Much to the chagrin of speculative investors, I haven't been all that excited about stem cell companies (see here and here, for instance). It's not that I don't think stem cells have potential -- they do -- but potential can't fund your retirement.
However, a couple of recent developments have me keeping a closer eye on stem cell companies. I'm not buying yet, but they're looking more appetizing than ever before.
Full speed ahead
Preclinical data is nice and a necessary step in drug development, but making mice walk again doesn't exactly tell you whether the drug works in humans. The market for treating mice with stem cells is fairly limited, I would imagine.
Fortunately, quite a few companies have gotten past the preclinical stage over the past few months. After much delay, Geron
In August, Neuralstem announced it was ready to begin clinical trials of its stem cell therapy for chronic spinal cord injury in the U.S. StemCells
We're still years away from phase 3 data, let alone an FDA approval, but the progress is better than nothing.
Big brother's buying
In another sign that investors should be paying attention, larger drugmakers are starting to enter the space, albeit in limited fashion.
GlaxoSmithKline has a partnership with Harvard Stem Cell Institute, and Pfizer
About a year ago, Pfizer licensed tiny Athersys' MultiStem for treating inflammatory bowel disease (IBD). It wasn't a major investment; Pfizer only spent $6 million to gain access to the treatment. The pharma giant will have to pay for all the early clinical trials, but the drugmaker is only on the hook for milestones of up to $105 million and royalties if the drug is commercialized.
If Billy jumped off a bridge ...
Your mom was right. Just because larger drugmakers are showing increased interest in stem cells doesn't mean they're a buy right now. Pharma doesn't always get it right.
Here's another way to look at it: Large pharma companies have multiple drugs in development and stem cells make a small portion of their portfolio. They can afford to take on the risk because if it blows up or takes an extended amount of time to develop, it won't affect the pipeline all that much. If you are going to invest in stem cell companies, it would be wise to keep it to the same small portion of your portfolio.
Being the last day of January, there's still time to add a New Year's resolution: keeping a closer eye on stem cell companies. I'm not recommending buying just yet, but keeping abreast of the news will help you realize when you should jump in. You can use the Fool's free watchlist feature to help keep the stocks on your radar. Click below to start following these stem cell stocks:
Pfizer is a Motley Fool Inside Value selection. GlaxoSmithKline is a Motley Fool Global Gains recommendation. The Fool owns shares of GlaxoSmithKline. 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.