Stem Cell Market Research Report

BWL Investments Ltd: April 17, 2020


This report is meant to offer an overview of the stem cell market and its current regulatory environment. By citing recent economic assessments, regulatory research and industry leaders we provide a concise yet thorough overview of the stem cell market. We highlight the business opportunities that exist due to the lack of good manufacturing practices (GMP), supply chain tracking and monitoring of stem cell production, distribution and quality. 

Therapeutic Stem Cells


The evolution of an organism from a zygote is the result of many highly complex and regulated processes. Upon fertilization, the resulting zygote is a single cell containing genetic information from both parents that directs its development into a multicellular, complex, and viable organism. Stem cells are undifferentiated cells that share this remarkable feature; they can differentiate into various cell types as well as self-reproduce1. The potential of stem cells to transform and regenerate makes them ideal candidates for use in treating disease, cell and tissue repair, drug testing, and for the cosmetic industry2.

Market Size

The therapeutic applications and potential for stem cell therapies have been growing intensely over the past decade. Stem cells and stem cell derived products are being studied for a number of high-impact applications including neurodegeneration, spinal cord injury, heart tissue repair, dental regrowth, vision impairment, orthopedics, regenerative medicine and cosmetic applications, to name a few.

According to one analysis by an industry trade association, 906 regenerative medicine companies exist globally, primarily in the United States (484), Europe and Israel (241), and Asia (142). These companies include both large pharmaceutical corporations and small biotechnology firms that are developing therapies to treat a range of conditions. As of 2018, overall global financing for regenerative medicine amounted to $13.3 billion. Cell therapy alone accounted for $7.6 billion8.

According to Grandview Research, the global market for stem cell therapies in 2019 was $9.6 billion and is expected to reach $16.8 billion by 2025 and $ 27.8 billion by 2030, growing at a CAGR of 10.6% (projections in Figure 1).

Figure 1. Therapeutic stem cell market growth between 2019-2030 at a CAGR of 10.6%.

Regulatory Overview 

The explosion of commercial growth experienced by this sector has warranted clinical trials and increased awareness relating to the need for regulations relating to stem cells and stem cell derived products in clinical settings. However, in its current state the regulatory environment, manufacture tracking and supply chain infrastructure surrounding stem cells is disparate, inconsistent and in many cases non-existent.

Andrews et al provide an overview of the considerations to take when developing Good Manufacturing Practices (GMP) for cell-based therapies (Figure 2).

Figure 2. The manufacturing process for induced pluripotent stem cell (iPSC) based therapies. Multiple regulatory, ethical and business issues must be considered (right). The figure excludes issues related to evaluation of cell therapies in clinical trials.

GMP compliant human induced pluripotent stem cells (hIPSCs) have been generated by teams in China (Wang et al), Japan (Azuma et al), the U.S (Baghbaderani et al. 2015) and the UK (Catapult; references future work needed to develop GMP compliance). Indeed, Japan is at the forefront of developing stem cell technologies that integrate GMP and detailed stem cell tracking and characterization, making it a desirable place for entrepreneurs and innovators looking for a sophisticated regulatory ecosystem (Nature 573, 463 (2019)). Korea, a leader in the cosmetic stem cell market, has recently developed GMP for stem cells and stem cell derived products (Jo et al.)

In addition to offering a description of what constitutes GMP in different jurisdictions (Table 1) Bedford et al note: 

Health Canada’s regulation surrounding cell therapy clinical trial manufacturing requirements is the most flexible and simplest to follow, but it lacks detail. Health Canada’s approach stands out because the regulator does not require manufacturing establishments to register or obtain a license for their manufacturing establishment when they only produce products under Division 5—Clinical Trial Application of the Food and Drug Regulations.

This approach was more recently applied by Baghbaderani et al. (2016) where the authors describe cGMP manufacturing guidelines for the characterization of hIPSCs manufactured for therapeutic applications. A list of essential tests for validating stem cells can be found in Table 2. 

Table 1. Description of GMP in different jurisdictions by Bedford et al.

DNA analysis for stem cell characterization

It is important to note that cells have intrinsic variability. It’s possible their genetic information can change during the manufacturing process or after implementation due to spontaneous mutations and/or their response to different environments. Therefore, it is crucial for regulatory tests throughout these processes to be implemented. Baghbaderani et al. (2016) suggest DNA sequencing methods should be considered in stem cell therapy GMP. Karyotyping, a test in which one’s chromosomes are examined for abnormalities, is currently in place for characterizing hIPSCs. Additionally, Baghbaderani et al. (2016) utilize methods such as transcriptome analysis (RNA-seq), a SNP-CHIP/CGH array, and whole genome sequencing (WGS) to facilitate the characterization and screening of hIPSCs. These assays typically reveal vast amounts of information about populations of stem cells (Nakayama et al.) and Baghbaderani et al. were able to reveal genetic signatures at single base resolution

The authors posit that for a relatively modest investment useful information about the molecular signature of stem cells can be obtained, while emphasizing their methods may miss epigenetic factors and less abundant variants (depending on sequencing depth and assay sensitivity).

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Table 2. A list of critical required tests for cGMP generation of stem cells from Baghbaderani 2016.

Stem Cell Good Manufacturing Practice (GMP) 

MSCs reside in many human tissues and can regulate inflammation, immune response, healing, and regeneration. As a result of this, MSCs have been extensively used in preclinical disease models and early phase clinical trials with promising results, though no FDA-approved indications exist yet. 

In 2019, Mcgrath et al. claimed to generate GMP-compatible MSCs for clinical application but offered no specific details regarding their GMP guidelines (other than utilizing GMP-compatible low-serum Allegro™ Unison Medium), highlighting the need for more transparency, consistency and regulation in the space.

In a 2020 review, Ntege et al. highlight the need for more tracking and quantification of MSC characteristics for useful application:

Deeper understanding of factors contributing to the biological and pharmacological disparities between pre-clinical research and human translational studies is needed. Suggested factors significantly contributing to the dissonance include differences in cell preparation, potency, and functionality among MSCs tissue sources, culture methods, and expansion levels, and variations in cell handling including thawing, route of delivery, and dosing.

Furthermore, Bedford et al eluded to the lack of a robust stem cell specific GMP:

With few regulators developing manufacturing requirements specifically for Cell Therapy Products (CTPs), highly harmonized regulatory principles of Good Manufacturing Practice (GMP) for pharmaceuticals and biologics apply. However, what people mean when they say they make “GMP grade” CTPs remains ambiguous, and this confusion is exacerbated because most CTPs in early stage development are processed in whole or in part in academic hospital-based settings instead of industrial facilities.

The prevalence of concerns and lack of consistency relating to GMP in the stem-cell market highlights a valuable opportunity for disruptive, commercializable solutions.

Stem Cell Supply Chain

Unlike many other medical and consumer products, stem cell products lack robust and standardized supply chain tracking protocols.

According to Gerald Garrett, VP of clinical operations at the stem cell/cell therapy company Marker Therapeutics:

“For the safety of our patient, accurate tracking is a must,” states Garrett. “We need to know exactly where the product is at any step of the way. We also need to know critical details such as the shipping company and the temperature and orientation of the product. Chain of custody must be tracked all the way through from pickup to infusion, and we also need to know exactly when it arrives at the site and where it is physically located.”

A schematic of the ideal stem cell supply chain (Figure 3) was published as part of a review by Teng et al. In this analysis, the authors advocate for a standardized and detailed approach to managing supply chains for stem cells.

Figure 3. A schematic representation of a generic stem cell therapy production and supply chain.

The implementation of a standardized supply chain system to monitor, validate and track production and logistic data would provide significant value for businesses and consumers. 

Biotechnology Research Products

Innovative biotechnology companies have created significant value in recent years by capitalizing on the potential of stem cell technology.  Rooster Bio, a US company that markets mesenchymal stem cells (MSCs) and associated products and services has raised a total of $28.2 million since 2014. Rooster bio is part of a growing number of stem cell manufacturing labs (ex. PredTech Group) that offer solutions to the regulatory issues that plague the sector.

Lonza Group is a more multifaceted pharmaceutical company with a large stem cell market share and an estimated revenue of $6 billion. 

With over 1400 employees, British Columbia based Stem Cell Technologies is one of the leading producers of stem cells and stem cell related products. According to Owler, Stem Cell Technologies has a revenue of approximately $200 million and about 10 competitors. Stem Cell Technologies quality assurance and regulatory information can be found at this link

The research stem cell market size in 2020 is approximately $1.1 billion and is expected to grow at a CAGR of 8.2% according to Grand View Research, just below the CAGR of the therapeutic stem cell market (10.6%).

Figure 4. Research stem cell market growth between 2020-2030 at a CAGR of 8.2%.

Cosmetic Products

Many applications of stem cells in consumer products occur in so-called cosmeceuticals. A cosmeceutical is defined as a cosmetic that has or is claimed to have medicinal properties, especially anti-aging ones. These products include skincare lotions, injections to stimulate hair growth and tissue repair solutions. However, the FDA has not approved or deemed safe the use of human derived stem cells for cosmetic procedures and has issued warning letters to physician-owned stem cell treatment centers in California, Florida and New York. These restrictions led scientists to turn to plant derived stem cells to avoid FDA regulation.

The FDA does not recognize the term cosmeceutical and insists it has no meaning under law. Regardless of the FDA’s definition, products in the cosmeceutical industry frequently utilize plant derived stem cells to treat and prevent undesirable cosmetic outcomes.

However, skeptical dermatologists, such as Leslie Baumann MD, claim that plant stem cells are simply too large to penetrate the skin and cannot live in the cream while it stays on the shelf for months or even years According to another dermatologist, Richard Hope MD, stem cells in topical skin care products are of no value at this point. The stem cells are plant derived, dead and basically have no activity in human skin.

A research report by Future Medicine focused on the Canadian market identified around 30 businesses offering unregulated stem cell interventions. Six of these businesses stem cell procedures for cosmetic indications such as ‘wrinkles and face/neck sagging, skin imperfections and aging of the hands and prominent veins.

According to Credence Research (San Jose, CA) the stem cell market as it relates to cosmeceuticals is growing at a CAGR of 8.81% and is expected to exceed $4.8 billion by 2022.

Figure 5. Cosmetic stem cell market growth between 2020-2030 at a CAGR of 8.81%

Cosmetic Stem Cell Regulations

Cosmetic treatments that utilize stem cells (ex. Anti-wrinkle skin injections) are becoming increasingly common and the lack of effective stem cell regulation introduces uncertainties and risks to patients. Historically, clinics offering stem cell injections have been located in Asia, Mexico and Columbia but are becoming increasingly common in the US, the UK and parts of Europe. Korea has a massive cosmetics economy and has been utilizing stem cells for cosmetic purposes for years without the utilization of GMP or supply chain tracking. 

Often, if not always, these products lack FDA approval, are sold online, are sourced through a dermatologist or are administered by unlicensed aestheticians. There does not yet exist a reliable and robust system for researchers and medical practitioners to validate the quality and safety of stem cell-based products. Furthermore, additional safety measures and transparency efforts offer immense value for patients undergoing medical treatments that currently or could potentially utilize stem cells.

The FDA has recognized these problems and has issued warnings to Loreal and Cell Vitals, a stem cell face cream maker, related to products that include stem cells. These creams can cost more than $100 USD per bottle and claim to have both cosmetic and, in defiance of the FDAs regulations, medicinal benefits. 

The FDA has also issued official warnings to companies selling unapproved products marketed as containing exosomes, a stem cell derived biologic. It states that it has not approved any exosome products and highlights the lack of regulation in the space.

Non-profit groups and charities have also taken advantage of the opportunity for innovation in the management of stem cell technologies. For example, Anthony Nolan operates a registry for bone marrow donors to facilitate transplants, which require compatible hematopoietic stem cells, for leukemia patients.

In addition to increased safety, efficacy and accountability having in place GMP and supply chain tracking for stem cells offers revenue opportunities for motivated entrepreneurs. With a so many brands and products available to consumers, corporate ethics often heavily influence buying patterns. According to a recent analysis by IBM, 70% of purpose-driven shoppers pay an added premium of 35% more per upfront cost for sustainable purchases, such as recycled or eco-friendly goods and 57% of them are even willing to change their purchasing habits to help reduce negative environmental impact. Additionally, 79% of all consumers today state it is important for brands to provide guaranteed authenticity, like certifications, when they’re purchasing goods. Within this group, 71% are willing to pay an added premium – 37% more – for companies offering full transparency and traceability. These statistics further emphasize the motivation for developing more advanced tracking and monitoring of stem cell products across multiple sectors.

Overall the concerning lack of regulation and oversight in cosmetic stem cell applications highlights an opportunity for innovation. As cosmetic formulations advance in their complexity and sophistication an increased level of validation and manufacturing transparency is needed to ensure both the safety of consumers and the accountability of manufacturers.


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  2. Zakrzewski, Wojciech et al. “Stem cells: past, present, and future.” Stem cell research & therapy vol. 10,1 68. 26 Feb. 2019
  5. Blackford, Samuel JI, et al. “Validation of current good manufacturing practice compliant human pluripotent stem cell‐derived hepatocytes for cell‐based therapy.” Stem cells translational medicine 8.2 (2019): 124-137.
  6. Andrews, Peter W., et al. “Harmonizing standards for producing clinical-grade therapies from pluripotent stem cells.” Nature biotechnology 32.8 (2014): 724.
  7. Bedford, Patrick et al. “Considering Cell Therapy Product “Good Manufacturing Practice” Status.” Frontiers in medicine vol. 5 118. 30 Apr. 2018, doi:10.3389/fmed.2018.00118
  11. Baghbaderani BA, Syama A, Sivapatham R et al. Detailed characterization of human induced pluripotent stem cells manufactured for therapeutic applications. Stem Cell Rev Rep 2016;12:394–420.
  12. Nakayama, Manabu. “Cell therapy using induced pluripotent stem (iPS) cells meets next-next generation DNA sequencing technology.” Current genomics 10.5 (2009): 303-305.
  13. Wang J, Hao J, Bai D et al. Generation of clinical‐grade human induced pluripotent stem cells in Xeno‐free conditions. Stem Cell Res Ther 2015;6:223.
  14. Azuma K, Yamanaka S. Recent policies that support clinical application of induced pluripotent stem cell‐based regenerative therapies. Regen Ther 2016;4:36–47.
  15. Baghbaderani BA, Tian X, Neo BH et al. cGMP‐manufactured human induced pluripotent stem cells are available for pre‐clinical and clinical applications. Stem Cell Reports 2015;5:647–659
  16. Catapult CGT. Early Seed Lot and Clinical Grade iPS Cell Line from the Cell and Gene Therapy Catapult. 2017
  17. McGrath, M., Tam, E., Sladkova, M. et al. GMP-compatible and xeno-free cultivation of mesenchymal progenitors derived from human-induced pluripotent stem cells. Stem Cell Res Ther 10, 11 (2019).
  18. Ntege, Edward H., Hiroshi Sunami, and Yusuke Shimizu. “Advances in regenerative therapy: A review of the literature and future directions.” Regenerative Therapy 14 (2020): 136-153.
  19. Nature 573, 463 (2019). A stem-cell race that no one wins. doi: 10.1038/d41586-019-02844-6.
  20. Jo, H., Han, H., Jung, I. et al. Development of genetic quality tests for good manufacturing practice-compliant induced pluripotent stem cells and their derivatives. Sci Rep 10, 3939 (2020).

Extracellular Vesicles: Potential and Profit in the Space Between Cells

What are EVs and Exosomes?

Extracellular vesicles (EVs) are small bodies that are released by parent cells into the fluid between cells, or extracellular space. EVs include microvesicles and smaller nano-scale vesicles called exosomes. EVs perform several important cellular functions, including transferring DNA, RNA, and proteins from source cells to other cells and helping cells communicate with each other.

It used to be thought that EVs were like garbage carriers that take away unnecessary or toxic materials from cells to dump into the extracellular space, but it is now becoming clearer that their work and potential are powerful. EVs are an exciting research topic for researchers, whose breakthroughs in understanding and harnessing EVs are drawing money from the government, philanthropy, venture capital, and public market investors. Exosomes are being used to treat chronic pain, cardiovascular disease, and neurodegenerative disease, and they are being used in many cancers that are otherwise untreatable by standard-of-care drugs and chemotherapy. Exosomes are also being studied and applied in orthopedics, sexual function, hair regrowth, and cosmeceuticals, which are cosmetic products with bioactive ingredients and health benefits.

A Rapidly Growing Market

The period from 2010 to 2020 brought significant growth in the use of exosomes, and the trend is set to continue. Research firm Grandview Research expects the exosome diagnostics and therapeutics market to exceed more than USD 2.28 billion by 2030. The commercial growth of EVs in the next decade is being catalyzed by investments today by a range of investors.

Companies that have invested into exosome-related therapeutics include corporate venture capital outfits like GV (formerly Google Ventures), which has put money into EV therapeutics companies like Evox Therapeutics. That company raised $45.4 million in Series B financing in 2018 from GV and others on the strength of its plan to use EV research from a leading Swedish institution and Oxford to deliver small and large molecules to target the human brain and central nervous system. ArunA Bio, which specializes in neural EVs, raised $13 million in common stock financing

Massachusetts-based Codiak Biosciences has raised $168.5 million through Series C since its 2016 founding. Codiak has paired with Jazz Pharmaceuticals to bring engineered exosomes to market for the treatment of five cancer targets not reachable by known methods, guaranteeing Codiak at least $56 million upfront. In other joint ventures, PureTech Health PLC has linked up with Roche with an upside potential of over $1 billion if the exosome company boosts the success of the pharma giant’s next wave of drugs.

Public market investors are also showing a deeper interest and willingness to explore EV stocks. There are publicly traded companies specializing in exosomes that retail investors can access, such as Avalon GloboCare (US: AVCO), Capricor Therapeutics, Inc. (US: CAPR) and Australia’s Exopharm Limited (ASX-EX1). The rising tide of interest from venture capital to corporate partnership funding that touches retail investors will only swell further as the full potential of EVs across a range of uses becomes clear.

The Academic Research

The cutting edge of drug technology is in academic medicine, and there are strong prospects for a steady pipeline of innovations in both extracellular vesicles and exosomes coming from top institutions globally.

Dr: Joy Wolfram’s Nanomedicine and Extracellular Vesicles lab in Florida part of Mayo Clinic is exploring organotropic drug delivery which is a new way to treat disease by targeting drugs at specific organs. The laboratory of Dr. Stephen Gould at Johns Hopkins investigates how EVs work, including how they develop and are taken up by neighboring cells. The lab also looks at how EVs affect cell-to-cell communication and polarity. This research also improves understanding of how retroviruses like HIV originate, because they originate in a similar way to exosomes and microvesicles.

A Wide Array of Clinical Applications

Immune cell- and cancer cell-derived EVs have potential in clinical applications against a wide array of diseases. Immune cell-derived EVs have unique functions that have made them the focus of new immunotherapeutic strategies in recent years. They can also offer many advantages relative to whole cell-based therapies (including ease of manufacture, stability during storage & transport and reduced risks associated with transplantation). These attributes make them critical to cellular therapy advances. In addition, EVs can in certain cases cross physiological barriers that challenge whole cells (i.e. the blood brain barrier), potentially also opening up more therapeutic space.

Immune cell-derived EVs can have diagnostic value as disease-specific biomarkers, including in the evaluation of transplantation outcomes. This alone would help health systems save millions in rejection costs and misallocation of precious donated organs. Immune cell-derived EVs can also have therapeutic value. NK cell-derived EVs for example, have several characteristics in their makeup, targeting, and stability that make them promising candidates for ‘off-the-shelf’ anti-cancer treatments. Moreover, tumor-derived EVs can be used to expand and activate immune cells to show enhanced anti-tumoral functions. In conclusion, there is huge potential for EV to influence the body’s immune response to disease, and for the use of EVs as agents in immunotherapy. To learn about immune-derived EVs, take a look at this review article.

The Future

Through a combination of basic research to understand EVs and applied research to show their application potential in real-world scenarios, science will teach us the true power of extracellular vesicles. Look for clinical advances and approvals for a range of therapeutics and other products in the coming years, bringing the transformative curative potential to the public and stellar returns to investors.

And for more information on all types of innovations in extracellular vesicle and exosome science, visit the International Society for Extracellular Vesicles and its publication in the Journal of Extracellular Vesicles or follow industry leaders through blogs and social media platforms like Twitter.

-Braeden Lichti

Deciding when to invest in a biotechnology company

Often investors we meet are not sure when to invest in a biotechnology company. Companies that you might come across could be in any stage of development – ranging from discovery stage, preclinical, to phase 1, 2, or 3. While there are also Phase 4 clinical trials, we will not cover that stage. Phase 4 trials are post-approval studies once a product received market approval by the FDA.

All of these stages of development can offer different rewards and risk. We compiled a simple overview that could help you to decide when is the right time for you to invest.

Find companies that are about to enter Phase 1 or have an ongoing Phase 1 trial

The notion that investing in a preclinical company that is about to go into Phase 1 is riskier is not always correct, and there can be exciting investment opportunities that show a significant return on investment. First, find out if the company has enough capital to enter into Phase 1 or if they are looking to raise money for this trial.

This could be a good time for investors to get in to increase the value of your investment with limited risk because Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics. 

Phase 1 trials are usually small and can occur rather quickly. Phase 1 studies—which represented 37% of biotech IPOs through the third quarter of 2018 had an average market value of $535 million, according to the Wall Street Journal. That is up from 35% of biotech IPOs with an average market value of $471 million in 2015.

These investment opportunities could be hard to find, so it´s best to find and invest alongside investors that get access to or build biotech companies from the ground up.

Phase 2  Could be the best time to get involved

Phase 2 trials are done only if Phase 1 trials have shown that the drug is safe, but sometimes Phase 1 and Phase 2 trials are combined. Let’s consider you are looking at a company entering a Phase 2 clinical trial.

Phase 2 clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the product candidate for specific, targeted indications; to determine dosage to tolerance and optimal dosage; and to identify possible adverse and safety risks. 

Often, after a public biotech company reports positive Phase 2 data, the value of the company goes up significantly. If a company is listed publicly, the stock price is likely to jump as this data will give investors the first real indication that the drug works.

According to Marc Lichtenfeld, Chief Income Strategist, The Oxford Club, “Phase 2 is often the most profitable time to be involved in a small-cap biotech stock. Many times, Phase 2 results are positive. Sometimes it’s because the drug works and other times it’s because the trial is rigged to provide positive results.

Generally, on positive Phase 2 data, a small biotech company will either seek to raise additional capital from a strong VC or look for a partner from a larger biopharma company to start Phase 3 clinical trials.

Phase 3: Big Rewards and Big Risks

Phase 3 trials are the final stage of the development journey; Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical statistical considerations for the product candidate and disease but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labelling. 

The FDA reviews the results from Phase 3 trials when considering a drug for approval. Like in Phase 2, a positive outcome in Phase 3 will frequently result in a massive increase in valuation. If the companies stock is publicly traded, there will be a surge in the stock price as investors anticipate FDA approval and sometimes a buyout from a larger biopharma company.

However, often, drugs fail in Phase 3 trials due to the drug not working or unexpected side effects. This results could mean a plummet in the value of your investment and almost all your investment lost.

Use extreme caution when holding a stake in a biotech company that is entering or waiting on Phase 3 data. Drugs entering Phase 3 have a 55% chance of failure. If you have held your investment since Phase 1 or Phase 2, it’s suggested to think about protecting your downside and taking some money off the table before Phase 3 data is released.

Hedge risk of failure: Focus on companies developing drugs in areas of lower risk

Try and find companies that are developing drugs for a market with significant unmet medical needs but also has a chance to show real results on the bedside. For example, its widely known that GBM (Glioblastoma), an aggressive form of brain cancer, is a ruthless disease and has no cure.

Roughly 17,000 new cases of glioblastoma are diagnosed every year, with average glioblastoma survival rates resting somewhere in the 11-to-15-month time frame. Senator John McCain died 13 months after his glioblastoma diagnosis.

Investing in a company working on a drug for a disease like GMB could be riskier because the chance of loss of life during the clinical trials is much higher.  Stick to investing in companies developing drugs for diseases where the risk of patient death is low during the drugs development life cycle.

Diversify your sources of information

Biotech companies are presenting their latest data results and enrollment at conferences around the world and also report updates at Also, monitor social media feeds from expert biotech journalist and reporters on Twitter and subscribe to platforms like Statnews, or Fierce Biotech for excellent industry news and insights.

Whether you are looking for an early-stage investment opportunity or would like to join an investment at a later stage, be sure to do your homework or team up with a group that works together to buy or build biotech opportunities.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision.

The author is not a United States Securities Dealer nor Broker nor US Investment Adviser.

Big pharma admits data manipulation in FDA application for multi-million-dollar gene therapy

By: Braeden Lichti

Aug. 14, 2019 The Food and Drug Administration (FDA) said data manipulation took place during the approval of Novartis’ studies of Zolgensma, the world’s most expensive drug. The medicine, costing around $2.1 million for a one-time infusion, treats children with an especially devastating, sometimes fatal form of spinal muscular atrophy (SMA). Novartis knew of the data irregularities for two months before the gene therapy’s approval by the FDA in May 2019.

But Novartis did not inform regulators until June 2019, a delay that led the FDA to issue a very rare public warning of potential civil or criminal penalties for AveXis. Novartis bought the biotech startup in early 2018 for $8.7 billion mainly due to promising data for the then-experimental Zolgensma.

Phase 1 and Phase 3 data manipulation

As explained in our previous articles, FDA approved medicines go through long, expensive and gruelling clinical trials before being approved. AveXis manipulated results in Phase 1 clinical trials as well as those from some nonclinical studies included in Novartis’ approval application. Fifteen infants with the most severe form of SMA received Zolgensma, and all remained alive and off permanent ventilation at two years, a milestone seldom achieved in untreated patients.

According to Wilson Bryan, head of the FDA’s Office of Tissues and Advanced Therapies both the Phase 1 and Phase 3 versions of Zolgensma use the same vector and therapeutic gene, giving him confidence the clinical results from Phase 1 confirm the effectiveness of the Phase 3 product.

After learning of the data manipulation, the FDA inspected AveXis’ San Diego, CA facility from 24 July-2 August, handing the company an inspection report finding failings to thoroughly review unexplained data discrepancies, incomplete laboratory records and failure to follow laboratory test procedures. The FDA intends to continue its investigations and could require AveXis submit “one or more” supplemental applications, a process that could take several months. Novartis and the FDA have assured the public that the falsified data did not affect the safety, quality or efficacy of Zolgensma and will remain on the market

Impact on future gene therapy approvals

Zolgensma is only the second gene therapy for an inherited disease to win FDA approval, marking a significant milestone for the growing field. At $2.1 million per patient, Zolgensma is also the most expensive drug ever brought to market. The FDA investigations are relevant for the whole sector as gene therapy is a promising emerging field and many active, well-funded biotech companies are working to develop much-needed therapies.

Data fiddling is more common than you think

Manipulating data to make them more meaningful is a well know problem in statistics and is known as p-hacking. The probability value or p-value measures whether the data would be at least as extreme compared to no real difference between the groups or phenomena being compared. The term p-hacking describes the conscious or subconscious manipulation of data in a way that produces a desired p-value. Researchers collect or select data or statistical analyses until nonsignificant results become significant. A p-value of 0.05 or 95% probability is often the de-facto standard to get published in academic literature. You can check out the following visualization to find out how easy it is to manipulate data.

Should you trust the data shared by companies?

Whether you are reading scientific journals or the latest article in the Wall Street Journal, always seek additional guidance when picking a biopharma investment. Connect with an experienced team of biologists, investors, and statisticians to help you to spot troubling signs earlier in your investment journey.

Our views are based on experience and for educational purposes only. We encourage inquiries, suggestions, and comments.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision.

The author is not a United States Securities Dealer nor Broker nor US Investment Adviser.

Five-basic biotech investing due-diligence principles

While big, unprofitable tech IPOs dominated headlines this year, it might be time for potential investors to turn their attention back to the early-stage biotech sector. Barrons magazine estimated that since 2012, early-stage biotech companies that have gone public have, on average, raised more money and performed better than biotech companies whose initial public offering came closer to when they brought their products to market. Between 2001 and 2017, only 6% of biotech companies were profitable at the time of their initial public offering, according to an analysis conducted by Jay Ritter, a finance professor at the Warrington College of Business at the University of Florida. During the same time frame, the average three-year buy-and-hold return for more than 350 biotech companies that went public was 36.3% — beating the market by 14%.

As with every investment, biotech investing is associated with inherent risks. Our five-basic due-diligence principles can help you evaluate an early-stage biotech investment and potentially uncover the rewarding investment opportunity you were searching for.

1. A pipeline of products, programs, and patents

Look for ​companies with a patented product and program pipeline consisting of more than one drug. Companies with 2 or more products in or entering clinical trials are more diversified and can cope with setbacks more easily. If one product fails, the company will have other assets in development to try and recoup any lost value. Clinical trials are organized into three phases, and the National Cancer Institute compiled a great introductory video that should be studied.

Make sure the company is past the discovery stage and is either filing an IND or is clinical ready. Don’t invest in mere science experiments!

Finally, check the patent status of the products and make sure it’s current. If the company has no signs of a patent then the product is not protected and has limited value.

2. Good Management

Experienced managers must lead the company and have a history of working in biopharma. Look for early-stage companies in which the founders are still a part of the management team, and that they have recruited diversified executives with in-depth experience in financing, successful drug development, and commercialization. Make sure that the chief medical officer has education from a credible university and an abundance of clinical experience and published work around the medical indication targeted.

3. Long-term finance commitments

It is advantageous to opt for companies that have just completed financing and have a reliable investment bank or venture partner committed to the development of the company.

Depending on the phase of the drug development, it can take years and many rounds of financing to bring a drug to market or for a company to establish a partnership with an established pharmaceutical company.

Without fresh financing or a committed strong investment group, it could be difficult for a company to continue securing capital for growth.

4. Research latest scientific breakthroughs

Be cautious of companies developing drugs and raising capital for therapeutics that are in vogue or are in an over-saturated market with competition. For example, areas such as CAR-T immunotherapy are overrun with companies racing to bring the next drug to market, so it’s best to avoid these companies. Look where the crowd is not and find companies developing next-generation products addressing high unmet medical needs. Areas such as pain management, addiction, age-related or anti-aging, gene therapy, and viral infections in which there is a high degree of incidence in the population. Positive clinical data in these areas could provide shareholders a ​faster return on their investment. We advise staying clear of companies focusing on homeopathy as its efficacy is unproven.

5. Scientific evidence in reputable journals

Always make sure that the science behind the product being developed is published in a peer-reviewed scientific journal. You can quickly find peer-reviewed journals via google scholar, a google service that indexes academic journals. Reliable measures in assessing the credibility of a scientific journal include the impact factors (i.e., citation frequency) compiled by Thompson Reuters and the SCImago Journal Rank (SJR). SCImago developed the SJR indicator from the widely known algorithm, Google PageRank™. This indicator displays the visibility of journals since 1996.

Stay away from companies that have no scientific publications. We also advise speaking to an expert with a background (e.g., Ph.D., Professor) in either biology, chemistry, or medicine to evaluate a drug and the claims by a company properly. If you don’t have anyone to consult with one of our industry specialists could be available.

Our principles are based on experience and for educational purposes only. We encourage inquiries, suggestions, and comments.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision. 

The author is not a United States Securities Dealer nor Broker nor US Investment Adviser. This letter and the attached related documents are never to be considered a solicitation for any purpose in any form or content.