One of my smaller investments had good news. It appears they’ve been able to regrow severed nerves. One of their trial patients has regained use of his arms. Amidst the cautions layered around investments and health care news it was too easy to mark the progress off as a necessary but insufficient step – but someone who thought they’d be permanently paralyzed from the neck down can now use their upper body. To them, this is big news. It may be big news for others, too. For the investment and medical communities, it is only a small step. They’re both right.
Asterias is developing a stem cell treatment that may have grand applications, but for this clinical trial they are focusing on a specific application: can they help accident victims regain nerve function. In all good caution, the trials are supposed to measure objective criteria from which a judgment can be made. Most biotechs go through a process I’ll grossly simplify: lab tests (watch the cells and molecules to see what they do), pre-clinical trials (lab rats, at least), Phase 1 clinical trials (is it safe for humans?), Phase 2 clinical trials (is it effective?), Phase 3 clinical trials (what’s the right dosage?), and hopefully FDA approval (go ahead and treat the general population, and good luck trying to make any money.) Asteria’s test is a Phase 1/2a trial because the real process has much finer distinctions. The trials are also uncommon because so few people are being treated. Instead of working with hundreds or thousands to gain a statistical sample, trials for extreme conditions are sometimes limited to a few patients.
Data is necessary for the financial and medical community, but people respond to stories, too. In my semi-annual portfolio reviews I’ve mentioned how significant it would be for a patient to walk again. For me, the imagery would be startling. Now, I know I was limiting myself to thinking they were treating paraplegics. Instead, they’re treating quadriplegics. The logical place to start with is as high as possible, I guess, and at least for one patient;
The clinical trial data will be presented on September 14th. The anecdote was published September 7th. September 8th, the company’s stock, AST, was up 11.8% during the main market hours, and up another 7.1% after hours. Institutions care about data, but people care about people. Having a potential treatment for something many considered untreatable provides a lot of hope for anyone who realizes the impact of an accident, and that any of us can have an accident. That’s worth something, probably more than a few dimes in a stock price.
The FDA is the key approval agency, is known for its bureaucracy, and yet is also just another collection of people. The FDA allows another option for patients, “Expanded Access (Compassionate Use)“,
“for patients may be able to receive the product, when appropriate, through expanded access.”
It is easy to imagine how frequently they are asked to allow such treatments. Whether it would involve Asteria’s treatment is unknown, but is at least possible.
Regardless of the regulator issues and the investment implications, this is the sort of news that encourages my optimism. As dire as some things seem in the news, our civilization continues to progress. That progress happens because of innovators and courageous people. The patient who signed up for the treatment had a lot to gain, but it also takes courage to be subjected to experimental procedures. We are not perfect. Unintended consequences happen. In this case, the consequences were positive. Good.
There is great hesitancy in society. We’re recovering from the traumas of 9/11 and The Great Recession (what I call the Second Great Depression). Worries about terrorism continue. Worries about another economic collapse are reinforced by various data, which shifts the market psychology to caution, which slows the economy, which becomes a self-fulfilling prophecy. Corporations are issuing bonds at negative interest rates because losing a little money is preferable to losing more in conventional investments or losing more by spending on R&D that never finds a receptive market.
And then, something like this happens.
Stem cells aren’t the only things that may disrupt entrenched industries. In my optimism I consider the probability that every industry can be disrupted in such a fashion that either startles the conventional companies to move or replaces them with more agile competitors. Driverless cars, virtual reality, 3-D printing, renewable energy, and more are causing positive change. Health care treatments require a bit more work and caution, but to me it looks like disruption could happen there, too. Stem cells have the potential to do far more than regrow nerves. I don’t know the limits, but I suspect they aren’t constrained to accident cases and may extend to other parts of the body. Organs?
As one friend and fellow investor who understands my position and portfolio observed, the stock would have to go up about a thousand fold for me to be able to retire. I don’t expect that kind of performance. If it happened, Asterias’ market cap would be about $160B. Possible, but improbable.
In the meantime, I’ll cheer their anecdotal success, hope for measurable confirmation, and would definitely be pleased with more people enjoying such positive results. And, I’ll thank Asterias for a yet another reason for optimism in a world that could use more of it.