StemCells (NASDAQ: STEM) has decided to close up shop after its most advanced therapy didn’t do enough in a Phase 2 trial to improve people with spinal cord injuries. The one-time stem cell pioneer will wind down operations with $5.5 million in the bank, as of May 31, it said in a statement this morning. Shareholders are not guaranteed any final compensation, the company said.
Shares were down 81 percent today, closing at 57 cents each.
StemCells had been planning to raise up to $30 million in a stock offering, but those plans have been cancelled, according to this morning’s statement. It has 50 employees remaining.
Founded in 1988, StemCells, of Newark, CA, was one of the earliest companies to try to turn modified human stem cells into therapies. It benefited from California taxpayers’ vote in 2004 to fund in-state stem cell research, much of which the George W. Bush administration considered unethical and refused to fund.
But the state funding, channeled through the California Institute for Regenerative Medicine, or CIRM, became a problem. In 2014, StemCells made a questionable move to name Alan Trounson a board member days after he left his post as president of CIRM. Trounson had overseen CIRM’s $19 million award to StemCells in 2012 to help fund an experimental Alzheimer’s treatment. CIRM later pulled the plug on the funding, but StemCells had already received $10 million it didn’t have to give back. The incident prompted CIRM to revise its conflict of interest policies. Trounson is still on the StemCells board.
Little has gone right since. As the San Francisco Business Times reported in January, StemCells was paying its ex-CEO Martin McGlynn more than $1 million in severance even as it was cutting costs by laying off workers and shutting down a trial of an experimental treatment for dry age-related macular degeneration (AMD), a leading cause of vision loss in the western world.
In late 2013, CEO McGlynn told Xconomy that dry AMD—which affects tens of millions of people around the world—likely represented the largest market opportunity for the company.
Apparently the cost-cutting didn’t happen fast enough. StemCells has burned through nearly $16 million, or three quarters of its cash, since the end of September.
Photo courtesy of Stefan Böhm Fotografie via a Creative Commons license.