Adult Stem Cell Companies Seen as Profitable Investment

Fortune Magazine, June 16, 2009

While religious groups debate the various ethical issues of embryonic versus adult stem cells, and researchers debate the various scientific issues, financial analysts are not debating at all. From a purely monetary perspective, it is adult stem cells, not embryonic stem cells, which constitute a sound investment.

As the authors of today's article point out, "Amid controversies over embryonic stem cell research, drugs using adult cells are already bearing fruit." As the authors continue to explain, "When it comes to stem cells, the public - and the media - tend to focus on embryos. But researchers and analysts say marketable therapies already are emerging from less controversial work with adult stem cells."

Such a fact is hardly a secret, as scientists and physicians have been trying to tell the world for years that adult stem cell therapies already exist, while embryonic stem cell therapies do not, and probably will not for at least another decade. Such information is often "translated" through the filters of the media, however, many members of whom seem to be heavily biased toward the word "embryonic". Apparently it takes a financial perspective to convey the point that adult stem cells are scientifically and medically viable as human therapies, whereas embryonic stem cells are not. As the authors of today's investment article explain, "Adult cells make up the lion's share of the stem cell space, mainly because they are easier to come by than embryonic cells, and less expensive to run in clinical trials. They are also derived from mature tissue, like bone marrow or umbilical cord blood, so they avoid the ethical debate that surrounds embryonic stem cells."

The authors go on to point out that adult stem cells can "combat a variety of maladies from diabetes to heart disease", and "In fact, adult stem cells are currently the only type of stem cells used in transplants to treat diseases, such as cancers like leukemia. Furthermore, researchers are far closer to commercializing drugs based on adult stem cells than any product based on embryonic stem cells." Such medical and scientific advances did not suddenly happen overnight, but in fact have been going on for years. Where have you been, members of the media???

Ethics and politics aside, the scientific differences between embryonic and adult stem cells are numerous and significant, which is precisely why financial analysts are cautioning investors to heed the differences when it comes to market and monetary considerations. One financial guru in particular, Robin Young, a medical industry analyst with RRY Publications, has estimated that gross sales of adult stem cell therapies will surpass $100 million in the U.S. alone, just in 2009. In less than a decade, by 2018, Mr. Young has calculated that revenue from adult stem cell therapies could exceed $8.2 billion. Embryonic stem cells, by contrast, are not expected to advance beyond the laboratory stage for at least another decade, at the earliest, due to the numerous inherent problems that plague embryonic stem cells, not the least of which is their strong tendency to form teratomas - a particularly hideous type of tumor that contains teeth, hair, bones and bodily organs in a grossly disorganized fashion, like a disassembled and randomly rearranged human embryo. Even Dr. James Thomson, the world authority on embryonic stem cells, repeatedly emphasizes the point that embryonic stem cells are notoriously problematic in the laboratory and therefore will require at least another decade of research before being safe enough to be considered clinically viable as therapies. As "the father of embryonic stem cell science", and the first person who ever isolated an embryonic stem cell in the laboratory, Dr. Thomson certainly knows what he's talking about, although most members of the media seem uninterested in such a dismal prospect for embryonic stem cells, so the disadvantages of these highly volatile and dangerous stem cells are rarely reported. But for anyone who may be interested either in being treated as a patient with stem cells, or in investing money in stem cells, the scientific realities become immediately relevant and important. While such realities are certainly discouraging for embryonic stem cells, they are highly encouraging for adult stem cells. As stated in today's article, "Indeed, several pharmaceutical companies are now taking notice of research advancements in adult stem cells - and their proximity to reaching the market."

According to Debra Grega, executive director of the Center for Stem Cell and Regenerative Medicine at Case Western Reserve University, "Adult-derived cells are the ones that have been studied for the past 10 to 15 years and are ready for prime time. Large pharmaceutical companies are now wanting to get into the adult stem cell therapeutic area. That indicates to me that there is enough safety and enough efficacy that they are willing to put money in."

By sharp contrast, as the authors of today's article point out, "The California-based outfit Geron dominates the embryonic market, and is perhaps 10 years away from commercializing a spinal cord treatment based on its research."

Another example of the momentum behind adult stem cell therapies is found in the pharmaceutical giant Pfizer which announced in November of last year that it would invest $100 million in regenerative medicine research over a 3 to 5 year period, with a strong emphasis on adult stem cells. Additionally, as the authors of today's article explain, "The frontrunner in the adult stem cell space is Osiris Therapeutics. Last year, the biotech Genzyme paid Osiris $130 million up front, with another $1.2 billion to be paid in potential milestones, to develop two new adult stem cell treatments. Osiris's star drug Prochymal is used to fight graft-versus-host disease, a painful illness that can afflict transplant recipients. Osiris says the FDA could approve the drug within a year. If successful, Osiris would be the first company to win approval for a stem cell drug."

Among other adult stem cell companies mentioned in today's article are Stem Cells Inc., Cytori, and Aastrom Biosciences, all of which are described as "moving forward in the adult stem cell space."

As the authors conclude, "And so while there's just one star in the embryonic stem cell universe, a whole constellation of adult stem cell drugs could be just around the corner."

Rather than having to wait another entire decade, or longer, for what may or may not even be a profitable return on one's investment in the embryonic stem cell field, a wiser investment strategy would target any of the numerous companies that already have adult stem cell therapies in FDA-approved clinical trials, and which are moving increasingly closer to legal commercialization in a virtually unlimited market which is entirely untapped.