What happened

Shares of Athersys (NASDAQ:ATHX) declined more than 23% last month, according to data provided by S&P Global Market Intelligence. By comparison, the S&P 500 rose 12.7% in one of its best months on record. But investors might not be too concerned. The stem cell stock's April decline was really just a matter of timing. 

Athersys has opportunistically positioned itself to respond to the coronavirus pandemic, and has been rewarded by investors. Shares of the small-cap stock more than doubled from the beginning of 2020 to the end of March. Therefore, April's decline was simply a correction. The stock has delivered a 111% gain year to date.

A group of declining arrows on a chalkboard.

Image source: Getty Images.

So what

Athersys is developing a technology platform based on multipotent adult progenitor cells (MAPC). These stem cells are thought to have unique biological roles such as mediating inflammatory responses and promoting wound healing, although the company has yet to successfully commercialize its lead drug candidate, MultiStem, after over a decade of development in various disease indications. 

Why have shares doubled in 2020? Before the coronavirus pandemic struck, Athersys was developing MultiStem as a potential treatment for acute respiratory distress syndrome (ARDS). Specifically, a clinical trial was testing if the drug candidate could reduce the amount of time ARDS patients needed ventilator support in the first four weeks following treatment and improve one-year survival rates. 

Early results from a small study were underwhelming, but Athersys is now advancing the clinical trial to treat COVID-19 patients with ARDS. The acute lung disorder is the most severe symptom of the disease caused by the SARS-CoV-2 virus. 

Now what

Many stem cell stocks received a boost in April after a small exploratory study evaluated stem cells as a potential treatment in COVID-19 patients with ARDS, but investors might not want to get too carried away. It's especially important not to extrapolate the results to Athersys, which has struggled to demonstrate the therapeutic potential of MultiStem. If investors are keen to follow the small-cap stock, they should keep it on their watch list until clinical results are reported.