Aastrom ($ASTM) Raises Capital - $40 MLN Private Placement

Aastrom Biosciences (ASTM) completed a $40M private placement with Eastern Capital ($1.81 -$0.01) Net proceeds to Aastrom, after placement fees and other offering expenses, are ~$38M.

The company intends to use the net proceeds from the financing for general corporate purposes, including research and development expenses related to the pivotal Phase 3 REVIVE-CLI clinical trial with ixmyelocel-T initiated in February 2012.

At closing, Aastrom issued approximately 12,300 shares of Series B convertible preferred stock to Eastern Capital at a price of $3,250 per share.

The shares will accrue dividends at a rate of 11.5% per annum during the 5-year term.

The Series B preferred stock is convertible into shares of the company's common stock only after 8-Mar-17 at a rate of 1,000 common shares for one preferred share.

There were no warrants issued in connection with the financing and Eastern Capital will not take a board seat.

Daily Dose Conclusion: This strikes us as a last resort financing. Aastrom has the capital to see the CLI trial to its conclusion, and if the trial hits, they can pay off this "expensive financing" and if it does'nt its essentially the end of Aastom. As such we view this deal as raising risk for investors and making the "B" in Binary now a capital letter.

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JMP Securities company report on Aastrom Biosciences ($ASTM)

Aastrom Biosciences, Inc.
ASTM - $1.79, $69M market cap
Jason N. Butler, PhD; +1 212 906-3505; jbutler@jmpsecurities.com

Solid progress as CLI Phase III trial gets underway; reiterate Market Outperform rating and $6 price target. Aastrom announced that it has initiated the Phase III REVIVE trial, evaluating the company's autologous cell therapy, ixmyelocel-T for the treatment of patients with critical limb ischemia (CLI). The timing of this news is in line with our expectations and we anticipate that enrollment could be completed with approximately 18 months, with data read out in 2H14. We continue to believe that the SPA-backed Phase III trial has a higher than average probability of success based on the impressive results from the randomized Phase IIb RESTORE CLI trial as well as the design and powering assumptions for Phase III. Additionally, we anticipate the emergence of further value-driving catalysts in 2012 as we gain more visibility on advancing ixmyelocel-T in broader CLI patient populations and indications (e.g. dilated cardiomyopathy), currently not included in our valuation. Our $6 price target is derived by applying a 5x multiple to our projection for ixmyelocel-T sales of $571MM in 2018, discounted by 35% per year.

Aastrom Biosciences, Inc. ASTM - $1.79, $69M market cap

View more documents from ProActive Capital Resources Group.

Pluristem ($PSTI) versus Aastom ($ASTM) in CLI

 

We had two stories yesterday, one on Aastrom (NASDAQ: ASTM) and one on PluriStem (NASDAQ: PSTI). Aastrom has started their phase III trial. PluriStem updated their progress on several trials including CLI. 

Both companies are marching forward. Aastrom in a Phase III trial, Pluristem in a Phase II that they hope will morph into a Phase III (PII/III) trial and can be used as part of a registration package.

Here is how we read the Critical Limb ischemia indication:

1. It’s a difficult indication to prove efficacy because the endpoint is amputation free survival (AFS). AFS itself is a very variable endpoint and not easy to predict with accuracy who will be amputated versus whose limbs can be saved. 
2. Aastrom ran a Phase II trial. The interim analysis showed great separation between the control (placebo) are and the active (cell / drug) arm. So much so, that ASTM halted enrollment early. Unfortunately when Aastrom looked at the data again, Phase IIb look, the placebo arm did better and there was not a statistically significant difference in AFS between the two arms. Too bad they got head faked by the first data look. The problem is what do they do now ? Run another Phase II trial or run a Phase III with lots of power (patients) to get statistical significance between the active and placebo arms. Answer: They are going for it. Time is money in biotech and its hard raising capital (that’s what been weighing on ASTM shares). So the cost to do a Phase II get great data, then run a phase III while less risky from a science viewpoint, is too long too expensive versus risk a large phase III and hope you hit your endpoint. 

Aastrom Conclusion: This is a situation that investors hate being in, they have to gamble that the Phase II signal seen, will show up in a better powered phase III trial but these risks are now reflected in ASTM's low valuation. Investors now will have to own it and wait the 2 years for data that leads to the binary announcement, success or failure. 

What about Pluristem (PSTI) ? They are smart enough to have learned from Aastrom’ s mistake. The plan is move forward with a well powered ?, well designed phase II trial with the goal of announcing both a stat. significant result and a morph to Phase III. In that way it may be possible (our opinion) for the PII plus the PIII to act as an approval package. Pluristem did imply in their letter to shareholders that the new facility will supply the CLI trial.  The ramp up time for that to come on-line may be faster than people expect.  If so it will help mute any time advanatge Aastrom now has.

1. Given the PSTI PII/III goal one might conclude that Aastrom really does not have a significant time advantage versus pluristem (PSTI).
2. Which product is cheaper? No question in our mind that PSTI's allogeneic, 3d-fermentation style product will be significantly less expensive to manufacturer. The hope is that these placental cells are unique and immuno-privledged and are "autologous" like in their properties versus Aastom's expanded autologous cells.
3. Is there an engraphment advantage of auto versus allo? Yes, always there is But in CLI engraftment may not be the issue as it is in cardiology (heart repair). If the cells help vascularize a bad limb and go away, and patients can be re-treated multiple times (PSTI says yes they can, on retreatment they have not seen immune reactions) then auto may not have a keen advantage versus allow in CLI and COGS here could be the critical factor. 
4. What about the rest of the field? Investors should note that Cytomedix acquired Aldagen who is also hoping to kick of a Phase II trial. This will be with autologous cells but enriched for ALDH-br cells. It looks like this would be the third product to the marketplace and the most expensive, so can Cytomedix (CMXI) show an efficacy advantage over Aastrom or pluristem. We conclude that is very unlikely. Thermogenesis also had need recently about an adipose (fat derived) autologous (but cheap, bedside processed) product, also chasing CLI with a small proof of concept study in India.

Last Point: Its full speed ahead for both Aastrom and Pluristem in CLI. See our recent comments on both, but in weighing the products, the associated cogs, the indications, the cash on their respective balance sheets we conclude that PSTI is strongly positioned.

PluriStem ($PSTI) : Letter to Shareholders

Pluristem Therapeutics (PSTI) provided a Letter from the CEO (the quarterly update), and it’s a good and comprehensive piece. Our take-away is as follows: Pluristem has cash ($43 million), the company is hiring great talent, and is making clinical progress. Their allogeneic product has the potential to be very unique, as an immuno privledged allo cell therapy product. In English what that may mean is the best of both worlds. An autologous like product (auto being self, like your own cells) but with a low cost of goods, "cells in a bottle, like pills in a bottle". With that said it is early days, as Pluristem marches forward in their lead indication, Critical Limb Ischemia (CLI). Aastrom (ASTM) is in the lead as they begin their Phase III trial (see today's prior note). There is no question in our mind that Pluristem's product may have the lowest cost of goods sold, which in CLI may be a critical factor. Other indications, muscle injury, et al, add additional catalysts to watch.

From Pluristem's News Letter:

Clinical Trials Update: Muscle Injury:

Pluristem plans to initiate a Phase II dose escalation trial using its PLX cells in muscle injury.

Its PLX cells will be administered into muscle routinely traumatized during hip replacement surgery in an effort to improve and shorten the rehabilitation time for the patient.

The study will enroll an estimated 18 patients and be conducted at the Klinik für Orthopädie, Charité Hospital, Berlin, Germany.

Pluristem has filed the Investigational Medicinal Product Dossier (IMPD) with the Paul-Ehrlich-Institut and will initiate the study upon regulatory approval.

Clinical Trials Update: Peripheral Artery Disease (PAD):

Pluristem plans to  initiate three clinical trials in the PAD area.

Clinical Trials Update: Intermittent Claudication (IC):

Pluristem plans a dose escalating Phase II trial in IC involving several clinical sites in the United States and Europe.

PSTI has finalized the study protocol, and will initiate the study upon regulatory approval of the Investigational New Drug (IND) Application in the United States and the IMPD in Europe.

Clinical Trials Update: Buerger's Disease:

The company plans to initiate a clinical trial in the U.S., Europe and India upon approval of the regulatory applications.

Clinical Trials Update: Critical Limb Ischemia (CLI):

Pluristem is planning a Phase II/III pivotal trial at multiple sites in the USA and Europe for CLI

The endpoint for this pivotal trial will be amputation free survival (AFS).

Based on recommendations of regulatory experts and potential collaborative partners, Pluristem has made the strategic decision to use only commercial-grade PLX cells for this pivotal clinical trial.

These cells will be manufactured in our new facility scheduled to be completed towards the end of 2012.

PSTI will then file the necessary documentation with the U.S. FDA and European Medicines Agency (EMA) and upon regulatory approval, will begin this important trial.

Clinical Trials Update: Radiation Exposure

In preclinical studies, Pluristem's PLX cells demonstrated statistically significant improvement as mitigators of the acute radiation syndrome (ARS) and as protectants of the bone marrow following radiation exposure in animals.

Manufacturing Update: The new manufacturing facility is on schedule with the build-out. Pluristem is one of the few cell therapy companies (other than NeoStem) that is focused on manufacturing at an early stage.

Financial Update:  In PSTI's recently released 10-Q quarterly report the company had approximately $43 million in cash and deposits.

Aastrom ($ASTM) patient enrollment

Aastrom Biosciences (NASDAQ: ASTM) announces initiation of patient enrollment in REVIVE phase III trial of Ixmyelocel-T ($1.79):

• ASTM has begun patient enrollment in the REVIVE Phase 3 clinical trial to assess the efficacy and safety of ixmyelocel-T in the treatment of patients with critical limb ischemia (CLI).
• The primary endpoint of the trial will be amputation-free survival at 12 months.
• The REVIVE clinical trial has also been granted Fast Track designation by the FDA.

Daily Dose Conclusion: This is positive as the trial gets underway. Investors are concerned that the lack of a partner means Aastrom has to fund this trial alone, which will be expensive. The likely conclusion then is that Aastrom will need to raise additional capital. At this valuation however a good amount of that is likely factored into he share price. Other earlier players in CLI include Pluristem (PSTI), and Cytomedix - Aldagen (CMXI). We have also recently written on Thermogenesis (KOOL) working in the CLI space.

Medistem ($MEDS) Initiates Collaboration With Chinese Conglomerate Aimed at Clinical Development of Endometrial Regenerative Cells for Critical Limb Ischemia

Medistem Inc. (OTC: MEDS) announced today initiation of joint efforts with the Chinese conglomerate, Shanghai Jia Fu Medical Apparatus Inc, in developing the Endometrial Regenerative Cell (ERC) “universal donor” stem cell product for the Chinese market. The initial focus of the collaboration will be treatment of critical limb ischemia, an advanced form of peripheral artery disease.

Medistem has previously received FDA clearance to begin a Phase I clinical trial using the ERC stem cells in this patient population. A scientific publication providing the rationale and supporting data for utilization of ERC in treatment of critical limb ischemia may be found at http://www.translational-medicine.com/content/pdf/1479-5876-6-45.pdf.

Video on MediStem's Source of Cells:

Daily Dose Conclusion: Critical Limb Ischemia (CLI) is getting crowded. Aastrom (ASTM) is in the lead in the US with a P3 FDA trial in motion. With that said the market capitalization for Aastrom has fallen sharply as trial has been expanded and costs rising. Definitive Phase II data should have translated into a pharma partnership but the Phase IIB data read missed the primary endpoint as the AFS (Amputation free survival rate) of the control group fell (it was unusually high in the PIIa read-out). As such it seems that Aastrom has to go it alone now. Also aggressive in the CLI space is Pluristem (PSTI), Aldagen (now part of Cytomedix: OTC/BB:CMXI) and even device company Thermogenesis (KOOL) announced CLI data from a trial in India. We believe that in CLI COGS (cost of goods sold) and the ability to retreat patients will be significant factors.

Aastrom (ASTM) fall in market cap appears over-done at this point but smart investors will wait for a financing to be completed before jumping in. Data is at least 2 years away so there is no rush. Ditto for the other CLI players. In terms of Cytomedix we are very concerned that the strategy is flawed as Aldagen's product (ALDH-br cells) look expensive to make and are in early stages behind Aastrom and Pluristem. Is Cytomedix funded for a phase II CLI program ?  Stay tuned.

Aldagen Finds a Home: CytoMedix Acquires for $16 MLN in Stock

CytoMedix (OTCBB: CMXI) is set to acquire Aldagen, which is a private company that has been shopped on the street for the past year after two failed IPO attempts.

This is a stock deal valued at aproximately $16 million. Aldagen shareholders will own 17% of CMXI and will be eligible for milestones of up to 20+ million in Cytomedix stock, (valued at $28.4 million based on Cytomedix's close of $1.40 on Wednesday, before the deal was announced).

The company utilizes an ALDH-br bone marrow cell that is selected. Aldagen has P1 data from a Critical Limb Ischemia trial that looks fine (all P1-CLI data looks pretty good). The company is also pursuing a stroke indication and is treating the first group of n=10 patients in a P1a/b safety/efficacy (hint) study that they hope will morph into a P2 trial.  As part of the terms of the deal Aldagen's VC are making a $5 mln investment in Cytomedix (CMXI).

Cytomedix's lead product is the AutoGel system which is marketed to produce platelet-rich plasma (PRP) gel derived from a patient's own blood for use on a variety of exuding wounds. We have not in detail evaluated this transaction, and there will be a call in the morning.

Daily Dose Early Read: CLI is getting competitive and Aastrom (ASTM) is in the lead in a  Phase 3 pivotal trial with replicel. Pluristem (PSTI) is right behind with their allogeneic PLX cells. PSTI will have the lowest cogs and we expect because of the enrichment step for Aldagen that they will have the highest COGS. We are therefore concerned that Aldagen is likely the third player to market and with the most expensive product. Can efficacy in CLI be dramatically different between these three players and can it be proven ? That is a big question and only time and science will answer it, but we expect the answer will be no. Stroke is even more complex, requires very large trials and Athersys is pursuing it with MultiStem (low COGS, allogeneic).  CYMX will pick up Aldagen, their manufacturing and operations folks and this will increase their fixed and variable costs.  Its hard to see given the price paid how this works for CytoMedix shareholders.

Transaction Terms: (from press release): At the closing, Cytomedix issued 135,398 newly designated Cytomedix Series E preferred shares to Aldagen shareholders. Pro forma for the conversion of these shares to common stock, as set forth in the designations documents for the Series E preferred stock, Aldagen shareholders will own approximately 17.3% of Cytomedix common shares outstanding after the concurrent conversion and/or redemption of all existing Cytomedix preferred shares.

There are also contingent clinical milestone payments totaling up to 20,309,723 shares, which will be issued to Aldagen shareholders upon the achievement of predetermined clinical milestones associated with an ongoing Aldagen Phase 2 trial in post-acute ischemic stroke. Notably, 80% of this contingent consideration is issuable only upon a favorable clinical efficacy signal in the above-mentioned trial. The costs of the clinical trial will be funded, in part, by the $5.0 million investment made by Aldagen shareholders, $3.0 million in proceeds from completed or committed warrant exercises by existing Cytomedix shareholders, as well as a portion of Cytomedix subject to lockup restrictions ranging from six to 18 months.

As part of the transaction, as of the closing date three Aldagen Board members have joined the Cytomedix Board, which has been expanded to nine seats. They are Richard Kent, M.D., Chairman of the Board of Aldagen, Lyle Hohnke, Ph.D., Aldagen Del Guercio, Managing Director of CNF Investments and a current Board Observer for Aldagen. Concurrent with these additions, Craig Mendelsohn has stepped down from the Cytomedix Board.

In addition, Edward L. Field, Aldagen Operating Officer of Cytomedix. Aldagen is now a wholly owned subsidiary of Cytomedix and will retain manufacturing and product development facilities in Durham, N.C.

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PluriStem (PSTI): All Systems are Go !

Pluristem Therapeutics (NASDAQ: PSTI) announced that following preliminary discussions with several governmental authorities, it will expand its research and development efforts on an acute radiation exposure treatment. The announcement comes as governments around the world have broadened their search for easily administered and effective radiation countermeasures.

Liat Flaishon, MD, PhD, recently appointed Pluristem's Director of Business Development, will lead the company's development efforts.

Dr. Flaishon joins Pluristem after serving as the director of Drug Safety Risk Management in the global drug safety and pharmacovigilance department at Teva Pharmaceuticals. Dr. Flaishon received her medical degree from the Sackler School of Medicine, Tel-Aviv University, and her PhD in Immunology from The Weizmann Institute of Science.

As previously announced, Pluristem's PLX cells have achieved favorable pre-clinical data in the treatment of radiation exposure. In studies conducted by Professor Raphael Gorodetsky and his team at the Biotechnology and Radiobiology Laboratory at the Sharett Institute of Oncology at Hadassah Medical Center in Jerusalem, Pluristem’s placental 3D expanded cells have demonstrated efficacy as mitigators of the acute radiation syndrome (ARS) following radiation exposure in animals that were given lethal doses of radiation and 24 hours later were treated with these cells. According to these studies’ findings, a statistically significant increased survival rate (3-4 fold) was observed in those animals treated with Pluristem’s cells over the untreated control animals. Additionally, bone marrow cellularity was significantly elevated following the administration of the placental cells throughout the follow-up period. These beneficial effects may be attributed to the cytoprotective effect and/or the immunomodulatory properties of PLX cells.

“Following announcement regarding our initial studies on radiation treatment, we have seen significant interest in our radiation product candidate”, said Zami Aberman, Chairman and CEO of Pluristem. "Currently, there is an extensive search for an easily administered and effective product for radiation countermeasures. We believe that our PLX cells have the potential to both extend the window of treatment for radiation victims and to become an off-the-shelf nuclear catastrophe countermeasure product."

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Daily Dose Conclusion: ARS (Acute Radiation Syndrome) is really three sub-syndromes but the standard of care for radiation exposure remains a bone marrow transplant. A rapid off the shelf allogeneic product is a perfect fit for this type of medical counter measure (MCM). 

Importantly the key drive for PSTI is progress in CLI (Critical Limb Ischemia).  REPORTS circulated yesterday that PSTI was looking to divest or exit the CLI indication. Those reports appear totally unfounded. While Aastrom (ASTM) has the most advanced therapy for CLI (now in P3) the COGS equation for an allogeneic product will give PSTI a great advantage versus ASTM.  So the key question will be autologous versus allogeneic, and all of the implications that accompany the two very different approaches such as cellular integration, the need and cost to re-treat and the efficacy of autologous versus allogeneic (placental derived) cells.

The answers clinically are not known yet but given the size of the opportunity there is room for more than one therapy.  We are hopeful that Aastrom has enough power (enough patients) to meet the primary endpoint (AFS – amputation free survival) and that will be positive for all the cell therapy companies.