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The RegMed Daily Dialogue, 5/18/11, Market suffers lack of clarity, conviction and risk tolerance

The 6 W’s:   Who, what, where, when, why and what of it…

 

Regenerative medicine/stem cell universe stocks are up in mid-day trading on Wednesday (5/18/11). The NASDAQ is up 18.07 (0.65%) to 2801.28. The Dow is also up marginally 3034 (0.24%) to 12,509.92. What’s driving the regenerative medicine/stem cell market today …

Stocks on Wall Street started trading within a narrow range at the opening on Wednesday (5/18/11), after 3 days of losses. In early morning trading, the Dow fell 5.60 points, or .04%. The NASDAQ was up 6.91 points, or 0.25% fell 2 points, or 0.1 percent, to 2,335. Overseas markets rose slightly on 5/18/11 after a late-afternoon rally a day earlier. In mid-morning trading in Europe, the FTSE 100 index of leading British shares was up 0.9%, while Germany’s DAX rose 0.8%. The CAC-40 in France was 1% higher. But, it is coming back … slowly.

ASTM, ACTC.OB, ATHX, AMEX: CUR, CYTX, BMTI, OSIR, PSTI are up!  The bottom line, we are seeing a better appetite for depreciated shares where volumes have been anemic. I believe without any real news, regenerative medicine/stem cell companies are slowly crawling back as investors look for appreciation after these horrendous declines. Look for a lot more M&A initiatives … Time to get back slowly in this universe!

Shire acquires Advanced BioHealing for $750M:  Advanced BioHealing (ABH) is one of the few companies selling a product made of living cells. ABH’s Dermagraft skin substitute is used to treat slow-healing diabetic foot ulcers. Dermagraft is a cryopreserved human fibroblast-derived dermal substitute that is already approved in the U.S. for the treatment of diabetic foot ulcers and is in late-stage development for treating venous leg ulcers. Shire says it will continue to invest in the development of new indications for Dermagraft in additional countries and use its international commercialization and marketing expertise to increase sales of the product. The firm expects the acquisition will represent a springboard for the potential purchase of additional regenerative medicine assets. The product, with $146M in U.S. sales in 2010, has a 5% patient share of a potential $3B market.   The bottom line, Shire said it would finance the purchase through existing cash resources and expects no impact from the deal on its 2011 outlook. The bottom line, based on the acquisition, Shire said it planned to establish a new regenerative medicine business unit. Before the deal was announced, Advanced BioHealing had been planning to go public. Its initial public offering was expected to raise up to $214M on Tuesday, with shares expected to begin trading on the NYSE on Wednesday. Safeguard Scientifics Inc (SFE.N), a holding company with an investment in Advanced BioHealing, said it stood to receive $140M in connection with the Shire transaction, which is expected to close in the 2nd or 3rd Q of this year. Canaan, ABH’s largest shareholder with a 30% stake, had an initial investment of $15M in 2006.

Stem cell hope for kidney disease:  Australian researchers are claiming to have managed to “trick” human kidney cells into reverting to generalized cells, able to develop into virtually any type of tissue in the body. This achievement, done without the use of embryos, offers scientists a powerful new set of tools for studying the molecular mechanisms driving genetic kidney disorders such as polycystic kidney disease and Alport syndrome, as well as for testing new treatments for the diseases. The bottom line, in theory, these induced pluripotent stem (iPS) cells might even be used to create stop-gap cells for seriously ill people facing long waits for a donor kidney. This research is a stepping stone for the development of iPS cells from patients with genetic kidney disease, which is one of the most common life-threatening genetic conditions.

UCLA receives $8M CIRM:  UCLA had been awarded more than $8M in grants from California’s stem cell agency. The bottom line, 6 researchers with the Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research at UCLA will use the funds to investigate basic mechanisms underlying stem cell biology and differentiation. The Basic Biology III grants; 27 awarded in all, totaling $37.7M represent an ongoing effort by the California Institute of Regenerative.

VistaGen Therapeutics and Excaliber Enterprises complete of Reverse Merger and $3.8M Financing:  Excaliber Enterprises, Ltd. (OTC Bulletin Board: EXCA) announced today that its wholly-owned subsidiary has merged (the Merger) with VistaGen Therapeutics, Inc. (VistaGen), a private biotechnology company focused on stem cell-based drug rescue and drug development. As a result of the Merger, VistaGen is a wholly-owned subsidiary of Excaliber. Excaliber, now headquartered in VistaGen’s South San Francisco facility, will continue the business of VistaGen focused on development and commercial applications of VistaGen’s stem cell technology platform, Human Clinical Trials in a Test Tube™, and AV-101, VistaGen’s orally available pro-drug candidate in Phase 1 clinical studies for treatment of neuropathic pain.  Upon the closing of the Merger: Jon S. Saxe and Shawn K. Singh were appointed as directors of Excaliber; Stephanie Jones and Matthew Jones resigned as officers of Excaliber; Shawn K. Singh was appointed as CEO; VistaGen’s founder, H. Ralph Snodgrass, PhD was appointed President and CSO and A. Franklin Rice was appointed as CFO.  The bottom line, immediately prior to the Merger, VistaGen completed a $3.87M financing (including cancellation of $1.0M of debt) to accredited investors, including a $1.5M investment by Platinum Long Term Growth Fund. The financing consisted of 1.10 M Units at a price of $3.50 per Unit (as adjusted to give effect to the Merger). Each Unit consisted of one share of VistaGen Common Stock and a 3-year warrant to purchase a one fourth of one share of VistaGen Common Stock at a price of $5.00 per share (as adjusted to give effect to the Merger). In addition, concurrently with the closing of the Unit financing, VistaGen converted approximately $6.17 million of convertible promissory notes into approximately 1.76M Units and converted all of its outstanding shares of Preferred Stock into shares of Common Stock on a one-for-one (1:1) basis. Prior to 7/30/11, Excaliber intends to change its name to VistaGen Therapeutics and receive a new ticker symbol on the OTC Bulletin Board once the name change is completed.