Newsletter

MediStem: The Nike of Stem Cells

February 1, 2006
Volume VII, Issue 12
Home Page : www.otcjournal.com
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To OTC Journal Members:
 

MediStem Laboratories (OTC BB: MDSM): The Nike of Stem Cell Technology

Today's edition is a "first look" at an exciting new company. Admittedly, there isn't a wealth of information on MDSM's technology. Over the next two months a lot more will be known. On October 12, 2005, Medistem completed a reverse take over, and became a publicly traded company. 

We do know this: MDSM now possesses the technology to treat patients with Stem Cells, and plans to begin doing so through an International licensee in the next couple of months. I've looked at several stem cell opportunities, all of whom claimed they had the greatest IP on the planet. This company is planning on actually using their IP to treat patients in the near term. That fact makes them very unique.
 

What Are Stem Cells?

In preparing for this edition, I did a little research and learned there is a wealth of misinformation and misconception about what Stem Cells actually are and why they are controversial. In short, Stem Cells are cells from which other types of cells can develop. Stem cells are cells capable, by successive divisions, of producing specialized cells on many different levels.

Stem cells have two important characteristics that distinguish them. First, they are unspecialized cells that renew themselves for long periods through cell division. The second is that under certain physiologic or experimental conditions, they can be induced to become cells with special functions. They can actually seek out a damaged area, and morph into the required cells to replace damaged or defective cells.

There are two kinds of stem cells: Adult and embryonic. Each of us still has stem cells, and they can easily be extracted from our blood. However, fetal stem cells are far more robust and active.

Within fetal stem cells there are controversial and non controversial versions. The controversial stem cells come from aborted fetuses- it's the moral issue that makes them controversial. Non controversial stem cells come from the placentas and umbilical chords of healthy births.

MDSM works only with non controversial stem cells for both ethical and scientific reasons. On the moral side, as a public company they want to avoid the issue. On the scientific side, the company believes it stands a better chance of getting a good result for patients using stem cells from a healthy birth rather than an unknown. 
 

Medistem's Technology

MDSM possesses some very interesting technology. First and foremost, they have technology which allows them to significantly multiply the number of stem cells in the lab. They can take a sampling and use it to literally "farm" millions more. There are no animal proteins involved the process, so the stem cells are replicated in an untainted manner. MDSM has the ability to turn 1 million stem cells into upwards of 500 million.

Early treatments indicate it can require vast quantities of stem cells to get a result for a subject. Therefore, the ability to reproduce the cells in the lab puts the company in a position to offer treatments at a reasonable cost. 

Today, after the market closed, MSDM announced it acquired the world wide rights to a cancer therapy using stem cells. According to the patent application for this new therapy, these stem cells "have demonstrated anticancer effects by inducing cancer cells to differentiate into benign, non-malignant cells". The MDSM portfolio of available stem cell technology is growing.
 

The "Nike" of the Stem Cell World

When I think of Nike the phrase "Just Do It" is imbedded in my brain. In the stem cell treatment world, MDSM has devised a way to "Just Do It". There is enough clinical data around to support the thesis that stem cells can be highly effective treatments, particularly for untreatable neurological disorders such as Parkinson's, Cerebral Palsy, and strokes. They have proved effective in treating blood disorders such as Leukemia. These little guys get into your body, go find the defective cells, and turn into the healthy cells that should be there.

Here's where this story becomes really interesting. MDSM has a licensee arrangement with the Institute for Cellular Medicine (ICM) in Costa Rica. ICM is a licensee of MDSM technology. Within the next two months, ICM will be open for business in San Juan, Costa Rica, and be treating stroke victims with Stem Cells. MDSM will provide its technology, and collect licensing fees for each treatment.

The Costa Rican government views Stem Cell therapy as akin to blood transfusions vs viewing the treatment as a new drug. Therefore, the standard protocols of screening for bacteria, aids, or any other agent that might taint blood are all that apply.

Once the Costa Rican clinic is operational, MDSM will be pursuing other international opportunities, and hopes to license 9 to 12 more clinics worldwide over the course of the next year.

I can't find any other public company that is pursuing this course. Two possible outcomes could prove valuable to shareholders: 1. Revenues would be generated in the near term, and 2. The company will be able to accumulate a wealth of intellectual property and data on individual patients who have been treated. The data could become a valuable asset to the company.
 

Conclusion

Here's a chart showing the price performance of MDSM since completing the RTO. As you can see, there is nothing technical we can derive from this chart besides noting that the stock is at the very low end of its trading range. However, since it is still virtually unknown and under followed by investors, the price and volume action don't mean much.

Of far greater interest is the fact that MDSM possesses the ability to reproduce stem cells in large enough quantities for treatments at a reasonable cost to the patient. The company anticipates being in a position to see the treatments in action within the next two months. Not only will this generate revenues, it will also generate valuable data.

Market value wise, the bar has been set fairly high on this one. The former company issued 100 million shares of stock to acquire MediStem. The founder of MediStem, Dr. Neil Riordan, now owns 80% of the company. According to one report I have, there are now 125 million shares I&O, but anecdotally I have heard estimates that the available free trading shares are in the 9 million range. With the limited history, the roughly $60 million market value is pricey, but some of the market caps in the Stem Cell sector are completely off the charts. 

I expect the story to develop over the next two months. We will have a better idea of the proprietary nature of their stem cell technology, names for advisory panels, clinics opening and patients being treated, and a myriad of other unpredictable developments to explore.

Consider this a "first look" at a very exciting company in one of the hottest sectors in the market. The stock has plenty of upside from current levels, especially if the float is limited. An opening position in the $.50 to $.60 range is suggested, holding back some capital for market volatility and a maturing story. If you own the stock in the $.50 to $.60 range, a stop loss at $.40 is suggested and prudent.

Here is the complete text of today's press release for your review:
 

Press Release Source: Medistem Laboratories, Inc.

Medistem Acquires Worldwide Patent Pending Rights to Potential Stem Cell Treatment for a Variety of Cancers

Wednesday February 1, 4:01 pm ET

Proprietary Stem Cell Technology has Demonstrated Ability to Trigger Cancer Cells to Behave Like Normal Cells

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Feb. 1, 2006--Medistem Laboratories, Inc. (OTCBB:MDSM - News; FWB:S2U), committed to the ethical development of next-generation medical therapies from non-controversial adult stem cell sources, announced it has acquired exclusive worldwide rights to a potential treatment for cancer that uses stem cells to reprogram malignant cells to behave like normal cells.

The patent pending technology has the potential to lead to the development of anticancer treatments for a variety of the most serious and widespread cancers. The invention was discovered by Dr. Thomas Ichim, a Medistem consultant.

"This new patent pending strengthens Medistem's intellectual property portfolio," said Neil Riordan, Ph.D., CEO of Medistem. "It is an example of the promise of stem cell-based technology to enable the creation of medical therapies that could revolutionize the treatment of cancer and other serious medical conditions."

The technology described in the patent application focuses on stem cell therapies that have demonstrated anticancer effects by inducing cancer cells to differentiate into benign, non-malignant cells. The patent pending pertains specifically to the use of stem cells derived from adult sources, such as umbilical cords and placentas from healthy, full-term births.

Medistem believes the newly acquired patent pending may provide doctors and cancer patients with an entirely new avenue of treatment options. "While chemotherapy and radiation therapy induce severe side effects through collateral damage to non-cancerous cells and organs, the present invention utilizes the ability of cancer cells to be 'reprogrammed' into benign, non-cancerous progeny," said Dr. Ichim.

Recently published research conducted at Northwestern University with federally approved human embryonic stem cell lines has demonstrated the ability of stem cells to successfully reprogram malignant melanoma cells into cells that behave like normal skin cells. This work adds credence to the newly acquired patent pending.

About Medistem Laboratories, Inc.

Medistem Laboratories is an innovative biotechnology company committed to the creation and commercialization of advanced medical therapies based on non-controversial adult stem cells. Medistem's corporate mission is to transform these stem cells into valuable medical treatments. The Company intends to create these treatments from adult stem cells derived from muscle, bone marrow and fat of adult patients seeking treatment, as well as from full-term, healthy placentas and umbilical cords, but not the controversial embryonic or fetal stem cells that are the focus of ethical and moral debates in some communities. The Company's business strategy calls for the establishment of a series of clinics and laboratories around the world to deliver unprecedented, next-generation cell therapies to help millions of patients. Initial development and treatment focus will use proprietary technology and cells sourced from umbilical cords, fat, bone marrow, and muscle for advanced treatment of cerebral palsy, stroke, cardiovascular disease and orthopedic diseases, primarily for the international marketplace. Additional applications, ultimately be targeted to the treatment of neurological disorders such as Parkinson's, Alzheimer's and certain types of cancer. Medistem believes it may hold a substantial competitive edge in the worldwide emerging market for stem cell-sourced medical solutions, positioning it to become a leading global provider of stem cell treatments on a fee-for-service basis, while accumulating intellectual property based on clinical and laboratory findings. For more information, please visit http://www.trilogy-capital.com/tcp/medistem/. To read or download Medistem's Investor Fact Sheet, please visit http://www.trilogy-capital.com/tcp/medistem/factsheet.html. To obtain daily and historical Company stock quote data, and recent Company news releases, visit http://www.trilogy-capital.com/tcp/medistem/quote.html. Medistem is traded on the Frankfurt, Germany, stock exchange under the symbol S2U.

Cautionary Statement

This document does not constitute an offer to sell or a solicitation of an offer to buy any of our securities. This document contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward looking statements contained herein can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. We wish to caution the reader that these forward-looking statements that are not historical facts, are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved.

Contact:

Medistem Laboratories, Inc.
Neil Riordan, Ph.D, 954-727-3662
riordan@medisteminc.com

Source: Medistem Laboratories, Inc.

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