You are thinking “I thought this was a skin care science site; why are you telling me about financials of penny stocks when I want to hear about wrinkle creams?”
The answer is this – sometimes skin care products are an afterthought to a company engaged in legitimate science. An add-on, a “bastard child”. This might happen for all sorts of reasons, including financial ones. I think this company and its’ products provide us an illustration of that sort of “second thought” approach to the skin biz.
The lifeline skin care products are created by a company called “international stem cell corporation” (ISCO) which has been around a long time. I believe they have burned through a lot of investor money, and never made any, and so they decided skin care was good biz to be in. I’m not faulting them. But I think their genesis story has led them down a path that doesn’t quite add up for me. Which I why I am left scratching my head about the direction they take scientifically.
We will start with the financials. (skip this if you hate numbers)
Financial Statements for INTERNATIONAL STEM CELL CORP (ISCO) Year over year, International Stem Cell Corporation has seen their bottom line shrink from a loss of $8.5M to an even larger loss of $12.7M despite an increase in revenues from $1.1M to $1.6M. An increase in the percentage of sales devoted to SGA costs from 477.79% to 489.62% was a key component in the falling bottom line in the face of rising revenues. International Stem Cell Corporation’s Quarterly Revenues
International Stem Cell Corporation had 3rd quarter 2011 revenues of $842.1K. This missed the $1.8M estimate of the one analyst following the company. This was -24.4% below the prior year’s 3rd quarter results. Their burn rate exceeds this amount by a considerable margin. They are bleeding out at the rate of $12M annually. Last balance sheet I could find (2010) showed only about $6M in cash. They must have had more investment to make up the difference. Not looking too good, even as penny stocks go.
Now to be clear, there is no shame in being a start up with negative cash flow. All great companies have to start somewhere. But in this case, you wonder whether key trends in the underlying (stem cell) science has punched a hole in their balloon. More on that later. Could this be why they decided the skin trade was worth a try? Is this a hail Mary pass with seconds left in the 4th quarter and no timeouts?
As to their science, first let me emphasize this this is clearly a science-based organization. Not one of the “make believe” science companies that seem to proliferate, and that we have written about often. This company has real M.D.’s and PhD’s and bench scientists. Their science makes logical sense, and fits know scientific constructs. They have published 4 papers in scientific journals. However, none of them have anything to do with skin applications. But their stem cell work is legitimate, and they have a lot of credibility with me to start with.
They use a type of stem cell called “parthenogenetic stem cells”. They call them non-embryonic, as they are not fertilized by sperm, but instead are induced to become embryo-like using lab procedures. The National Institutes of Health, and other US science agencies consider them to be embryos. I am not going to decide for you whether this is or is not an embryo, with all the ethical issues that brings up. What I am going to say instead is that I believe the whole concept of parthenogenetic stem cells is a tad stale in the current fast moving world of stem cell biology. It is predicated on the notion that it is better for a stem cell to be more pluripotent than the average (let’s say mesenchymal) stem cell. That notion had its day, but in the world of anti-aging science, and skin rejuvenation in particular, it has long been surpassed. It turns out that cells, including stem cells, can be induced to de-differentiate (get stemier, or more embryo-like). These days, in the lab, you can take a skin cell and make a stem cell out of it. On the scale that goes from pluripotent (can become any kind of cell) to committed (differentiated) cell, it is quite possible to move both ways. When humans first did this in the lab (just a couple years ago – we call them induced pluripotent cells) they thought they were inventing something new. Turns out they were just discovering something that our bodies already do. Cells that have been committed to a particular fate (e.g. epithelial skin cells) can be coaxed back into the mesenchymal cells from which they derived (“epithelial-mesenchymal transition”). In fact, there are stem cells that snuggle up to committed (differentiated) cells and induce them to de-differentiate naturally (see our post about this). We have long since figured out that differentiation is a two way street. As a result of these discoveries, the whole parthenogenetic thing just doesn’t make much sense in the brave new world of stem cells
However, they can make the argument that for immune rejection reasons, parthenogenetic stem cells are superior to e.g. induced pluripotent stem cells. They claim 50 cells lines of their cells would make for compatible transplantable stem cells for every known human immune profile. That may be, and it may confer advantages when you talk about stem cell transplants or tissues grown from stem cells in the lab for implantation. However, this has nothing to do with skin applications in the cosmeceutical realm. Why? Because those uses do not involve implantation of cells. If cells were being implanted the products would be regulated not as cosmetics but as biologic devices.
The legitimate role of stem cells in cosmeceuticals is to act as a farm for human biochemicals that are involved with healing and regeneration. No immune problems (or a host of other worries) as there would be with someone else’s cells entering your body. This is, in fact, how ISCO makes in Lifeline products’ key ingredients.
So here is where we find the logical leap I have trouble making. If you are not transplanting cells (ISCO’s original and core business plan) then the logic of parthenogenetic stem cells for anti-aging skin care really doesn’t hold. No advantage whatsoever. Why do we need embryonic stem cells (fertilized or not) to farm cytokines, growth factors, and other skin affecting chemicals in the lab? This company presents no clear rationale. And if you thing about it teleologically, you might ask what is the role of an embryo in wound healing? As a stem cell, just because you can differentiate into lots of different cell types does not make you an expert in skin healing or rejuvenation. There are other stem cells more suited to the task, because their physiologic function is to repair damage, not to make babies. Even fibroblasts make more sense, although they depend heavily on signals from other sources.
Lifeline talks all about the nature of the stem cells on their web site but presents no arguments anywhere as to why parthenogenetic stem cells in particular would benefit skin as a unique organ. Nothing about anti-aging cell biology either. It seems like they have invested many millions in the idea of parthenogenetic stem cells, and decided cosmeceuticals was a market they wanted (needed) to be in, as they don’t seem to have much else in the near term pipeline. A financial decision, not a scientific one.
But so what, if the products work, right? When I start to try to answer the question of do their products work (or should they work, based on a cohesive scientific hypothesis with some evidence to back it up), I become instantly frustrated. Their web site is very poorly organized. They make claims, to be sure: “…improved appearance and depth of fine lines and wrinkles, significantly reduced damage from free-radicals, greater skin elasticity, brighter and more well hydrated skin. “ But I cannot find any evidence from clinical trials, or bench science, and I really did look hard. The only pictures they present look heavily Photoshopped. I find lots of talk about basic stem cell science, but then no specifics about how they apply it to skin rejuvenation. I cannot even find an ingredients list on the site. Reading between the lines on their blog page, I am led to assume that they are growing these cells in culture and extracting conditioned media. It says they “patented a process to extract various bioactive growth factors, peptides and enzymes from these PSC”. However, a quick search of the patent database shows 4 patents granted or applied, none dealing with such a process. But let’s assume they did so, and that is how they derive an active ingredient. If it is protected by patent, they surely they could tell us about it and what it accomplishes without worry.
This is the company that originally gave stem cells dermatologic products a bad reputation by claiming a secret stem cell ingredient and then sold it like snake oil, with tales of high security facility somewhere in Russia, surrounded by barbed wire. BTW I always assumed the facility might be real, but probably a prison, with some not yet reformed bunco artists as marketers of nonsense. Amatokin is still sold, still pretending to have something to do with stem cells. But look at the ingredients — not a stem cell, cytokine, or any such thing in sight. No actual stem cells used in the making of this product. The labeling no longer claims stem cell derivatives but now instead says “stimulates your own stem cells”. Right. Proof please? Anyway, in another part of their blog these ISCO Lifeline guys give a flattering nod to Amatokin (clueless warning #1- go look at their actual ingredients guys). And they do so without snickering or at least winking and nodding. Very strange. Can they not tell the difference? What’s the story there? Are there some ex-Amatokin parolees on the marketing staff?
I have another issue. They claim that their recently released products are “the first human stem cell products” to reach the market. Not true by a mile. I participated in a product three years ago, and it certainly wasn’t the first. More marketing hype? Or do they really not know what is out there? (clueless warning #2).
OK. So let’s just say they are not very discerning, but still are very clever scientists who just need some help with their market research and web site to make their own science message a bit clearer. And to perhaps distance themselves from the “behind barbed wire” guys. So, what about the science they do talk about on their web site?
They also make some very obvious science gaffes like “Only parthenogenetic and embryonic stem cells possess enough telomerase to make them effectively immortal.” Well, that is simply not true. Every human cell possesses the telomerase gene. Some organs (including skin) express telomerase (make it in the cell), most don’t, unless prompted to by a wake up chemical or event. Human cancer cells of all sorts make a lot of it, and they can be immortal (e.g. HeLa cells).
So, bottom line, I have no idea whether the products work, because they haven’t provided on their web page (or in a journal article) a clear rationale that would allow one to judge the soundness of the translational (lab–>clinical) science, nor foundational evidence showing that it works. The background science is interesting, yes. But what does it have to do with skin care, and anti-aging? They don’t clearly say, and I find the whole rationale for parthenogenetic stem cells as a pathway to skin rejuvenation to be lacking sound logical rationale. Other than perhaps rescuing a company from financial ruin. I doubt that the skin trade alone is going to rescue them, however, with their current burn rate. Product efficacy aside, this company is a risky bet.
If someone can provide more information, I would be happy to revisit this topic. I really want this product to work!
The parent company for Lifeline, ISCO, saw a strong increase in selling activity of it’s stock today, and the stock price dropped another 8.33% to $0.44 per share. I don’t have any non-public information, but I don’t think this has anything to do with recent events but rather reflects the very dire straights of this company based on financial fundamentals. The Hail Mary of jumping into cosmeceuticals as an afterthought is not going to alter that trajectory. Only thing that might help would be to slash the burn rate (expenditures) significantly. Of note, they don’t even want to market their skin care line themselves, so do so through middlemen. Again, this has nothing to do with whether the products work or how they compare to others in the stem cell realm. But I do wonder whether this company is going to be around long. Clearly some folks who own the stock are bailing out, showing their lack of confidence at this stage.
I had a very helpful telephone conversation with Simon Craw, PhD, of ISCO yesterday. I found him to be very helpful, straightforward, and spin-free. Refreshing. I must say, he represented his company very well. Nice chap, too.
After our conversation, Dr. Craw kindly sent me an 8 page glossy piece by e-mail. I will interweave the two sources of information. The brochure was about the company, parthenogenetic stem cells, and then had a small section (page 6-7) on Lifeline Skin Care. Page 6 is an ad, page 7 talks about clinical studies. Thus far, this is the only data I have seen.
We are going to take a deep dive into scientific constructs here that will probably not be of interest to most of our readers. We invite you to skip this section.
The brochure gives the results of an 8-week study of the products (a day and night serum) with measurements of visual skin changes, and a biopsy study looking at gene expression levels for elastin, collagen, and three growth factor families.
The clinical study looks industry standard in construct, but there was no mention anywhere of how many subjects. This shows the report was not done by a clinical scientist, as this is always a key factor. The end points were skin hydration, elasticity, brightness, and fine/coarse lines. Excellent results for all.
A biopsy study examined human fibroblasts in culture. The description said that the biopsies were “taken from subjects”. It is not clear whether this was the same subjects as the study above. If so, it didn’t mention whether the biopsies were taken before or after 8 weeks of using the product.
Gene expression levels of elastin, collagen, and several growth factor families were measured after treatment with HSC-X (they never explained what that was, but I presume it is an extract of parthenogenetic stem cells, which they talk about elsewhere).
Fibroblasts respond to a variety of growth factors, cytokines and pro-inflammatory mediators. So, the findings are not in the least surprising, as I understand that the extract contains a number of representatives of several growth factor families. Genes for elastin, collagen, and several key growth factors are upregulated. This experiment really just establishes that indeed there are growth factors in HSC-X. Nothing more there that I can see.
But, here is where I get confused. There is no clear rationale for doing what amounts to a stimulation test in fibroblasts from subjects who had already been exposed to HSC-X for 8 weeks. Why not just use fibroblasts from a different uuntreated) source? Unless they were looking for some epigenetic events … cell memory for exposure to HSC-X? An epigenetic trait is a stably heritable phenotype resulting from chromosomal changes without alterations in the DNA sequence. It’s all about cellular memory. If that was the purpose of the experiment, it is very advanced stuff, although could have used some additional measures. Otherwise, I just don’t quite get the experimental design.
***END GEEK ALERT***
OK, so let’s put all this into some context. As I said before, these guys are real scientists, and believe in the same principles we uphold here every day –e.g. pursuing facts, and truth, as far as we can know it, given the limits of our knowledge in science.
I actually like this company and their work on several fronts. The science is leading edge, and in many ways parallels our own work. I suppose that makes it harder to be objective, but then we never claimed to be entirely objective. We all have our biases. We disclose our “potential conflicts” like all good scientists, and let others judge whether our opinions have any validity or not. So, you may also be curious as to how we can like our competition? Again, as scientist-entrepreneurs, we have some profit motive in there somewhere, but we have other principles that we hold more important. Integrity is one of them. Dr. Craw can be my colleague and my competitor in the same breath. Because he is steeped in the same traditions I am, easily discerned in a brief conversation, I can trust him. If we are on different sides of the scrimmage line right now from a commercial or institutional viewpoint, it doesn’t bother me a bit. Never has. Because we know we are working ultimately for a higher cause than either of the commercial entities that employ us. (Although I am jealous that he probably gets paid by his). Besides, competition in science is good (as long as we hold to those basic principles).
And remember, barefacedtruth is not about us, or our companies. It is about setting a standard for scientific integrity in the world of antiaging cosmeceuticals, and doggedly pursuing the bad guys who distort science and make it unrecognizable.
We are not here to endorse specific products, even our own. So I am not going to tell you to rush out and buy anything. But I can give my opinion as to the validity of the science. Which I just did. This stuff is real. We can even recommend it.
Dr. Craw was very open in explaining that they only work with parthenogenetic stem cells, viewing it as their technology platform, and did not have any evidence that it was different or better than other stem cell types in terms of cytokine farming. That ties up that loose thread.
Dr. Craw informed me that they did hire a top marketing person mid-2011. I still do have issues with market execution (I won’t do a laundry list), and dearly wish they would distance themselves from Amatokin and stop saying they were the first to market. Sometimes in any company you have to restrain people who tend to say things that come back to bite. And I still have grave doubts about the long range financial condition of ISCO, given what I observe about the market for antiaging skin care and their publicly reported financials. But since our mission here is not stock picking, or management consulting, we can leave that aside, and wish Dr. Craw and his associates at ISCO a safe and prosperous journey.