Stem cell-based therapies may still be a ways away, but regenerative medicine is a reality today that is starting to be taken seriously by Wall Street. One small reflection of this was seen at the end of 2007 when the San Francisco-based investment bank Pacific Growth Equities appointed Caroline Corner as a senior research analyst covering regenerative medicine and convergent technologies. As such, she becomes one of the first, if not the first, regenerative medicine analysts at an investment bank.

 

Prior to joining Pacific Growth Equities, she served as a vice president and senior research analyst covering medical technology for Montgomery & Co. and worked as an associate analyst with Wells Fargo Securities, where she covered medical devices. Before embarking on a career on Wall Street, Corner worked for Baxter Transfusion Technologies in Belgium, where she was responsible for supporting the global commercialization of proprietary healthcare technologies and with Eli Lilly working in the protein engineering group. She earned a Ph.D. in Biological and Environmental Engineering from Cornell University and a B.S. in Biological Systems Engineering from at Virginia Tech.

 

Corner expects to follow about a dozen companies in her new role. She has initiated coverage on her first two companies—LifeCell (LIFC) with a neutral rating and OraSure Technologies (OSUR) with a buy rating.

 

She recently spoke to The Journal of Life Sciences' Web Editor Daniel S. Levine about the state of regenerative medicine, the world of convergent technologies and whether the new year will put stem cell companies on the radar of investors.

 

A: I don’t know if I’m the first. I think some other banks are also looking at the area. I’m probably one of the first.

 

A: Obviously, in the past, the space has really been the Wild West. There were lots of failures coming out of the 1990s, but since then we have had several success stories that speak to increasing investor comfort with regenerative medicine. An example would be LifeCell, which I write on. I have a neutral rating on it. They are a $1.4-billion market cap company with $180 million plus in revenue and completely regenerative technology. They have an acellular matrix that is made using cadaver dermis to repair hernia primarily. That stock has had a really good run this year from about $20 to about $40. It’s a neutral on valuation at this point, but it’s definitely a regenerative medicine story that’s made good. There’s also Integra LifeSciences (IART), another $1-billion plus company. I’m not currently writing on that name, but they have $544 million in revenue expected this year. Not all of it is regenerative medicine, but their core technology is. They play in the neurogenic, orthopedic space.

 

A: They have several collagen matrices, for an example one of them is a brain dura patch.

 

A: It’s a very broad universe and one I plan on growing into over time. At the one end, we have companies like Integra and Life Cell. Then we have Regeneration Technologies (RTIX)—another company making a play in the orthopedic space with allograph tissues—all the way from there to ultimately stem cell technologies as well. The stem cell technologies are still far off as far as the growing out a pancreas in a Petri dish-type technologies they were talking about in the 1990s.

 

But there are some companies that are using stem cell technology that I think more near term we should see some success. Companies like Cytori Therapeutics (CYTX), which is a public company—not one I’m writing on yet. They are taking stem cells from a person’s fat, concentrating it down and processing it, and putting that concentrated stem cell material in other places of the body. Their first trial involves post-mastectomy breast reconstruction. So they will have a regenerative technology based on stem cells. There are a couple of private companies too using stem cells more near-term. A company called VistaGen is growing stem cells and then the resulting material is used to test drugs. They are making a diagnostic. Then there is Tengion. Tengion is a little further along. They are seeding collagen matrices with a person’s own cells to regenerate bladder. I think there are about seven children out there with regenerated bladders.

 

A: That's critical before they get attention from the street. This whole space has been marred by false hopes in the past. As we see investors becoming more comfortable with okay, we can put a cell into a part of the body and it will regenerate, then if we get some of these companies that we think will have near-term revenues, that will be a lot more interesting to the street.

 

A: That includes regenerative medicine in a way because it’s combining devices with biologics and things like that. Anything where you have different technologies coming together. To me, it actually covers a lot of things including some of the biological applications as they pertain from everything from medicine to clean fuel. It’s the application of biology within other technologies. In some ways convergent technologies is a bit of a catchall for things that are not falling under a typical device analysts or a typical biotech analysts space.

 

A: There’s starting to be a clear pathway. For example, LifeCell, if you look at their product, that originally was a human tissue-based product so you didn’t need approval because it was just like getting an organ transplant. Now that they have started to launch their xenograft version, which is porcine, in that situation they needed to get 510K approval.

 

But we’ve got plenty of precedence for collagen matrices being approved. If you look at some of the companies addressing diabetic foot ulcers, for example, they are using human cells—usually from neonate foreskins and seeding a collagen matrix. That combined device needs a 510K or a pre-market approval before it can go on the market because the level of complexity is such that the FDA is not willing to say that’s a human tissue anymore. You’ve got Organogeneisis approved in that space, Advanced BioHealing, and a public company called Ortec International (OTCI) is looking at getting a pre-market approval for that kind of technology for venous leg ulcers.

 

A: I don’t want to cover bad companies and I don’t want to cover technologies that don’t go anywhere, but at this point the success seen by LifeCell, Integra, Regeneration Technologies—Biomimetic Technologies (BMTI) is another one that is starting to have success—I’m starting to feel a lot more comfortable that there are going to be some more opportunities that will bring investors a return like what’s been demonstrated with LifeCell.

 

A: It will be a continuum. We will see more and more of these wound management products come to market and be successful. And then we will some of these stem cell using technologies, not necessarily regenerated organs, but I think we’ll see positive stuff coming out of Cytori Therapeutics. I think the diagnostic stem cell space will start growing. It’s going to be a gradual process. I don’t think there will be a light switch go off and say ‘Oh, these stem cell companies—let’s get in there right now.’ A lot of their technologies are still far off and there are a lot of problems to work out.