Stem cell fake news driving biotech investors or vice versa…or what?

US Stem Cell Google Search

Is there a proliferating stem cell fake news problem in the biotech world?

More broadly, the SEC is cracking down on the mess that is fake biotech news, but what about fake news on stem cell biotechs more specifically? Already in the past year I’ve seen examples of possible stem cell fake news.

Hyped press releases (PR) that might arguably be in part fake news are nothing new and there has always been stock pumping, but another more recent phenomenon consists of more extensive series of news-like pieces about publicly-traded companies from seemingly independent third parties, generally extremely positive in tone. One of my Top 20 Predictions for Stem Cells for 2017 was that fake stem cell news would mushroom.

Are these fake news? Standard pumping? Is there a difference? Something else entirely? Let’s take a look at one case study.

Upbeat pieces that are newsy in feel about one particular company, US Stem Cell, Inc. ($USRM), a stem cell clinic business, have caught my eye this year. USRM, formerly known as Bioheart, made news late last year in a way one might think investors would worry about as it was linked to the blinding of three of its customers. Even so, USRM stock has gone on to spike up. Around this same period of time I noticed an unusually large number of items popping up about USRM in the Google News Feed for various searches. You can see a recent screenshot below of an example of a cluster of generally positive pieces on USRM earlier this month.

US Stem Cell Google Search
Since essentially all of these (and other similar ones over a longer period of time) apparently independent news-ish items on USRM were positive and not one mentioned the blinded patients, I wondered how independent the news/investing outlets involved really were.

Could some of this be fake news?

The short answer is “who knows?”, but USRM and some other stem cell businesses in recent years have been the subjects of a large number of generally positive newsy items on the web. What’s going on with USRM specifically? Is it just outperforming other stem cell biotechs in terms of legit PR and in other concrete ways?

Ms. Kristin Comella, CSO of USRM, did publish a short paper prior to the beginning of the stock run up but it wasn’t a breakthrough pub in my opinion. Is there something not widely known that is exciting investors and prompting all these media items? The company also announced a deal to open stem cell clinics in the Middle East and the “reactivation status” of a trial by the FDA (not sure what that will mean practically speaking for the company). Could those be it?

Another item mentioned “positive” financial results and there was some indication of new investments in the firm. Does it all add up to a logical rationale for a big stock price jump? Or are media impacting investors? Both?

As a side note, USRM announced with some fanfare its RMAT application to the FDA as mentioned in one of the pieces listed above in the Google results, but no decision has been announced. What’s its status? Could it have been rejected? More data requested? The turnaround time on the RMATs seems pretty fast generally.

What exactly are the specific news/financial Internet outlets themselves that are running so many stories on USRM and in some cases other stem cell biotechs? They generally are not big, mainstream media kinds of sources. For instance, something called The Oracle Dispatch, has run quite a few stories on USRM. When I checked, the Oracle Dispatch has 42 Twitter followers. Yeah, 42, not 42K. A second media entity Street Register, which has 49 Twitter followers, also has positive newsy-looking posts on USRM. A small Twitter following isn’t necessarily a bad thing, but it is different than some well-known financial media outlets.

Insider Financial, which also posted on USRM, has relatively more of a following with more than a thousand Twitter followers. Another two, Geneva Journal and Stock News Union, are more of a mystery as I was unable to find anything concrete about them at all. Some more well known outlets like Yahoo Finance have had pieces now and then on USRM too, but the sheer volume of pieces overall is just not something I’ve seen with other stem cell biotechs without a blockbuster development and again nearly all these pieces are very cheery.

Even if this kind of stuff together is a case study of stem cell fake news, who’s driving it? One of the tough things about fake news is that you don’t necessarily know the behind-the-scenes source of it.

And let’s say this isn’t fake news, but rather is a case of investors simply being excited about a company’s potential for profit. What are the general implications? Could other currently private stem cell businesses that directly market non-FDA approved stem cells to consumers also go public? Should investors consider the risks to patients associated with the health practices of such businesses? Is treating patients first and then asking for FDA permission later (if at all) an acceptable business model? Can a business sell non-FDA approved and potentially even arguably non-compliant stem cell interventions to patients, collect data from that for-profit enterprise, and then turn around and use that data as a basis for an application to the FDA later with the potential to get an approval of an RMAT, etc.?

It’s going to get really interesting as we see how the FDA handles the 17 and counting RMAT applications that it has reportedly received from diverse entities. It wouldn’t surprise me if by the end of 2017 that it had three-dozen RMAT applications.

What do you think of all of this? Have you seen other examples of possible stem cell fake news or regenerative medicine fake news?

4 Comments


  1. It’s a pump and dump. Those types of stories are commonplace in P&D schemes. 2 billion shares? Really? To put that into perspective, Facebook has about 2.7 billion shares outstanding. Needless to say that USRM is no Facebook.

    https://www.sec.gov/Archives/edgar/data/1388319/000114544314000633/d31331.htm

    Average volume of 22 million shares per day selling at about 10 cents per share is 2.2 million per day. Now, consider that they have 2 billion shares to sell…

    They can sell as many shares as people are willing to buy – at any price.

    https://finance.yahoo.com/quote/USRM?p=USRM

Leave a Reply