Stem Cells Have a Long Way to Go


StemCells stock jumped more than 20% after the biotech released long-term data for its neural stem cell product HuCNS-SC, but investors seem to be coming to their senses today, knocking it down about 5% as of this writing.

No doubt the data are tantalizing. Of the three patients that were treated with HuCNS-SC a year ago, two have seen gains in sensory function -- detecting touch, heat and electrical stimuli -- which was also observed at the six-month follow-up. One of those patients converted from a complete spinal cord injury to an incomplete injury since the last update.

What does this mean? Unfortunately, not a whole lot. There's varying degrees of the definition of an incomplete spinal cord injury, but it's still considered a paralysis. It's not like these patients have gotten up and started walking.

Investors should keep in mind that StemCells has a long way to go. It's hard to draw hard conclusions from three patients in an uncontrolled trial. Sarepta Therapeutics' trial testing eteplirsen in Duchenne muscular dystrophy had eight patients in the drug arms and a placebo group to compare against, and many people question whether the data is strong enough to convince the Food and Drug Administration to approve the drug.

That wasn't really the point of StemCells' trial, of course; it was more of a proof of concept. I think the biotech has proven that HuCNS-SC likely has activity (without a matching placebo group, we can't know for sure). What isn't clear is whether the activity is clinically meaningful. What's the point of getting the injection if it doesn't improve your quality of life?

StemCells is running a second cohort of patients with incomplete injury, hoping that they can see a more dramatic effect starting with patients that aren't as severe. Whether it works or not, we're still years away from HuCNS-SC getting on the market.

The reason why Gerongot out of the stem cell business wasn't necessarily because there wasn't promise, but because it was clear that development was going to be costly and time-consuming. There's still a lot we don't know about how to create stem cell treatments.

At a market cap of $70 million, it's hard to call StemCells overvalued. But if you're going to buy, be prepared for a long haul that might never result in a product.

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