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One Stem Cell Stock to Avoid

Each week, Motley Fool editors cull a top stock idea from the pitches made on CAPS, the Motley Fool's 170,000-member free investing community. Want your idea considered for this series? Make a compelling pitch on CAPS with a minimum length of 400 words. Want to follow our weekly picks? Subscribe to our RSS feed or follow us on Twitter.
Company Pluristem Therapeutics (Nasdaq: PSTI  )
Submitted by zzlangerhans
Member Rating 99.08
Submitted on 4/24/2011
Stock Price at Sell Recommendation $2.86
Pluristem Therapeutics profile
Star Rating (out of 5) **
Headquarters Haifa, Israel
Industry Biotechnology
Market Cap $115 million

Aastrom Biosciences (Nasdaq: ASTM  )

StemCells (Nasdaq: STEM  )

Geron (Nasdaq: GERN  )

Cytori Therapeutics (Nasdaq: CYTX  )

Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.

This week's pitch:
Hooray! I love being the first on CAPS to call BS. In this case, I'm screaming it.

Any stock that has previously undergone a 200:1 reverse split should make you very very nervous. That's a lot of believers who got wiped out. Now there's a whole new crop of Pluristem believers who are either unaware of the previous generation, or simply think they're much smarter.

The stock increased about 300% at the beginning of the year on word that the company would proceed with advanced clinical trials of their PLX-PAD cells in various manifestations of PAD. I noted that the company trumpeted "protocol agreements" with the FDA and EMEA, language that I have previously seen used to confuse investors into thinking that there is an SPA. There isn't. Thus far there is very limited evidence that PLX-PAD cells have any clinical activity in humans. The recent phase I trial was designed in such a way that it almost could not have given negative results, due to the six-month duration of the study and the requirement that enrollees not be expected to require amputation within three months. That's a three month window in which patients could have failed the treatment and required amputation, assuming that clinicians could differentiate between patients not expected to require amputation within three months and those not expected to require amputation within six months (you can't).

Diving back into Pluristem's history, I see numerous press releases from 2007 fluffing the therapy's potential in autoimmune disease, Parkinsonism, and stroke before they apparently settled on PAD. These press releases serve no useful purpose other than to maintain share price artificially inflated to maximize the yield from dilutive financings. The company wasted no time taking advantage of the most recent surge, selling 11M new shares in addition to warrants in February.

Finally, I note Internet echoes of a prior relationship between Pluristem and disgraced stock promoter James Dale Davidson. Not enough to condemn the stock in itself, but in context ...

There's always an outside chance that this company is simply doing what it has to in order to survive and prove their therapy actually works. Empirically however, virtually all stocks with this kind of history prove to be failures if not outright scams.

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The Motley Fool is investors writing for investors. Dan Dzombak did not have a position in any of the companies mentioned in this article. Pitches must be compelling, made in the past 30 days, and be at least 400 words. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 11, 2011, at 12:35 PM, halochief wrote:

    Pluristem never claimed an spa. They said that they have an agreed protocol with both the FDA and EMA for a pivotal study. Evidently those two government agencies liked the data that they saw. The company met with both the FDA and EMA in a single meeting in London to accomplish this. How many times have you ever seen this happen? When you are conducting a study with an endpoint the the governing bodies are asking for you do not need an SPA. You only need an SPA when you are trying to change endpoints that they desire.

    Companies always put out data on their preclinical studies to show what their products may be useful for, why is it a problem that they did this? They recently raised 38 million dollars through Oppenheimer and Needham, not exactly companies involved in penney stock scams which you are trying to insinuate. They have over 40 million dollars in the bank so they won't have to go to the markets again for 3 years or more if ever, so thankfully your attempt at destroying their credibility will not get you far.

  • Report this Comment On September 07, 2011, at 9:33 PM, sammidee wrote:
  • Report this Comment On October 05, 2011, at 12:12 PM, fezziwig2008 wrote:

    Halochief- how's that eminent ph2/3 CLI trial working out? Pluristem touted it on 1/18/11 as reported by Paid PR Hack Ray Dirks (see J Bird Music Scandal as reported in Bloomberg Personal Finance 2000) in his "CP Reports" 1/24/11- SEEMS in the CEO letter Aberman put out in September- Pluristem not yet done evalating Ph ONE (as in PHONEY) data for the last patient- he obviously knew that 9 months ago !!! Is That Actionable fraud? Glad I didn't buy last January...pity those who did.

  • Report this Comment On January 29, 2014, at 8:38 PM, ThunderWolf wrote:

    This Stock is just getting ready to take off!!

    Big News!!!! with many upsides......

    "SVFC" "This is one stock you should jump on."

    Go "SVFC" $$$$$$$$$$$$$$$

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