline (NYSE:GSK), Johnson & Johnson, and GE invest in stem cells and regenerative medicine, it suggests a level of maturity. It is still high risk, but it is a calculated risk."

Based on the major player's existing involvement in stem cell research, it would not be surprising if Harada's improvement demonstrates the technical maturity needed to push the industry to the next level. The stem cell industry certainly presents many risks; it may be very difficult to commercialize a product and caution must be given to the ethical, political, and legal concerns of stakeholders. Nonetheless, investors should watch Harada's condition closely over the coming months and years to catch a glimpse into the future of stem cell therapy, and whether the major pharmaceutical companies finally get serious about its potential.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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: The writer is not a licensed broker or investment adviser and therefore cannot recommend that you buy, sell, or hold any security. While every attempt was made to verify the information in this report, much has been derived from public sources and cannot be guaranteed for accuracy.