Biotech firm StemCells to cease operations

Biotech firm StemCells plans to dissolve its operations following the failure of a clinical trial that was testing a treatment for spinal cord injury.

The Newark, Calif.-based firm said it would assess options to "monetize its intellectual property" — which could mean a sale of the compounds it was developing and corresponding study data. But it said stockholders may receive no value.

The company's shares (STEM) plummeted more than 80% to 59 cents at midday.

“We are extremely disappointed with the results of our pathway study, which we had hoped to be the first clinical program involving cellular transplantation to meaningfully improve motor function in patients with chronic spinal cord injury,” StemCells CEO Ian Massey said in a statement.

“However, we continue to feel immense pride over the contributions we have made to the stem cell research field, and we are confident that the progress we made will be instrumental in future studies in this area."

The study assessing the company's proprietary cell treatment had reached the second phase of the Food and Drug Administration's three-stage process for proving safety and efficacy.

In the second phase, scientists observed that 12 months following treatment, spinal cord injury patients had some improvements in motor strength, but "the magnitude of the effect" was insufficient, StemCells said in a statement.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.