Pluristem Therapeutics, Inc. (NASDAQ:PSTI)

CAPS Rating: 1 out of 5

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6
Player Avatar zzlangerhans (99.74) Submitted: 7/22/2012 1:42:11 AM : Underperform Start Price: $3.67 PSTI Score: +11.55

There's certainly no shortage of microcap biopharma companies that have questionable ethics when it comes to misrepresentation and self-promotion with the ultimate goal of enriching management. But there are only a few that inspire the deep revulsion that I have for Pluristem. I can't say I have much sympathy for anyone who knowingly invests in a stock that recently underwent a 200:1 reverse split. Nevertheless, no investor deserves a CEO who writes a letter to shareholders to take credit for "saving the life" of a single patient who recovered after use of their unproven therapy outside of a clinical trial. It's notable that this miraculous event occurred outside of the United States, which makes the company's version of events much more difficult to corroborate. Here's a blurb from the CEO from a press release to an Israeli newspaper:

"The patient has been hospitalized at the Hadassah Hebrew University Medical Center in Jerusalem since August 2011. Her aplastic bone marrow had been refractory to treatment. So she underwent allogeneic stem cell transplantation from a matched unrelated donor. The first transplant was unsuccessful and the patient remained with bone marrow failure. The patient underwent a second allogeneic stem cell transplantation from a second donor. The bone marrow function was very poor and the patient suffered from recurrent infections. Two months after the patient's second bone marrow transplant, the child received PLX cells intramuscularly in two doses about one week apart. Some 10 days after the last administration of PLX cells, the patient's hematological parameters began to significantly increase, an effect that has persisted to date. The patient's general clinical status has also improved. Subsequent analysis has indicated that the PLX cells worked by stimulating the recovery of the hematopoietic stem cells contained in the second bone marrow transplant that she had received over two months earlier."

Read between the lines here. In the letter to shareholders, the CEO states that PLX cells restored bone marrow after two unsuccessful bone marrow transplants. But in this blurb, we see that the bone marrow was actually restored by the second bone marrow transplant. "Subsequent analysis" indicates that the second bone marrow transplant worked because it was stimulated by the PLX cells. Of course, you'll never get to see that analysis. Just take the CEO's word for it. In fact, why bother having clinical trials at all? Just throw some PLX cells on top of standard of care for various diseases and selectively PR the cases that improve, giving the credit to the PLX cells. Once you've issued enough craven, self-serving PR's then you can sell the therapy to as many desperate, gravely-ill people as you can.

Just one problem with that approach. It's called the FDA. You can't sell your snake oil in the USA until they've approved it. In order to get something past them, you have to demonstrate a benefit that outweighs the risk in large, randomized clinical trials. That's an area where Pluristem has actually made very little progress in recent months, despite their exciting announcement of the selection of a contract company for an upcoming phase II trial. No word on when that trial will actually begin, and likewise for other promised late stage trials.

In the midst of all this creepy nonsense and loud moaning from the Seeking Alpha echo chamber, the stock is up 40% in a week from steady state around 2.4. Is the move over? Don't really know. But eventually the money will have been made by the insiders and manipulators and the retail traders will ride the wave back down to baseline.

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Member Avatar RRobertsmith (< 20) Submitted: 8/10/2012 12:38:43 PM
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your right, your very correct, but Mr. Market says your timing is off...aka your score is hurting on this one.

Member Avatar TSIF (99.96) Submitted: 8/11/2012 7:58:59 PM
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Mr. Market can frequently "wrong size" an equity. ZZ sometimes factors in potential catalysts, but short term blimps are not normally a conncern of his. Unlike many, he's not playing for CAPs points, CAPs is a tool to develop his thesis.

I'll take my downthumb at $4.35 after watching the chart and knowing it still has upward momentum. When the sellers decide to dump or when dilutive financing is on the back of the rise then the collapse can occur suddenly and you're either "in the game" with potential of a short term loss, or you're on the sidelines.

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