StemCells, Inc. (NASDAQ:STEM)

CAPS Rating: 2 out of 5

A biopharmaceutical company that operates in one segment, the development of novel cell-based therapeutics designed to treat human diseases and disorders.

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6
Player Avatar zzlangerhans (99.77) Submitted: 4/12/2011 11:08:21 PM : Outperform Start Price: $7.78 STEM Score: -84.94

This is a good one, even for baby biotech.

Stemcells dropped 15% on Friday after announcing they were canceling a trial of their CNS stem cells in neuronal ceroid lipofuscinosis because they couldn't find any patients that met enrollment criteria. Now that's an orphan disease. Now, you might want to think twice about investing in a company that has already spent millions of dollars trying to cue a disease that apparently no one has. Dumb as that sounds though, it's still not as bad as finding your therapy to be ineffective. And although I've repeatedly expressed my doubts about Stemcells' long term prospects, they haven't yet shown their treatments to be ineffective in clinical trials.

Despite the canceled trial. Stemcells still has clinical trials in progress for Pelizaeus-Merlbacher disease and spinal cord injury. Hopefully the former won't suddenly become extinct as well in the middle of the trial. Historically, the stock has rebounded well from this kind of minor setback.

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Member Avatar MajorBob04 (99.43) Submitted: 4/13/2011 10:43:44 PM
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The frequency of PMD appears to be 1 out of 100,00 to 1,000,000. If there's 7 billion people in the world, and all PMD sufferers needed / knew about / could afford / have insurance pay for the drug, that means approximately 7,000 to 70,000 people globally might need this treatment. Is that enough people?

I would think spinal cord injury is much more prevalent, thus from a pure financial benefit point of view, that looks to be more beneficial financially. I hope they find other applications, too . . .

Member Avatar zzlangerhans (99.77) Submitted: 4/16/2011 7:17:47 PM
Recs: 2

I found estimates of about 1 out of 200,000 to 400,000 males. For the sake of argument, say 1 out of 500,000 people. In reality, only about 2 billion people live in the USA, EU, Australia, Canada, and other highly developed countries where they are likely to be given treatment at anything approaching full price. That's about 4000 patients. Assuming Stemcells could capture half that population and charge $400K per year (which is what Alexion charges for Soliris for PNH) they could potentially bank 1.6B per year. As Alexion and Genzyme have proven, there's a lot of money to be made in orphan diseases. Alexion has been re-writing the biotech handbook after amassing a market cap of almost 10B treating their single rare disease.

Obviously, a successful treatment for spinal cord injury would bring in much more revenue - likely upwards of 10B per year. I'm sure Stemcells would be pretty thrilled for a shot at either market. The only problem is they've demonstrated absolutely nothing in terms of their therapy to improve any disease. That's why they're just another face in the crowd of dubious baby biotechs.

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