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Should Investors Chase the BCLI Doubler Into Monday’s Announcement?

Unable to postpone their wagers any longer, traders are finally placing their bets on Brainstorm Cell Therapeutics Inc (BCLI) today before Monday morning’s big announcement by buying BCLI stock … in spades. BCLI was up 50% for the day as of the latest look, and has gained nearly 100% since Tuesday’s close.

Brainstorm Cell Therapeutics Inc (BCLI) The impending news from Brainstorm is an update on the company’s development of NurOwn — a treatment for amyotrophic lateral sclerosis, or ALS, though it’s better known as Lou Gehrig’s disease.

If the news is positive, it will be a big step toward the approval and commercialization of the drug. If it’s less than encouraging news, of course, then BCLI is apt to plunge from its newly lofty levels.

Whatever Brainstorm Cell Therapeutics reports, Monday is assured to be an interesting day for shareholders.

What Exactly is Lou Gehrig’s Disease?

NurOwn is made up of “autologous mesenchymal stem cells that have been induced to secrete neurotrophic factors.” In layman’s terms, NurOwn is a patient-specific stem cell therapy designed to slow or halt the destruction of nerve cells found in the brain and spinal cord.

Lou Gehrig’s disease is a progressive neurodegenerative disease that gradually weakens and kills motor neurons, which control voluntary muscle movement. Unable to flex or exercise, a patient’s muscles can eventually shrink (atrophy) to the point where that individual is paralyzed.

Though less than 6000 individuals in the United States are diagnosed with amyotrophic lateral sclerosis in any given year, most die within five years of diagnosis. Only 10% of ALS patients live ten years after a diagnosis has been made.

The only approved treatment for Lou Gehrig’s disease is a drug called Riluzole, from Sanofi-Aventis. It was approved in 1995, however, and few would disagree that the pharmaceutical industry can come up with something better.

Brainstorm Cell Therapeutics might well be the name that introduces such a drug. The market seems to think it will be anyway, given the surge from BCLI immediately in front of Monday’s conference call/webcast which will inform shareholders of the final results of the Phase 2a trial of NurOwn.

But …

The Brainstorm Cell Therapeutics Biotechnology

NurOwn is actually more of a technology than a treatment itself. The platform involves extracting bone marrow stem cells, and from them, creating mesenchymal stem cells that are then injected into the areas of an ALS patient’s body where the nerve cell degeneration is occurring. These newly implanted cells secrete neurotrophic (nerve growth) factors that slow or even halt the deterioration of motor neuron cells.

Giving credit where it’s due, Brainstorm Cell Therapeutics has a leg up on other stem cell therapy developers — and a leg up on ALS treatment developers — in that it understands its underlying mechanism of action even if it doesn’t yet know whether that mechanism of action actually slows the progression of amyotrophic lateral sclerosis. (Most stem cell treatments currently in development are based on nothing more than an assumption that the injection of normal, healthy cells into an affected area will prove beneficial — a premise that has too often led to disappointing results.)

Even so, while the market is already decidedly bullish on this coming Monday’s news, investors may want to temper their expectations.

In an October interview with TheStreet.com’s Adam Feuerstein, Brainstorm Cell Therapeutics CEO Tony Fiorino flatly said, “I don’t know if our therapy works, and I won’t tell anyone that our approach works.” Fiorino added, “This is not a pivotal study and will not support approval, but hopefully, the results will be compelling enough to allow us to move ahead into the next, larger study where we can treat ALS patients with multiple doses of NurOwn.”

BCLI fans and shareholders will be quick to counter with the fact that NurOwn has been given a fast-track designation by the Food & Drug Administration, which bodes well and suggests the agency and is looking to accelerate the approval of the treatment.

However, that’s a point of view that reads more into the designation than the FDA ever intended. A fast-track status simply means the disease addressed by a particular drug is one that currently has few (if any) viable treatment options, and that the drug in question is at least safe enough to continue testing and accelerate the review process.

It’s not a designation that speaks to efficacy.

Bottom Line for BCLI

Whether the Phase 2a data to be unveiled on Monday is encouraging or not may be irrelevant at this point. The meteoric rise from BCLI this week may already have baked all of the news-driven upside into its price. Indeed, it’s scenarios like this one that made “buy the rumor, sell the news” an adage worth remembering.

Whatever the case, the conference call/webcast will begin at 8:30 a.m. EST on Monday, Jan. 5. The company’s website offers all the details on how to participate.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/brainstorm-cell-therapeutics-inc-bcli-monday/.

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