Why Athersys Inc. Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Athersys (NASDAQ: ATHX  ) , a clinical-stage biotechnology company focused on regenerative medicine, advanced as much as 10% after announcing that it had been granted three new patents for its stem cell and regenerative technologies in Japan.

So what: According to the company's press release, Athersys received a patent covering "non-embryonic, multipotent stem cells, such as MultiStem, and applies to all therapeutic applications;" a patent covering "the use of such stem cell therapies for the treatment of immune dysfunctions, such as graft-versus-host disease (GvHD), and inflammatory diseases and autoimmune disorders (e.g., inflammatory bowel disease (IBD)" and a final patent covering the treatment of brain injuries such as a stroke or traumatic brain injury with multipotent stem cells.

Now what: Obviously, being granted three patents protects Athersys' proprietary technology from competition and enhances the intellectual property value of the company. It's also a sign of changing times in Japan where recent regulatory changes have now allowed for a favorable view toward stem-cell-based therapies. Based on these patents, the next most logical step would be for Athersys to find a collaborative partner or two to help split its development costs. Historically, stem-cell research is very costly and few, if any, companies have been able to deliver for shareholders. With that being said, and Athersys' share price having doubled in just the past four weeks, I'd suggest that sticking to the sidelines and waiting for encouraging trial data might be your best course of action.

Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

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  • Report this Comment On January 09, 2014, at 4:20 PM, JaiYen wrote:

    I agree on your advice that it is folly to try and time the market. However, I think we could also find common ground in the advice to buy low and sell high. Currently ATHX has two phase 2 tests in progress, ample cash reserves, a partnership with Pfizer and is on the cutting edge of a revolution in medicine regarding the treatment of stroke and other diseases of aging. Currently it is selling at a share price of under $5. For those who research what this company is doing and has accomplished, the time for action has arrived. Biotech is a volatile field and those who delay may end up chasing the train as it pulls out of the station.

  • Report this Comment On January 09, 2014, at 4:47 PM, MikeLad wrote:

    I think Athersys is a great buy right now. I wish the author did a little more due diligence. If you're just going to report the news, that's fine, but don't make a recommendation to wait for a dip, because that dip may not come anytime soon. The crunch to get in before trial data has already begun. This company still has a relatively small market cap and it could easily multiply If the trial data is encouraging as it would validate their platform Multistem. It has even better catalysts ahead. Just the opinion of someone that actually has done a lot of research on this company.

  • Report this Comment On January 12, 2014, at 9:47 AM, pipelight wrote:

    I agree with doing better DD. This is a freight Train getting ready to run down the tracks. I have been covering and watching very closely this stock, news, etc. Spent 6 weeks DD everything. Unless they are flat out lying and ready to ruin their careers. This is huge on the upside this year.. I can't even guess what number if both phase II are good. Maybe 20 -40.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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