International Stem Cell Corp. - Die alternative !

Hey biotech freaks,

Auf der suche nach einer günstigen Stem Cell Company mit alleinstellungsmerkmal und Break Even in 2012 ? Hier könnt ihr euch einlesen: "Connecting the dots ...... "

Last Friday's conference call by Ken Aldrich, chairman of the board of International Stem Cell Corp. (OTCBB:ISCO), was an extraordinary demonstration of this company's accelerating progress. Typically, however, this giant step will not be understood by most of the usual suspects. This is neither new, nor surprising. In fact, there's an upside that I'll explain later.

This alert will be longer than usual, but it is about a critical breakthrough I need to explain. On the morning of the conference call, ISCO issued a press release announcing it had cleared the final hurdle to opening and operating its own manufacturing facility in Oceanside, Calif. Aldrich himself played down the announcement, because it was not an amazing scientific breakthrough like ISCO's recent discovery that parthenogenic stem cells can be derived from immature unfertilized human ovum. Indeed, the oocyte discovery was a major scientific breakthrough and was covered in the important Genetic Engineering & Biotechnology News.

This, however, is a financial newsletter. The oocyte breakthrough made scientific news, but I want you to know why it is important to investors. In short, it simplifies and accelerates ISCO's grand strategy of building the bank of 50-100 immortal parthenogenic stem cell lines that will “immune match” nearly all of the world's population. The opening of ISCO's Oceanside manufacturing facility is a financial breakthrough at least as important. Inside the company, there is real excitement. Key people see the opening of state-of-the-art stem cell production facility as a “huge” deal.

One such person is Jeffrey Janus, with whom I spoke extensively about the new facility. Janus is both senior vice president of operations for ISCO and the president and CEO of Lifeline Cell Technology, which will provide expertise needed to run the facility. For new readers, let me explain that Lifeline is ISCO's wholly owned subsidiary. It already sells a wide array of human adult cell and stem cell-related products to researchers. Already, Lifeline was on track to provide the revenues to support ISCO's therapeutic research, perhaps as early as next year. This new facility, however, moves Lifeline and ISCO up into a higher orbit.

The reasons are somewhat complex -- probably too complex for typical financial writers and bloggers. As I said earlier, however, this is a good thing for my readers. Remember, Breakthrough Technology Alert is about long-run transformational profits. Unlike those obsessed with fluctuations, I don't want ISCO's stock price going through the roof until all my readers have had a chance to buy as much as they want.

And I do, by the way, still consider the company grossly underpriced. I’m not, however, going to keep issuing specific buy alerts – as you know I look at ISCO as a long-term transformational profit opportunity, of which we’re still at the beginning. With that said, I do hope that those who do not yet own sufficient ISCO equity are watching the stock and establishing a position over time and buying on any price pullbacks.

If uninformed writers manage to drive the stock price down in the short run, that serves our long-term purposes perfectly. The news that Ken Aldrich gave on Friday will, in fact, move the stock upward, but it will take time. Serious biotech analysts were paying attention to that call, and when they've done their due diligence, ISCO will be seen in a new light by important players.

What You Must Know About ISCO's New Facility

There are several important things to know about the Lifeline facility. One is simply that it puts ISCO into the rarefied category of stem cell companies that are not just R&D companies. To the best of my knowledge, there are only two other SC companies that have similar production abilities, Geron (GERN: NASDAQ) and BioTime (BTIM: AMEX). And you probably know what's happened to their valuations.

Another thing you must know about this facility is who runs it. These are not nameless lab technicians. They are renowned scientists and executives who have already made pharma history. I'll give you more on that after explaining the facility's central role in ISCO's long-term financial strategy.

In a word, this manufacturing facility is the backbone of ISCO's strategy to bring the company's unique SC technologies to profitable clinical uses. This facility provides ISCO with its own cGMP (current good manufacturing practice) environment. It will meet, therefore, the government's most stringent requirements for clinical-grade products. As a result, ISCO products will be eligible for clinical uses. Already, in fact, Janus tells me that both for-profit and academic researchers are committing to buying Lifeline's expanded products and services.

The bigger impact, however, will be on ISCO's own SC therapy pipeline. This is because R&D companies, which include most stem cells companies, have major disadvantages. One is, obviously, that they must contract with outside facilities to manufacture product. This, of course, raises costs. But the impact is much more profound. If you are an R&D company developing a biotech product, you will wait until you have developed your product to a certain point before hiring someone to develop large-scale manufacturing abilities.

Often, however, that process yields unexpected results. Companies often discover that their products don't scale up as expected. Then, of course, it's back to the drawing board to try again. This is not just expensive. It is time-consuming. Moreover, an R&D company that works with an outside manufacturing company has to expose its intellectual property to third parties. Sure, everybody signs nondisclosure and noncompete contracts. In the real world, however, R&D firm secrets have been passed on to others by individuals who work for third-party manufacturers.

Now that ISCO has its own cutting-edge manufacturing facilities, its time line has been drawn in significantly. Product development will take place in parallel with scaling and manufacturing. It will all be done in-house, far more cheaply and with far greater security.

Just as significantly, ISCO is now in a vastly enhanced position to help external collaborators and researchers. There is no other SC company that is so well positioned to take advantage of this capability. The reason is somewhat complicated, but important.

Intellectual Property -- Poised to Profit

As Aldrich explained during the conference call, a crucial part of the company's strategy is based on ISCO's complete ownership of the human parthenogenic stem cell (hpSC) platform. In this aspect, ISCO is completely unique. Most stem cell companies pay royalties to the Wisconsin Alumni Research Foundation or other holders of SC patents. ISCO needs neither licenses nor permission from anyone to pursue therapies. In fact, it is in position to license its parthenogenic platform technology to many other companies and academic researchers.

Now, this is where it gets really interesting. In the world of stem cell intellectual property (IP), patents are awarded based on cell types. Once these cell types are developed from embryonic or the virtually identical induced pluripotent stem cells, they will be patented. Anybody who wants to use them will pay royalties -- and, in some cases, most of their profits -- to the IP holders. Herein is the rub. Researchers believe parthenogenic stem cells will be able to do most, if not all, of what embryonic or induced pluripotent stem cells can do.

This means that any therapeutic use of embryonic or induced pluripotent stem cells discovered can be modified by ISCO to use parthenogenic stem cells, which it owns completely. As scientists discover new embryonic and iPS cell therapies, the odds are that someone, either inside or outside ISCO, will be able to backward engineer a parthenogenic alternative. Moreover, in many cases, immune-matched parthenogenic stem cells could have huge inherent advantages over other stem cell types, both medically and ethically.

As I mentioned earlier, important scientists outside ISCO are, in fact, working to perfect hpSC therapies now. ISCO will retain manufacturing rights to the products created by these collaborators. The new facility will not only accelerate hpSC therapy development, it assures that ISCO will get a bigger portion of profits from these therapies. But there are other benefits, as well.

As Janus says, “Since ISCO retains manufacturing rights from work done with its academic collaborators, we have the ability to monitor these collaborations and have the ability to transfer the technologies developed through academic institutions into a manufacturing environment quickly and efficiently. Moreover, ISCO can utilize its manufacturing team from its Lifeline subsidiary to assist collaborators.

“Lifeline is currently manufacturing human cells and media for the research market, and its staff is experienced in manufacturing cells in a cGMP environment. Therefore, with this facility, ISCO can conduct its therapeutic research and development and transfer technology developed through its many collaborations with academic institutions in parallel with oversight from scientists skilled in therapeutic cell and media manufacturing.”

Let me give you a few examples of the ways that this capability will pay off:

1. ISCO can obtain donated human oocytes from local fertility clinics and derive parthenogenic stem cell lines under regulatory approved standards. This results in the clinical-grade product needed as the company builds the first bank of immune-matched stem cells.

2. In 2009, ISCO announced therapeutic work with Dr. Paul H. Chen to use its laboratory-grown human corneal epithelial cells to improve healing in PRK laser eye surgery. Now ISCO is moving the manufacturing and automation of this technology into its clinical-grade manufacturing facility in Oceanside.

3. Dr. Hans Keirstead at the University of California at Irvine is using ISCO’s parthenogenetic stem cells to develop retinal tissue for the treatment of macular degeneration and retinitis pigmentosa. ISCO can now use its facility in concert with Keirstead’s group to transfer the technology into a clinical-grade manufacturing environment to produce cells for future clinical trials.

Who Is Lifeline?

As I said earlier, the people running this new facility are not just generic lab technicians. If you know anything about the human cell product industry, you know the word “Clonetics.” The Clonetics brand of normal human cell systems is the leading brand, with the largest market share of human cell products sold today.

The people who created and pioneered the formation of the Clonetics products, including the quality-control standards and the manufacturing systems, are now working for ISCO’s wholly owned Lifeline Cell Technology. This, for any intelligent observer, is a really big deal.

There is no more capable team, in both scientific and financial terms, in the human cell business.

Moreover, the history of the Clonetics team bears directly on ISCO's forthcoming cosmeceutical skin product. I've written a lot about this remarkable product and have personally watched it work on my wife. Even some of my male friends who've seen those results tell me they're going to buy and use the product when it comes to market.

Regardless, Clonetics Corp. was founded in the late 1980s to culture human skin cells to cure burn victims. The idea was to culture and expand the burn victims’ own cells (keratinocytes) and use them to help heal the burn victims' wounds. Interestingly, the team faced the same purity and contamination issues the stem cell industry faces.

In those days, keratinocytes were cultured using a technology utilizing feeder layers made of human fibroblast cells to provide nutrition to the skin cells being cultured. It also utilized bovine serum. This means that before the new cultured cells could be used to treat wounds, the contaminants had to be removed. The feeder layers and bovine serum had to be eliminated.

If you've read my discussions about Geron's IP, by the way, this will sound familiar to you. As you know, Geron holds the patent on a feeder-free medium for stem cell culturing.

Regardless, Clonetics managed to create a human keratinocyte growth system that eliminated feeder layers and serum. It did this, incidentally, with the help of Dr. Richard Ham of the University of Colorado at Boulder’s renowned Molecular, Cellular and Developmental Biology Department. This technology, in turn, contributed directly to the technology used in present stem cell growth systems that eliminates feeder layers and serum.

The Clonetics team, now at ISCO's Lifeline, was in some sense too far ahead of its time. No one at the FDA truly understood its breakthrough technology. Facing the all-too-typical regulatory roadblocks, it set aside its original goal of providing skin cells for burn victims. Instead, it turned to the research products market, which is far less regulated.

Clonetics created and sold human cell systems for many different cell types. It sold mammary and prostate cells and growth media for cancer research. It created and sold muscle cell systems, as well as systems for heart and blood vessel cells needed in cardiovascular disease research. Other scientists used these products to create many therapeutic applications that have since been approved by various countries' regulatory bureaucracies. The first wound healing products for skin replacement came from research using Clonetics products, as were products for heart repair.

Clonetics was eventually sold to BioWhittaker, which required, of course, that the key team stay with the company. BioWhittaker was later sold to Cambrex Corp. and eventually to Lonza Corp., which sells Clonetics products today. Many of the core Clonetics people were freed from their contracts and gravitated back together at Lifeline. Now Lifeline is opening a world-class facility with capabilities that I can't even tell you about, though I promise I will when this information can be shared.

The Clonetics/Lifeline team intends to repeat its earlier success making systems to grow human stem cells and superior culture media systems. I'm betting it'll do it. Already, it has proven its abilities with such important discoveries as the successful creation of cornea tissue.

Connecting the Dots

Now, think about this face product in perspective. I predicted in one of my very first issues that a simple stem cell-based cosmetic product would be one of two great breakthroughs for the regenerative medicine industry. Experienced colleagues and financial analysts at Agora Financial agree with me.

Cosmetic products are, I know, trivial in real human terms. As a species, we spend way too much time trying to look younger. There are much more important challenges and goals for regenerative medicine: serious medical conditions that can and will be cured by stem cell therapies.

On the other hand, the market for truly effective skin treatments is worth billions. If you listened to the conference call, you know that an awful lot of the follow-up questioning was about the cosmeceutical. There's enormous interest and chairman Aldrich has, in fact, been trying to damp down that enthusiasm.

He's not, in fact, happy that I'm writing about it now. He and his team are working on much bigger technologies. They're focused on perfecting cures for neural disease, liver disease, macular degeneration and diabetes, among others. This is a driven company full of dedicated people. Not only do they dislike the distractions that come from this frenzy over a product that caters primarily to vanity, I sense that they are a little embarrassed to find themselves participants in an industry that is known for vague promises made by celebrity spokesmodels.

On the other hand, it would be irresponsible for me not to tell you what I can. Most importantly, I think that this product could provide significant revenues to support ISCO's far more important work. And I have to admit, I have enjoyed watching my wife look younger.

The Lifeline team is improving the product further both in terms of its effectiveness and its stability. So please don't call ISCO for more information about the cosmeceutical. I've already irritated the company enough. I promise you that I will get you any public information as soon as it's available. Aldrich said during the conference call that he was on track to making major decisions regarding the product in 60 days.

This, however, is what we know now. The base of the skin care product is Lifeline’s keratinocyte medium, specifically designed to grow skin cells in the laboratory. It is combined with extracts from stem cells. The people who have developed this product are the world-class scientists of the Clonetics/Lifeline team. And now they have the cGMP facility to improve, test and manufacture it. Janus tells me that nanotechnology will play an important role in the final version of the cosmeceutical.

All that, reading between the lines, is the huge breakthrough announcement I expected. I didn't expect chairman Ken Aldrich to connect all the dots last Friday with trumpets playing a fanfare in the background. And he didn't. As I said earlier, though, I'm glad he didn't. All the information was there, however, for those who understand the implications. Now I hope you do.

I hope you understand, as well, both the long-term potential of this company and the short- to medium-run revenue streams that will keep the company healthy until it achieves its ultimate potential.

One other important bit of news was Aldrich's mention that he is considering a move from bulletin board status to a major stock exchange listing. This is exactly what BioTime has done, and it has allowed institutional investors to finally buy into that company. Many of those same analysts are watching ISCO now.

At some point, the broader media and market are going to catch on to what's going on at ISCO and your opportunity to buy at ground-floor prices will be gone forever ....

MFG
Chali