Playing the adult stem cell revolution

Just a quick note:

Mesenchymal Stem Cells (MSC), which can be taken from adult donors and are universally compatible (no controversy, unlike embryonic stem cells) have been tested in labs for maybe 10 years now, and studies have shown that MSC can help fight a multitude of health problems (diabetes, cardiac, Crohn’s, cerebral, cancer, …) with remarkable results.

One company, OSIRIS Therapeutics,  will announce early next month their phase III trials of a product called Prochymal (= MSC) on patients with acute or chronic Graft-vs-Host-Disease (GVHD). If the results are OK, then they will be on the fast track for FDA’s approval for this indication, and it will be the first approved stem cell based drug in the US. Osiris is also doing clinical trials of Prochymal for other diseases as well.

There have been many small scale trials of MSC for GVHD  around the world, with more than a hundred of patients in total, and the results have been very positive and consistent, so the probability that Osiris phase III trial results will be also positive is very high (I would put it at 80-90%). And if the results are as good as expected, Osiris shares (Nasdaq: OSIR) will likely explode next month. (I would not be surprised if it doubles in price). That’s the reason why the implied volatility of OSIR is currently sky-high (above 200%)

Besides an arbitrage play (that I wrote about a few days ago), I also bet on OSIR with September 15 Calls. If I lose I’ll lose 100% of the premium, if I win I may win up to a few hundred %. of the premium. Let’s see how this thing will work out.

I made a risk/reward analysis of this play before getting into the position. Maybe I’ll write about in in the next post

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1 comment to Playing the adult stem cell revolution

  • admin MonsterID Icon admin

    David Granovsky informed me of his interesting adult stem cell blog:

    According to his blog:

    To date, Repair (Adult) stem cells have successfully treated 130 diseases believed to be “incurable” in the United States.

    Embryonic stem cells have successfully treated zero and the US continues to be locked in an unwinnable argument over the ethics and funding of embryonic stem cells.

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