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Irvine’s Nexell Comes Off a Strong Week

DOW JONES

Mere membership in the hot biotech sector doesn’t fully explain why Nexell Therapeutics Inc. became the darling of both institutional and retail investors last week.

Several reasons, any of which might not alone justify the institutional and retail interest, turned the Irvine cancer research company into one of the most heavily traded stars Friday.

The stock hit a 52-week high of $12.75 a share before settling back to $11.13, its highest closing price in the past year. About 15.1 million shares traded hands, about seven times the average number during the past three months.

Since the start of the year, the value of Nexell’s shares have soared 790%.

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“There is obviously the biotech market itself and money pouring in,” said Nexell spokesman Tad Heitmann, but “we are a company with broad intellectual property that in the long term could produce cell therapies for medicine, while growing revenues today” with products.

Nexell is involved in stem cell research and technology, a high-profile area. Stem cells are undifferentiated cells that can produce the cells of tissues and organs. Studies are underway to see if these cells can repair and replace diseased or damaged tissues.

Heitmann described the company as in the middle of the spectrum of biotechs between a “pure cash-burning research and development company and a profitable, revenue-generating, self-sustaining producer and seller of medical devices.”

Nexell expects to have a profitable quarter in about two years, which “in the time frame of biotech evolution is a short time,” Heitmann said.

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The company’s endeavors were highlighted in a story about stem cell research published Wednesday by the Bull Market Drug & Biotech Investor, a weekly publication with more than 110,000 subscribers.

Nexell’s main revenue source, Isolex 300i, took a more prominent position in the news Wednesday after Nexell filed a lawsuit in federal court regarding patents that are the “central technological component” to its system, Heitmann said.

Nexell licensed patents that cover the use of technology in its Isolex system, which obtained Food and Drug Administration approval in July. The system uses the patented technology to isolate and purify the bloodstream’s stem cells so they can be transplanted back into the blood after high-dosage chemotherapy.

The suit was filed against Germany’s Miltenyi Biotec GmbH, Miltenyi Biotec Inc. and AmCell Corp., alleging patent infringement and deceptive trade practices. Joining Nexell as plaintiff are Becton Dickinson & Co. and Johns Hopkins University, which have proprietary rights to the patents. Some market watchers noted these names added validity to the suit.

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Another contributing factor to recent stock activity is the keen interest of investors to grab biotechnology issues.

Investors are picking “any cheap biotech company and pushing it up,” regardless of a company’s financial strength or its product development, said Sven Borho, an analyst at health-care investment firm OrbiMed Advisors.

This indiscriminate investing stems from a desire to experience the most recent biotech bull-market wave--third-tier names, Borho said. The previous two waves, he said, were large biotech names and anything genomics-related.


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