Analyzing the
Business and Technology
of Stem Cells

Caveat Emptor, or Cave Canem?

Reputable stem cell companies build value by striving to deliver lifesaving therapies to the clinic, while some others just pump out press releases

August 9, 2013

The fifteen companies included in the SCSI Stem Cell Stock Index have a combined market cap of $1.8 billion, partaking of a public capital market for stem cells that is, at once, both too small to get the job done expeditiously and yet, paradoxically, at the same time too large for the industry’s own good.

Two billion dollars is a number large enough to be certain to capture the imaginations of hucksters, pump-and-dumpers, and sell-side ‘analysts’-for-hire. There’s serious money to be made here without going to all the bother and expense of delivering a legitimate product to market or saving a single life, provided only that one is not overly encumbered by too fine a regard for the facts. Combine that with the nature of stem cell technology itself -- too complex in its devilsome scientific details for the average retail investor to critically assess, yet widely and breathlessly heralded in the popular press on a daily basis -- and the opportunity that stem cells present to separate fools from their money may simply be too tempting to resist.

A textbook illustration of how an essentially information-free press release can thrill the rubes and thereby move this market is provided by yesterday’s (August 8, 2013) press release from TotipotentRx and Thermogenesis, TotipotentRx and ThermoGenesis Announce Successful Launch of Bone Marrow Transplant Program. As this article is being written, ThermoGenesis’ share price has spiked over 22%, on very heavy volume, in the day and a half since that press release was issued. Let’s parse it out to understand why.

The Subtitle: "First Successful ABO-Incompatible Transplant Using ThermoGenesis’ Breakthrough AXP® Platform"

The average college-educated retail investor is probably at least vaguely aware that life-saving bone marrow transplants (first mastered in 1957) require careful matching of the marrow donor’s tissue type to the recipient’s, lest the transplant recipient fall victim to the frequently fatal graft versus host disease -- and that identifying a suitably histocompatible donor is almost always difficult, and too often impossible. Thus, trumpeting the "First Successful ABO-Incompatible Transplant" can have an undeniable ‘wow’ factor for the careless reader.

Except of course that, as Lynne Trusse, author of the renowned treatise on the perils of punctuation, Eats, Shoots & Leaves might say, the devil is in the commas (or the lack thereof). No, silly investor, this press release isn’t boasting of the "first successful ABO-incompatible transplant," (which would be a patent falsehood, given that routinely successful ABO-incompatible bone marrow transplants have been a matter of course since at least 1982). Rather, this PR touts the first successful ABO-incompatible transplant employing ThermoGenesis’ AXP® product.

’Wow’ Words

The "breakthrough" this accomplishment presents is considerably more than merely open to question, given (as a recent clinical review notes):

ABO incompatibility is not a barrier to successful HPC [hematopoietic progenitor cell] transplantation....Approximately 40 to 50% of HPC transplants are ABO incompatible”.

Of course, the average retail investor could be forgiven for not knowing this, as well as for being unaware that numerous clinical instruments which make such ABO-incompatible bone marrow transplants both safe and practical have been marketed and used for this purpose for many years now, and are routinely found in any well-equipped clinical hematology laboratory (for example, TerumoBCT’s Cobe® 2991, which has been on the market for more than 30 years, as well as the company’s Spectra instrument). Can ThermoGenesis’ AXP system compete with these entrenched competitors on price and performance, or on clinical outcome? If so, that would be useful and interesting news, but the press release is silent on these points.

In short, ThermoGenesis’ and TotipotentRx’s recent roles in achieving a successful ABO-incompatible bone marrow transplant may have been a breakthrough for these two companies (in the sense of finding something useful to do with their AXP product), but for clinical medicine as a whole this "breakthrough" is little more than yesterday’s (or rather, 1980s’) news.

Sleight of Word Prestidigitation

ThermoGenesis’ and TotipotentRx’s press release observes, correctly, that:

Bone marrow transplantation is the only effective treatment for patients with severe aplastic anemia. However, 30–40% of transplant candidates are unable to find a compatible donor.

Given that the press release concerns the use of the companies’ AXP system to overcome ABO incompatibility in marrow transplants, the average retail investor might be forgiven for concluding that AXP solves this problem of the too-large percentage of patients who cannot find a suitable lifesaving donor. Except that the press release never actually quite claims that, and for the best of all possible reasons: because it isn’t true.

As discussed above, ABO incompatibility is today a non-issue, routinely solved by removing the offending and unnecessary red blood cells (the cells that bear the incompatible ABO antigens) from the bone marrow sample prior to transplantation. Instead, the reason why half or more of all transplant candidates still cannot find a compatible donor is because of a completely different set of antigens (so-called HLA antigens), on a completely different population of cells in marrow (leukocytes and stem cells) -- a problem that neither the AXP system nor any other approach today can address. A highly accessible explanation of HLA typing for bone marrow donations is available at the National Marrow Donor Program.

If the eager retail investor reading the ThermoGenesis/TotipotentRx press release slips and falls on the erroneous conclusion...never quite stated there, but never clearly disavowed, either...that the companies’ AXP product is a life-saving game-changer solving the long-standing problem of bone marrow donor/recipient incompatibility -- oh well. Just another application of the First Law of Investment: a fool and his money are soon parted. It’s hard to generate too much sympathy for people who buy something they don’t understand, out of the back of some truck, only to discover when they get home that it doesn’t work.

Unfortunately, the collateral damage of unwise stem cell investment decisions also impacts innocent bystanders, too: reputable but capital-starved stem cell companies sincerely striving to deliver life-saving innovations to the clinic, and the desperate patients and families praying for those miracles. Every dollar invested in stem cell smoke and mirrors is a dollar that isn’t invested in the quest for real stem cell cures. And that is, quite literally, a shame.

For further adventures in ThermoGenesis/TotipotentRx deconstruction, and our analysis of their upcoming merger to form Cesca Therapeutics, please see our previous essay, ThermoGenesis, TotipotentRx, and Cesca Therapeutics: A Disappointing ‘Gemisch’