Medical professionals would surely welcome any safe and effective treatment option for people with COVID-19 — and pharmaceutical companies are doing their best to hastily find solutions. Preclinical and clinical trials now under way are testing seemingly every plausible hypothesis, from failed Ebola drug candidates (antivirals) to approved arthritis drugs (anti-inflammatory drugs) to a moisturizer ingredient commonly found in hand lotions and shampoos (a long-shot vaccine adjuvant).Investors shouldn’t be surprised that stem cell developers have thrown their hats into the ring, too. What might be more surprising are the promising results from one of the first studies testing stem cells against COVID-19. Shares of Australian biotech Mesoblast (NASDAQ:MESO) soared as much as 219% on the data, while small-cap peers Pluristem Therapeutics (NASDAQ:PSTI) and Athersys (NASDAQ:ATHX) both saw their stock prices jump by double digits.The broad group of drugs referred to as stem cell therapies have yet to live up to their lofty potential. Could they really be the COVID-19 treatment we’ve all been waiting for?


It’s plausible. The types of stem cells being investigated in clinical trials as potential COVID-19 treatments are thought to play crucial roles in moderating immune responses. Researchers currently believe that many of the severe and critical cases of COVID-19 progress when the patient’s immune system overreacts, causing runaway inflammation, which leads to difficulty breathing, organ failure, and death. Therefore, the idea is that administering certain types of stem cells to hospitalized patients might help to bring immune responses back under control.

While the immunomodulatory characteristics of some stem cells are well known, scientists have struggled to demonstrate their therapeutic potential for most conditions they’ve tried, including heart attack, stroke, and autoimmune diseases. That’s what makes the results from a small study testing stem cells in COVID-19 so intriguing, and perhaps a little surprising to investors who have grown accustomed to disappointing news in the space.


Mesoblast conducted a small study at New York City’s Mt. Sinai Hospital under an emergency compassionate use declaration. COVID-19 patients diagnosed with acute respiratory distress syndrome (ARDS) and recently placed on a mechanical ventilator were eligible to receive two doses of the company’s allogeneic cell therapy, remestemcel-L.

Of the 12 individuals enrolled in the study, 10 survived (representing a survival rate of 83%), nine have successfully come off ventilator support at a median of 10 days (75%), and seven have been discharged from the hospital (58%). The results are promising considering an observational study of more than 2,600 COVID-19 patients requiring ventilator support in New York City hospitals found that 88% died.

There are some caveats for investors to consider. First, there were only 12 patients in the study and no control arm. Second, all 12 patients received additional experimental therapies while in the hospital. Third, the study wasn’t a clinical trial, though the results will be used to inform the design of a placebo-controlled phase 2/3 study of similar patients.

Nonetheless, the results are promising considering the poor outcomes for COVID-19 patients who require ventilator support. Investors interpreted the success of remestemcel-L as a positive indicator for other stem cell drug candidates being tested in COVID-19-associated ARDS. That’s helped to keep a strong 2020 rally in stem cell stocks humming along through the end of April.

Metric Mesoblast Athersys Pluristem Therapeutics
Market cap (market close April 24) $1.59 billion $520 million $221 million
Year-to-date stock gain (market close April 24) 101% 115% 215%
Type of stem cells Mesenchymal stem cells (MSC) Multipotent adult progenitor cells (MAPC) Placenta-derived, mesenchymal-like adherent stromal cells
Brand name N/A (chemical name is remestemcel-L) MultiStem PLacental eXpanded, or PLX cells
Intended clinical trial in COVID-19 Treating ARDS in patients on ventilators Treating ARDS in patients on ventilators Treating ARDS in patients on ventilators


Both Athersys and Pluristem Therapeutics are working to initiate clinical trials of their own stem cell products to treat complications related to coronavirus infections, although there are differences to each company’s approach.

There are technical considerations investors could dive into. For instance, Mesoblast and Athersys can generate MSCs and MAPCs, respectively, in easy-to-scale manufacturing processes while ensuring product consistency and avoiding the need to match donors and patients. Pluristem Therapeutics is limited by placenta harvesting and may not be able to use its stem cell products as widely.

But when it comes to stem cell stocks, investors don’t have to wander too far into the weeds to uncover broad concerns.


Could stem cell products become the COVID-19 treatments the world has been waiting for? Again, it’s plausible, but investors should stop and consider some of the higher-level concerns for stem cell stocks.

Mesoblast, Athersys, and Pluristem Therapeutics are all relatively small, which hinders their access to funding and demonstrates their lack of experience developing drug candidates. Stem cell drug candidates from across the field have a long history of delivering disappointing results in large studies, which explains the lack of commercialized products from the trio.

Equally important, well-established pharmaceutical companies have largely avoided stem cell therapies due to gaps in scientific understanding of how they might actually work in a therapeutic setting. MSCs, MAPCs, and placenta-derived stem cells each secrete a range of biomolecules in natural settings to initiate blood vessel growth, repair tissues, and calm the immune system. Does that mean scientists can simply administer stem cells into a patient and hope they’ll work their magic? The complexity of biology — and clinical data collected to date — suggests it won’t be so simple.

Simply put, while the early stage results from Mesoblast’s exploratory study conducted under emergency compassionate use are promising, investors shouldn’t get too carried away until more robust results are in hand.


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