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Topic: Wealth Management

Canadian firm’s hair-loss therapy awaits next trial

Investment Counsellor

Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.

RepliCel Life Sciences Inc., (symbol RP on Toronto; www.replicel.com), aims to develop and patent its hair-loss treatment.

RepliCel’s technology uses cells taken from each patient’s own healthy hair follicles to reproduce and “reintroduce” cells to the affected areas. RepliCel also believes it can use its technology to treat a variety of issues that stem from cell deficiencies, including chronic tendinosis and aging skin.

In late 2013, Shiseido Company, a major Japanese hair care and cosmetics firm, paid RepliCel $4.1 million for an exclusive licence to its RCH-01 male pattern baldness cell therapy in certain Asian countries, including Japan, China and South Korea.

RepliCel is using up its cash at a rate of about $1 million per quarter. As of June 30, 2014, it held cash of $4.3 million, so it has enough to keep developing its therapies.


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Investment advice: Hair-loss therapy still has most demanding trials ahead

The company has completed a Phase I trial on RCH-01 and is now aiming to start a Phase II trial by the end of this year.

In Phase I trials, a small group of 20 to 80 healthy volunteers is selected to assess the new treatment’s safety, tolerability and possible side effects.

Phase II trials involve groups of 20 to 300 people. These tests assess how well the treatment works and continue Phase I safety assessments. When a new treatment fails, it usually occurs during Phase II.

Phase III studies are the strictest scientific trials. They’re conducted by two or more clinical research centres on patient groups of 300 to 3,000 and aim to compare the new treatment to the current “gold standard.” Phase III trials are the most expensive, time-consuming and difficult to design and run.

The Shiseido licence gives RepliCel some measure of industry credibility. Still, its treatments are a long way from being sold commercially, and whether they will eventually be proven effective is far from certain.

We don’t recommend RepliCel. If you own the shares, we think you should sell.

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