StemCells, Inc. (NASDAQ: STEM, STEM message board) started the week with a launch of their stem cell derivation medium called GS1-R. According to the announcement this is the first commercially available method used to extract, grow and maintain true embryonic stem cells derived from rats.
The purpose of such a technology is to enable scientist to quickly and efficiently manipulate the artificial human like diseases caused in rats and in turn test various drugs and methods for their treatment. Rats are used to create models for human disease studies because they are psychologically closer to humans than mice.
The technology will add to the vide variety of StemCells' other products, and might even affect the company's income statement for the better because of its fundamental usefulness and demand. Other products weren't too successful in pushing the business forward.
Despite registering as a clinical stage biotechnology company, StemCells has to make a living with only modest revenues and most of their operating costs go to R&D. To force a positive cash flow the company is constantly issuing additional stock, which partially explains the low share price and illiquidity.
The pharmaceutical stocks are usually about the potential of the drugs they develop. In this case the SG1-R release to the market had no positive effect on the stock as all the effect was already counted in the stock valuation when it turned out to be a successful medium. We'll just have to wait and see the actual financial performance of the SG1-R before it can make an impact on the equity market.
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