Newsletter

Advanced Cell; The Next Frontier

March 27, 2006
Volume VII, Issue 28
Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:
 

Advanced Cell Technology (OTC BB: ACTC): The Next Frontier

The more I learn about the potential for Stem Cells, the more excited I get about the future of medical therapies. I just hope I live long enough to be treated with Stem Cell therapy when my heart, liver, eyes, or kidneys fail. Or, perhaps my future holds the challenges of Parkinson's or Alzheimer's, and Stem Cells hold out the potential for a cure.

The current generation of new drugs in the FDA Pipeline offer the promise of extending life for those with terminal illnesses 10% beyond current therapies. Stem Cells hold of the promise of a true cure. This is breakthrough medicine.

Stem Cell stocks were all the rage until the Bush Administration took a rather Draconian view of what they were willing to support through NIH funding. Adult stem cells are not controversial. Embryonic stem cells, the far more robust version, are controversial on moral issues as they are derived from embryos.

New technologies are emerging that will quiet the fears of all but the very radical right wingers. Embryonic Stem cells have recently been developed without any harm to the developing embryo in a mouse model. Embryonic stem cells, blueprinted with your DNA, are also being extracted from unfertilized eggs- I'm pretty sure even the most radical right wingers would not object to the use of early stage unfertilized embryos, often donated from IVF clinics.

At any rate, I don't want today's idea to turn into a moral debate. I want you to learn about a company with some of the best cutting edge Stem Cell technology and one of the strongest scientific management teams in existence today.

And- more importantly- the stock is cheap, cheap, cheap. It is so blown out it probably has no where to go but up. Read on.
 

Regenerative Medicine: A True "Cure"

I'm going to attempt to take what should be a very complex 50 page research report and condense it down to a five minute read anyone can understand. It's the most challenging part of this work. I'm sure there will be readers who recognize some scientific faux pas, but the concepts are described soundly.

ACTC is focusing on Stem Cell therapies for three maladies: 1. Age related eye diseases, 2. Heart repair and blood disorders, and 3. Dermal repair for burn victims and skin disease. The company has selected these three arenas because there is unlimited demand for better therapies, and the scientific research suggests this is the path of least resistance.

If proven successful, these treatments will not be new drugs that provide temporary relief or some small measure of improvement. Stem Cell therapy has the potential to represent a real cure. Stem Cells have the ability to differentiate into new, healthy cells, thereby providing the potential to replace the damaged, non-functioning cells. Hence the term "Regenerative Medicine"- healthy cells are literally regenerated and replace damaged cells.

Here's a graphic that demonstrates a simplified version of the ACTC process. It all starts with an eight cell entity called a "Blastocyst". A Blastocyst can be derived from any human egg, often donated or obtained from an IVF (invitro fertilization clinic).

Scientists at ACTC can extract pluripotent stem cells from a Blastocyst, and cultivate them. A pluripotent stem cell can morph into any kind of cell in the human body.

Through "Differentiation" scientists at ACTC coach Stem Cells to naturally develop into specific cells to be used as therapies for various specific ailments. The graphic shows heart cells, liver cells, brain cells, blood cells, and intestinal cells.

Now- here's the part that blew my mind: Here's how the scientists at ACTC are dealing with potential rejection or non-compatibilty issues. The human egg can be infused with anyone's DNA- this is the first step in therapeutic (not human) cloning. From there the Blastocyst can be developed into a patient specific Stem Cell line. ACTC can then drive embryonic stem cells and differentiated cells that are a perfect patient match.

In fact, last year the scientists at ACTC were able to infuse a mouse's egg with DNA, extract a single Blastomere, re-implant the egg, and a healthy mouse was born. The event was covered in a feature article in the NY Times, and you can access the article and read it by simply Clicking Here.

A very futuristic view of Stem Cell therapy would include individuals having their own embryonic stem cells being created from their own DNA, and being stored for use in the event of illness, accident, or disease.

A more practical view of the future suggests that 100 to 150 Stem Cell lines could be "banked" and would be compatible with 80% of the population.

The research at ACTC is being directed by several of the most high profile names in the Stem Cell world. Dr. Michael West, a pioneer in the field, and Dr. Robert Lanza, are two of the real innovators in this industry. Investors can expect continued media publicity of some sort down the road from this team, and their staff of scientists. Dr. West was the founder of Geron Corporation (NASDAQ: GERN), the largest public company in the Stem Cell arena and was involved in the earliest collaborations that first isolated the human embryonic stem cell. He served as the senior executive officer of Geron from 1990 to 1998. Dr. Lanza is perhaps one of the most heavily published researchers in the stem cell space and recently edited a key 2006 text book “Essentials of Stem Cell Biology”.
 

I Don't Like This One: I Love It Right Now- Here's Why

Here's an 6 month look at the trading history of ACTC.  As of today's close, ACTC is trading within a few pennies of a new all time low. Can you spell "nowhere to go but up"? There are reasons the stock is down to this absurdly oversold level, and once you understand the reasons you may agree the stock is long overdue for a rebound.

The first noteworthy event on the chart is the big breakaway a gap and spiky run in the stock last October. That move happened in conjunction with the publication of the NY Times article which you can read by referring back to the link above. In light of the kinds of research going on at ACTC, this is the kind of event that could easily happen in the future. All this stock needs is more volume and a larger audience to maintain a much healthier trading pattern.

The next trading event of note I have circled on the chart is the recent swoon on huge volume. That volume bar is enormous. It is the highest volume day on the chart. The stock was hit with a double whammy on that day. First- under Rule 144, shares purchased directly from the company that have been held for a year were eligible to trade freely in the open market. Shares issued a year ago at $.85 came free trading on and around that day. 1/2 million shares were filed for sale on March 6th alone. This was a one time event.

There was also a second financing done in September which explains another burst of excess supply. ACTC raised $18 million. According to the terms of the financing, after a period of six months, $750,000 must be paid back each month for the foreseeable future. Every month ACTC has the option to either issue $750,000 worth of free trading stock at the market price, or write a check for $750,000. Therefore, ACTC investors can expect the market will need to absorb $750,000 worth of stock each and every month for some time. That's about $30,000 worth of stock each and every trading day on average. The financiers in this group can be depended on to sell every single share the moment they are available. This factor could make for some interesting oversold opportunities each month depending on volume levels. On the plus side, ACTC is now armed with about $14 million in cash. More capital will be required to further the research down the road.

Both of these sources of supply hit at the same time. ACTC's stock price has suffered, and is long overdue for at least a technical trading bounce in my view. Volume has dropped considerably, suggesting everyone who wanted to sell has done so.

In the short term, I expect the stock to bounce nicely. Shareholders might enjoy the occasional spiky surge associated with publicity. Longer term, I would expect the stock to trade very well when Wall Street turns its attention back to the Stem Cell companies. The Bush Administration's policies put a damper on Wall Street's enthusiasm for these stocks. However, the promise of Stem Cells will overcome the political climate. Many high profile conservatives including Nancy Reagan, Orin Hatch (Utah Republican), and Arlen Specter (Pennsylvania Republican) support Stem Cell research.

The current swing to the right in US politics appears to be weakening as the war with Iraq drags on. Mid term elections in the Fall should mark the beginning of a move back towards the left. California, the world's 12th largest economy and a trend setting state, voted to support a $3 billion bond for Stem Cell research. Temporarily tied up in court, most observers feel it will move forward by the end of the year. That event could be the catalyst that brings Wall Street money pouring back into these stocks. At that time, all ships will rise with the tide. You can reserve first class accommodations at bargain basement prices today.

Look for a new Blog section on ACTC soon for comments, questions, and answers.
 

Comments in the BLOG

There were two new comments in the BLOGtoday- Sell DXCM, and sell (not swell - a typo) 1/2 your HDY. Two events came up after Friday's close, and both warrant taking your profits. Not much more to say other than DXCM yielded about 43% since the end of January- double if you bought on margin. HDY- impossible to say because you could have bought it or sold it all over the map.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. You can look there by company. The most current journal entries appear in the middle of your screen in chronological order. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every reasonable question.
 
 

 

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