(By Rich Bieglmeier) Alzheimer's and other dementias affects 5.4 million – 5.2 million aged 65 and over, and 200,000 under the age of 65. By 2050, up to 16 million will have the disease.
One in eight Americans aged 65 and over have Alzheimer's and another will develop the disease every 68 seconds. In 2050, it will fall to 33 seconds. It's is the only disease in the top 10 without a cure.
ALZ.org says that in 2012, "the direct costs of caring for those with Alzheimer's to American society will total an estimated $200 billion, including $140 billion in costs to Medicare and Medicaid."
The cost for care for Alzheimer's and other dementias sufferers is three times higher for Medicare and 19 times higher for Medicaid. By 2050, the cost is expected to explode to more than $1 trillion, a 500% increase for government run healthcare.
This doesn't include the toll, financially and emotionally, that caring for a loved one with Alzheimer's and Dementia takes on a family. This is something I know of firsthand. The doctors warn, it will be the most difficult period of your life – and it is.
It was with great interest, as an investor and on a personal level, that iStock read about StemCells Inc. (STEM) and the promise of helping folks with Alzheimer's and Dementia.
The company is engaged in the development and commercialization of novel stem cell therapeutics and tools for use in stem cell-based research and drug discovery. We are in clinical development with our proprietary HuCNS-SC® cells for a range of central nervous system ("CNS") disorders, including disorders of all three organs of the CNS - the brain, spinal cord and eye.
For those investors with moral concerns, StemCells uses tissue-derived derived stem cells a.k.a. adult stem cells which are less controversial than embryonic stem cells.
STEM came to our attention through our weekly accumulation screen. Last week, nearly 26% of the company's market cap of $46 million was purchase by investors. More than $12 million piled into the stock after the company following news "its proprietary human neural stem cells restored memory and enhanced synaptic function in two animal models."
World-renowned leader in Alzheimer's disease (AD), Frank LaFerla, Ph.D., Director of the University of California, Irvine (UCI) Institute for Memory Impairments and Neurological Disorders (UCI MIND) says ""This is the first time human neural stem cells have been shown to have a significant effect on memory. While AD is a diffuse disorder, the data suggest that transplanting these cells into the hippocampus might well benefit patients with Alzheimer's. We believe the outcomes in these two animal models provide strong rationale to study this approach in the clinic."
The revelation pushed the stock from 87 cents to $1.80 in a day. STEM is very expensive by every imaginable valuation metric you can imagine. It is what iStock terms a promise stock. Investors put their money in for the promise of a huge payoff sometime in the future.
Between here and the payoff, the biotechnology firm is going to need to raise money as they have no real source of revenue. STEM has applied for up to $40 million in funding from the California Institute for Regenerative Medicine (CIRM). An announcement is expected shortly.
If they get the money, it should be a catalyst for the stock to head higher and, with cash on hand, should be adequate to fund operations for up to three years as management has taken steps to reduce the burn rate – which dropped more than 15% from 2010 to 2011.
As trails and developments move forward, investors will look for StemCells to hook up with a pharmaceutical or biotech major for a strategic, financial partnership. If and when such an agreement is inked, the share price could regain its 52-week high of $4. In the biotech craze of the mid 2000s, investors paid more than $60 for the stock.
We see it as the sort of trade where you only invest what you can afford to lose in its entirety. StemCells Inc. (STEM) is like a call option without an expiration date, and that's the way you should look at it.
Hopefully, for investors and families like mine all around the world, STEM pays off.