As a small biotech with little revenue, no profits and no products on the market, stem cell therapy developer Athersys (Nasdaq: ATHX) is particularly vulnerable to big drops in its share price.

That's because Athersys' primary method for raising cash is through direct offerings of its shares, such as an offering that raised $13 million for the Cleveland-based company earlier this year.

"The stock price is essential to our valuation of the company as it determines the amount of cash received through such offerings and the extent of shareholder dilution," Morningstar analyst Lauren Migliore wrote in a note to investors that was published Monday.

That's why Tuesday's market surge was as helpful to Athersys as anyone. In midday trading, Athersys' shares were up about 13 percent to $2.07. Still, that represents a 19 percent decline on the year from Athersys' opening price of $2.54 in January.

On a brutal Monday for the market, Athersys dropped 18 percent to $1.83. Volume surged 395,000. On most days, Athersys' volume is below 100,000.

Migliore wrote that Morningstar was putting the company's shares "under review" in the wake of the falling share price.

Volatility in stem cell companies' shares is nothing new. That's because even the most obscure story on regenerative science can produce double-digit stock moves, thanks in part to companies's diminutive stock floats, according to Dow Jones Newswires.

Also contributing to that volatility is the near-constant uncertainty surrounding U.S. government support for embryonic stem cell funding, despite the fact that most publicly traded stem cell companies don't engage in research on embryonic cells.

Athersys' MultiStem product is an off-the-shelf stem cell treatment derived from the bone marrow of adults or other nonembryonic sources. The technology has shown promise in reducing inflammation, protecting damaged tissue and forming new blood vessels.

The company has about 23.5 million shares outstanding. Athersys is schedule to release its second-quarter financial information Wednesday after market close.

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