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Current Larry Oakley's Stock Pick:

Date Posted: 06/30/09

Bio-Matrix Scientific Group Inc. (OTC BB: BMSN)

This is an update on the emerging growth situation I first told you about in my Stock Pick on 2/24/2009. I like BMSN’s news regarding its wholly owned subsidiary called “Entest BioMedical Inc.” See the section titled “The Latest News.” As I initially mentioned, BMSN specializes in stem cells. I mistakenly thought that stem cells were only found in the cord that was cut off at birth, & if you didn’t collect them at that time you were out of luck – I suspect many of my readers have had that same understanding.

CEO David Koos originally told me that stem cells are available not only in the umbilical cord of a newborn baby (called cord blood) – they can be collected from peripheral blood (an adult’s blood), menstrual blood, and other human cells, such as fat tissue. That greatly broadens the applications of stem cells.

First, some Background

BMSN, founded in 2005, is becoming a leading source for technology in regenerative medicine in adult stem cell therapeutic procedures. By forging strategic partnerships, it is bringing together the necessary resources to offer key technologies to accelerate the advancement of regenerative medicine with stem cell cryogenics, therapies, & bio-medical devices for improving the quality of life. BMSN has a state-of-the-art 15,000 square foot commercial cryogenic banking & stem cell processing facility in San Diego. This facility previously served as one of the American Red Cross’ national testing laboratories linking the centralized Red Cross Blood Service regions to the world’s largest blood donor database & inventory systems. This highly secured technologically advanced facility was the initial phase of the company’s commitment to serving the present while helping to shape the future.

This facility focuses on all four of the sectors of the human body to derive stem cells. These stem cell sectors show the most promising avenues of deriving stem cells for future regenerative medicine/stem cell therapy applications. NMSN does complete stem cell processing as well as storage on site. In addition, the company has 192 disposable instruments designed for harvesting stem cell related tissue that are currently patent pending.

The Latest News

Entest was formed as an R & D company to pursue stem cell research in the areas of diabetes, cancer, traumic brain injury, & spinal cord injury. BMSN’s goal is to produce stem cell therapies that address these diseases utilizing adipose derived stem cells. The company believes that adipose derived stem cells have lower rejection rates with better therapeutic outcomes.

Adipose cells are the subcutaneous (below the top layer of your skin) fat cells. Scientists are finding that adipose cells have all sorts of vital functions, including their stem cell content.

Entest is merging into JBCC ( the publicly traded company formerly known as JB Clothing) as its business is R & D based and should be a stand alone entity from Bio-Matrix. As a stand alone entity, the company can attract researchers, joint ventures, alliances, and other collaborative efforts pursuing these. Bio-Matrix is a facility based business and while focused on stem cells, it is not a research based company.

BMSN’s Plans

Bio-Matrix is morphing into a research facility with the capacity to store specimens related to research activities. Areas of interest include veterinary research, tumor banking, and potential for medical manufacturing. This is in addition to stem cell banking. Currently, Steven Josephs, PhD is aggressively developing contacts for the company looking for candidates that show potential for alliances, joint ventures, and partners in stem cell related activities. I also believe that Entest will utilize the facility for its research. Bio-Matrix will own 71% of Entest.

More Background -- BMSN’s Patent Pending Stem Cell Extraction Instruments

Most of the instruments now used to extract stem cells are re-usable. They actually cannot be totally safe in the tissue transfer stem cell collection process. While the re-usable instruments are carefully cleaned after each use, the technicians & nurses cannot get them totally clean – they absolutely must be pristine. The patent pending instruments BMSN has developed are one-time use – they are disposable, totally eliminating any safety issue.

Actually, the nucleus of BMSN’s products for development & manufacture are these instruments that are specifically designed to provide direct assistance in plastic/cosmetic surgery procedures as well as for tissue management & stem cell research. To date, the company has developed about 192 diagnostic instruments for these purposes. These lightweight disposable instruments offer the surgeon the same reliability that they are accustomed to as well as the assurance of no cross-contamination or transfer of disease, & will be sold individually or in surgery specific sets. The company will also include the single use device in its Adipose (fat) Collection Kit for stem cell harvesting.

BMSN anticipates launching a national cord blood cryogenic storage program as its first revenue source. Current methods for stem cell storage involve collection of stem cells from cord blood & the collection of stem cells from blood donations. A potential advantage of using cord blood stem cells is that the patient's own cells could be expanded in culture & then reintroduced into the patient. Thus, there is also an unmet need in collecting human stem cell population for long-term cryogenic storage & for the eventual thawing of the cryo-preserved cell population for the treatment of a disease by autologous transfer.

Even More Background -- Cord Blood

Cord blood, which is also called "placental blood," is the blood that remains in the umbilical cord & placenta following birth & after the cord is cut. Cord blood is routinely discarded with the placenta & umbilical cord. The baby's umbilical cord blood is a valuable source of stem cells, which are genetically unique to your baby & family. Stem cells are the body's "master" cells because they create all other tissues, organs, & systems in the body. The stem cells found in cord blood are the building blocks of your blood & immune system & most readily replicate into red cells, white cell, & platelet. Cord blood has also been shown to contain other stem cells that may provide the ability to regenerate other body tissues.

Peripheral Blood

Hematopoietic stem cells divide to form more blood-forming stem cells, or they mature into one of three types of blood cells: white blood cells, which fight infection; red blood cells, which carry oxygen; & platelets, which help the blood to clot.. Most hematopoietic stem cells are found in the bone marrow, but some cells, called peripheral blood stem cells (PBSCs), are found in the bloodstream. Blood in the umbilical cord also contains hematopoietic stem cells. Cells from any of these sources can be used in transplants.

Adipose Derived Stem Cells

Adipose-derived stem cells are, in layman’s terms, stem cells that are harvested from fat tissue. This source of stem cells has been used in cranial bone repair, heart muscle regeneration, & ligament/cartilage regeneration. Currently, adipose-derived stem cells are being used in veterinary medicine to aid in the repair of damaged tendons, ligaments, & joints. In humans, adipose-derived stem cells are typically harvested as the by-product of liposuction.


Stem Cell Therapy

Stem cell therapy is becoming a common treatment for some conditions. Stem cell therapy has been used successfully in the U.S. over the last 10 years & it has been used many more times in other countries around the world. It is believed that stem cell therapy may eventually offer remedies for such conditions as Parkinson’s & Alzheimer’s diseases, juvenile diabetes, MS, ALS, & certain forms of cancer & heart disease.

Researchers have found that stem cells hold enormous potential for the therapeutic treatment of new diseases currently not on the list shown below. Some of the potential applications of stem cell therapy would be to treat: neuronal degenerative disorders such as Alzheimer's, Parkinson's, & ALS (Amyotrophic Lateral Sclerosis or Lou Gehrig’s Disease); chronic heart conditions such as congestive heart failure & chronic ischemic heart disease; periodontal disease & to grow replacement teeth & bone. The application of stem cell therapy to these diseases is currently being pursued by many of the brightest minds at the best institutions around the world & it is management’s belief that these treatments are on the horizon.

My Opinion

I like this situation – I suggest that you check this one out – it’s at an early point in its growth potential.

Bio-Matrix is a company with a first-class stem cell storage bank facility based in California that has the capacity to store blood specimens for hospitals& universities seeking to do research & treatment work. The company announced this week that it has launched an aggressive marketing program to hospitals & research centers in need of BMSN’s 15,000 square foot stem cell storage bank facility. Hospitals, in particular, have an acute need for the kind of stem cell storage bank facility that BMSN now operates.

Bio-Matrix’s state-of-the-art stem cell storage bank facility focuses on all four of the sectors of the human body to derive stem cells. These stem cell sectors show the most promising avenues of deriving stem cells for future regenerative medicine/stem cell therapy applications. BMSN does complete stem cell processing as well as storage on site at its facility.

There are 31.16 million shares outstanding, & 25.02 million in the float. It was trading at $0.072 in its last trade at 10:03 a.m. today as I wrote this, on a volume of 3,000 shares, with an average volume of 70,132 shares & a market cap of $2.24 million.

I suggest that you check www.BMSN.us – it has a great deal of additional information.

BMSN is located at 8885 Rio San Diego Drive, San Diego, CA 92108. Call CEO David Koos at: 619-398-3517 -- email: info@bmsn.us

My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).

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