Thursday, June 19, 2014

StemCells CEO's Letter Once Again Shows Catalysts And Why You Should Invest In June $STEM

With today's dramatic runup in $STEM shares, had to share this. This was my rejected article from June 4th:

Investing in StemCells (STEM) is not for the faint of heart. The stocks sees large double digit gains and losses on a monthly basis, as the company updates investors on trials and upcoming events. A recent letter from StemCells' CEO should have investors bullish on this long term play going into an exciting month and year full of catalysts.
StemCells CEO Martin McGlynn is active in letting investors know what is going on with his company. He tells investors it is "important to have regular updates to keep you informed of the remarkable progress we are making".
Here are the highlights from McGlynn's latest letter to shareholdersand future investors:
· Over the next two years, clinical data from two Phase II studies will be released. This data will center on StemCells progress in studies related to spinal cord injuries and eye injuries
· StemCells recently completed enrollment in a Phase I/II spinal cord injury trial. This is the world's first human neural stem cell transplantation in chronic injury
· 4 of 8 current patients have experienced return of sensation
· Phase II clinical trials this fall will be completed in as many as 12 clinical trial centers
· Enrollment in Phase II SCI test expected to be completed in 12 months, with results coming 12 months later
· Enrolled 13 of 16 patients in a Phase I/II dose escalating trial geographic atrophy of age-related macular degeneration.
· Looking for a partner for further Phase II trials in the areas of NCL (Neuronal ceroid lipofuscinosis, aka Batten's Disease) and PMD (Pelizaeus merzbacher's disease)
· Cited the following as valuation drivers:
o People
o Alliances
o Intellectual property
o Research and development
o Financials
o Market opportunity
· Working on transforming "groundbreaking science" into "breakthrough medicine"
· Ended quarter (3/31) with $26.5 million in cash
Upcoming Catalysts
· June 19th: will present interim results of a test for age-related macular degeneration, trial is to test safety, tolerability and preliminary efficiency of one time transplant of stem cells, presentation taking place at International Society for Stem Cell Research in Vancouver, taking place June 19th through June 21st
· June 29th: will provide an additional update on the company's spinal cord trial at the Annual Symposium of the National Neurotrauma Society in San Francisco June 29th through July 2nd
· Fall 2014: Investor R&D Day, company will provide several items at this event including:
o Provide additional data from the Phase I/II AMD and SCI trials
o Provide clinical study design details for the planned Phase II controlled trials
o Hear from key opinion leaders in spinal cord injury and retinal degeneration
o Provide investors with a forum to have their questions addressed
Aside from the CEO letter, StemCells has also provided a couple of news releases investors shouldn't overlook. On May 21st, StemCellsreported the first 5 patients in a 16 patient AMD trial. On May 19th, StemCells announced that 2 patients had sensory functions from its spine cord injury trial. This brought the total up to 4 patients who had regained sensory function. The more impressive part is that the patients who have seen some function range in an elapsed time of 4 to 24 months from their injury. This shows the possibility of stem cells and the restoration of function in those with spinal cord injuries.
I have wrote about StemCells several times (January 2014July 2012), urging investors to invest in this lottery ticket medicine company. Shares are now down since those articles. Shares are trading up 6% in 2014, but remain down 25% in the last 52 weeks. This is a company who routinely sees its shares jump 10 to 20% on positive news. The events in June and the investor day in the fall will likely see large jumps. While shares may also fall from those jumps, eventually shares will see value and not trade in the $1 to $2 range anymore.
StemCells continues to have a relatively small market capitalization, despite a leading position in the stem cell research market. The company owns a patent portfolio that is well ahead of rivals, as Nature Biotechnology calls three patents "among the five most fundamental neural stem cell patents". StemCells has the SCI and AMD trials going on, but also has pre-clinical tests dedicated to PMD, stroke, and Alzheimer's. In 2012, StemCells shares jumped 70% on bullish notes of stem cells being used to treat Alzheimer's.
Shares of StemCells have traded between $1.15 and $1.87 over the last 52 weeks. With shares trading around $1.40 and approaching several milestones, investors may want to consider starting a position now in this long term play.

1 comment: