Regenerative Medicine: The Best Ways to Play This Fast-Growing Market
by Marc Lichtenfeld, Healthcare Expert
Tuesday, June 15, 2010: Issue #1281
Grab your crystal ball… we’re going to jump into the healthcare sector and try to look into the future.
Let’s spring forward 10 years and ask a simple question: With technological improvements, what medical advances will be routine procedures?
Unfortunately, as optimistic as I am about new therapies for cancer, I’m pretty sure there won’t be a full cure. Same goes for heart disease and diabetes.
However, come 2020, I suspect that it won’t be unusual to be able to re-grow tissue, organs and perhaps even limbs.
And it will come courtesy of game-changing – not to mention life-changing – progress in one particular medical field…
Regenerative Medicine… A 7,766% Market Explosion in Five Years
The regenerative medicine market is set to explode.
In 2008, the market was approximately $1.5 billion. In 2013, it’s expected to generate revenue of $118 billion, according to Life Science Intelligence.
Some of the advances in this field are already incredible.
- For example, doctors are growing organs in labs and transplanting them in humans.
- Soldiers injured in wars are able to re-grow muscle and even achieve mobility and sensitivity with body parts transplanted from cadavers.
- And trials are ongoing across the globe, applying regenerative medicine principles to spinal cord injuries, organ failure, cosmetic procedures and a host of other uses.
- The world of stem cell research is enjoying equally amazing progress. Stem cells that are injected directly into the spinal chord and brain may help ALS and stroke patients.
- And early clinical trials are showing that patients who receive an injection of their own stem cells suffer less damage to their heart after a heart attack.
Industry expert, Robin Young, says that by 2015 “virtually every surgeon in the United States will be incorporating stem cells in either autologous, allograft or cultured forms into their practices.”
Autologous, Allograft and Cultured Cells These are medical terms, pertaining to the world of human cells. Autologous cells are harvested from a patient’s own body. Allograft cells come from a donor. Cultured cells are grown in a lab. |
So how do you play the regenerative medicine sector?
Investing in Regenerative Medicine: The Right Way and Wrong Way
There are a few different ways that you can try to identify potential winners in the regenerative medicine field…
- The Shot-in-the-Dark Method
If you’re familiar with my many columns here at Investment U, you’ll know that the biotech sector can be a high-risk/high-reward proposition.
However, if you’re right and stumble upon the next great company, a small investment could end up making you rich. That’s the case with stem cell companies, so one way to pinpoint companies in the field is to look for those that are in early-stage clinical trials.
Just do a search for stem cell stocks and you’ll likely find that almost all of them will have some early studies. The best hope is that these firms are either bought out or actually have some incredible new treatment that will be proven in a few years. However, the likelihood for success is low.
- The Mammoth Odds Method
Few stem cell companies make it past the early trial stage, so later-stage studies are harder to find.
For example, Clinicaltrials.gov, the government’s database of clinical trials, lists 3,050 trials involving stem cells. But only 186 of them are in Phase III. Even worse… of those 186, only one involved a publicly traded company that was studying the effect of injected stem cells (as opposed to studying various forms of chemotherapy after a stem cell transplant).
That company is Bioheart (OTCBB: BHRT), which is currently in a Phase II/III trial for congestive heart failure.
- The Beyond-the-Trial Method
A better way to play the regenerative medicine sector is to look for companies whose businesses don’t depend on the success of a clinical trial.
For example, there are companies that produce and sell stem cell lines and products to researchers. Millipore (NYSE: MIL) is one of them. It sells a variety of life science tools, including those used in regenerative medicine. The firm is being acquired by German drug maker Merck KGaA. Sigma-Aldrich (Nasdaq: SIAL) has a similar business model to Millipore’s.
- “Research” Your Way to Regenerative Profits
Perhaps the best way to invest in the regenerative medicine field at the moment is to go for Contract Research Organizations (CROs), like Charles River Laboratories (NYSE: CRL).
These companies run clinical trials for other firms. Charles River Labs and other CROs are involved in a wide range of trials, including stem cell therapies.
Investing in a CRO or equipment company lets you participate in the expansion of the regenerative medicine market without making what is often an all-or-nothing bet on some of the earlier-stage companies.
No Flying Cars… But How About Stunning Medical Breakthroughs Instead?
Of course, if you do want to swing for the fences with earlier-stage stem cell companies, be sure to spread your risk among several stocks and keep your investments small, as it’s still a speculative area.
Over the next 10 years, however, I suspect regenerative medicine companies and their investors will make a lot of money.
I thought by 2010 we’d have cool stuff like jet packs and flying cars. Yet I still seem to be walking and driving everywhere!
By 2020, I doubt we’ll be able to fly to the doctor’s office. But we may be able to get new kidneys grown from our own cells, lessen the damage from a heart attack, or even walk after a spinal chord injury. All thanks to the cutting-edge technology in the field of regenerative medicine.
Hoping your longs go up and your shorts go down.
Marc Lichtenfeld
Any investment contains risk. Please see our disclaimer.
11 Responses to “Regenerative Medicine: The Best Ways to Play This Fast-Growing Market”
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Marc is a senior analyst at Investment U. His investment career started out at the trading desk of Carlin Equities in San Francisco, CA, where he executed dozens of trades each day for his clients.
Thanks for your insights. How about the picks and shovels method. I’m told Biotime and International Stem Cell would be good candidates for consideration. Thoughts?
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Larry,
Marc’s a big fan of the picks and shovels method. It’s why he mentioned Millipore and Sigma Aldrich. BioTime and International Stem Cell would definitely fall into that category as well.
Thank you,
Investment U
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I owned Bioheart 24-12 months ago. Watch it go from 4 to 5 a share and then blew through my stop loss on to less than $1 a share.
I would caution anyone about this trade.
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John,
Just to be clear, Marc was not recommending Bioheart as a trade. It is merely an example of a company in late stage clinical trials.
Thank you,
Investment U
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Check out Stem Cell Therapeutics
sss on the TSX venture exchange.
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Dear Investment-U,
Just writing to say I’m readin you. And thanks for the inspiration, I was debating quiting my paid subscription with an outfit, will take heart in the idea next 10 years will be good for regenerative medicine.
Stephen
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Marc, heart disease and diabetes are routinely being cured by MD’s who have given up on the lousy drugs (the 4th leading cause of death in the US are reactions to big pharma’s drugs) from the Pharmaceutical companies. Cancer in the first two stages is also being routinely cured. I’m living proof.I can provide much more info if requested.
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Where is the promised special report??
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Barbara,
If you are referring to the special report that you receive for signing up to our e-letter, it should be emailed to you within 5 or so minutes.
Thank you,
Investment U
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It is reasonable to believe, that organs will be grown from one’s own stem-cells. Can they control the size though? e.g. HPLF?
What do You know about TSSR? Their claim was they had grown a kidney in vivo in mice from porkine /!/ kidney stemcells. They must have been rolling on the lab-floor from laughter, aft. robbing us blind. Did they vanish? or in jail?!!!…
deede K
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Hi Marc,
We thank you for your publications. There are lots of stocks to sort through and to find the stocks with a grand slam return is tuff. Do you know of any speculative stocks for less than a dollar that has potential for big gains in the regenerative industry?
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