StemCells, Inc. (NASDAQ: STEM) is seeing a rather favorable reaction to an FDA trial approval today. The question to ask is if the move is justified. The exact news is a FDA authorization for the company to initiate a Phase I/II clinical trial study in age-related macular degeneration. This covers the company’s proprietary purified human neural stem cells HuCNS-SC candidate.
AMD causes vision loss and blindness and is the most common reason for such loss in those over 55 years. Some 30 million people are affected by this worldwide, and treatments today seem more of a delaying mechanism rather than a treating or curing mechanism.
The trial will be an open-label, dose-escalation study. Where we have an issue is that the company expects to enroll a total of 16 patients. This is a long ways off for a company of limited means. The love of stem cell stocks has also come and gone. Even after a 9% gain to $1.07 today on 8-times normal volume, the 52-week trading range is $0.70 to $9.80. StemCells also has a market cap of only $15.3 million and its total short-term liquidity is only about $12.5 million.
For such a long process, StemCells is going to have to access more funds before too long. Questioning the move today is not a question of the company, it is simply financial math. It has a long road ahead of it, even if the stock continues to recover.
JON C. OGG
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