What happened

Shares of Athersys (NASDAQ:ATHX) rose over 26% last month, according to data provided by S&P Global Market Intelligence. The stem cell stock's movement in May can primarily be described as a recovery from a lousy April, but two business updates certainly helped.

In the first week of May, Athersys announced the U.S. Food and Drug Administration (FDA) had authorized the initiation of a phase 2/3 trial in COVID-19-induced acute respiratory distress syndrome (ARDS). The development was followed by additional business updates packed into the discussion of first-quarter 2020 operating results. That was enough to fuel the ascension of this small-cap stock -- for now. 

A hand placing blocks with rising arrows on them in ascending rows of blocks.

Image source: Getty Images.

So what

Athersys is throwing its lead drug candidate, MultiStem, at the coronavirus pandemic. More specifically, the stem cell treatment will be administered to individuals with COVID-19-induced ARDS, who often require mechanical ventilation. It helps that the company had been studying the drug candidate's potential to treat ARDS before the health crisis struck.

However, investors might be getting a little carried away. The results from the phase 1 study evaluating MultiStem in ARDS weren't very impressive and weren't very detailed. 

Athersys and other stem cell companies appear to be riding a wave of enthusiasm for Mesoblast, which reported encouraging results for its stem cell treatment in a small, 12-patient study in COVID-19-induced ARDS. But it's important to point out that Athersys and Mesoblast utilize different types of stem cells. 

Now what

Even with increased attention, Athersys is valued at a lowly $570 million. That suggests Wall Street still isn't very enthusiastic about the stem cell stock, which isn't too surprising considering the company hasn't successfully commercialized MultiStem for a single disease despite over a decade of clinical trials. Investors need to remain grounded until indisputable clinical results are published.