DD Education: Which Cell Therapy companies present the best value? Part 2

We developed an analysis using public filings and annualizing the most recent quarters as of 12/31/11. As such, the accuracy is subjective to our proprietary algorithm, and this list is not mean to be all comprehensive.

We conclude that ex leaders Dendreon and MesoBlast make the space very inexpensive. The sample below represents just over $500 million in market cap for eight of the selected public companies (ex DNDN and MSB). These companies have 3 - PIII trials, 5 PII trials and several P1 trials (based on these crude metrics).

We conclude that is worth investors time to understand among these companies in terms of what they are doing and the associated probabilities of success of their trials. Recent data peaks from the Cardiology space suggests that Baxter (BAX) and their CD34 cell type may be very viable. NeoStem has a very similar approach. The retrenchment in MesoBlast shares since that company presented data at AHA in November is of concern. Cytori, Aastrom, Athersys all have active programs in cardiology while Athersys lead program is partnered with Pfizer for Ulcerative Colitis and Aastrom is entering a Phase 3 trial in CLI.

By price ($), Osiris, MesoBlast, and Dendreon are the highest $ priced stocks:

But that starts to change as we migrate to market cap:

And if we eliminate Mesoblast and Dendreon we get a better picture of the rest of the field:

And that picture changes as we adjust for debt and cash: (enterprise value). In all fairness here, we know that NeoStem with $20-$30 million in value from their China generic company, could be the cheapest name and others are / will raise capital but ex China, Athersys is the “cheapest name”.

Looking at R&D spending: IMUC, Prima and NeoStem are among the most efficient but in fairness one must adjust for the fact that Aastrom is embarking on a pivotal trial versus Prima just starting their P3 and NeoStem their P2.

Revenues: Here we have excluded NeoStem’s $65 million from China which means PCT (Cell Therapy CMO) is running at close to $10 million in annual revenues (currently).

Which Cell Therapy companies present the best value?

In the wake of a robust season of financings, and low valuations we revisit the basic questions in the cell therapy space, updating our tables for year end reported financials. Our numbers are forward looking and subjective to our proprietary algorithm, and this list is not mean to be all comprehensive.

Dendreon and MesoBlast remain the market leaders, but the best values by far are in the micro-cap space with names like Aastrom and PluriStem funded with strong balance sheets.

The sample below represents just over $875 million in market cap for eight of the selected public companies (ex DNDN and MSB). These companies have 3 - PIII trials, 5 PII trials and several P1 trials (based on these crude metrics).

We conclude that is worth investors time to understand among these companies in terms of what they are doing and the associated probabilities of success of their trials.

By price ($), Osiris, MesoBlast, and Dendreon are the highest $ priced stocks: 

By Price ($), Osiris , MesoBlast and Dendreon are the highest $ price:

But that starts to change as we migrate to market cap:

And if we eliminate Mesoblast and Dendreon we get a better picture of the rest of the field:

And that picture changes as we adjust for debt and cash (enterprise value):

Looking at R&D spend gives us an idea of who is spending what on clinical programs:

NeoStem Closes Public Offering for $6,800,000 in Gross Proceeds ($NBS)

NeoStem, Inc. (AMEX: NBS; Stock Twits: $NBS) is engaged in the development and manufacturing of cell-based therapies in the U.S.  Its January 2011 acquisition of Progenitor Cell Therapy, LLC ("PCT") is central to the Company's strategic mission of capturing the paradigm shift to cell therapy.  The acquisition of PCT gives NeoStem not only access to a world class contract manufacturing cell therapy company but provides a platform and expertise around the evaluation, development and regulatory requirements to develop autologous, allogeneic, immunomodulatory and vaccine-based therapeutics. NeoStem also holds the worldwide exclusive license to VSEL(TM) Technology, which uses very small embryonic-like stem cells, shown to have several physical characteristics that are generally found in embryonic stem cells, and is pursuing the licensing of other technologies for therapeutic use.

The Company has announced "the closing of its previously announced underwritten public offering of 15,000,000 units and the exercise of the over-allotment option by the underwriter for an additional 2,000,000 units, bringing the total units offered to 17,000,000. The offering was priced at $0.40 per unit. Each unit consists of one share of common stock and a warrant to purchase one share of common stock with a per share exercise price of $0.51. Maxim Group LLC acted as sole book-running manager."

Dr. Robin Smith, NeoStem's Chairman & CEO, commented, 

"NeoStem's management remains focused on our key objectives of expanding our stem cell therapeutic contract manufacturing business, enrolling the PreSERVE AMR-001 Phase 2 clinical trial for preserving heart function after a heart attack and monetizing our China pharmaceutical subsidiary through divestiture."

The offering resulted in gross proceeds of $6,800,000, "prior to deducting underwriting discounts and commissions and offering expenses payable by the Company. These funds will be used for working capital purposes, including research and development of cell therapeutic product candidates, expansion of business units, strategic transactions and other general corporate purposes."

Read the full release at Neostem.com. 

NeoStem Announces Pricing of Public Offering for $6,000,000 in Gross Proceeds (NBS)

NeoStem, Inc. (NYSE Amex:NBS) is engaged in the development and manufacturing of cell-based therapies in the U.S.  Its January 2011 acquisition of Progenitor Cell Therapy, LLC ("PCT") is central to the Company's strategic mission of capturing the paradigm shift to cell therapy. 

 

The Company has announced "the pricing of an underwritten public offering of 15,000,000 units at $0.40 per unit. Each unit consists of one share of common stock and a warrant to purchase one share of common stock with a per share exercise price of $0.51. Maxim Group LLC acted as sole bookrunner. The Company expects to receive $6,000,000 in gross proceeds, prior to deducting underwriting discounts and commissions and offering expenses payable by the Company."

These funds will be used for working capital purposes such as the research and development of cell therapeutic product candidates, as well as the expansion of business units, strategic transactions and other general corporate purposes. Neostem "has granted the underwriters a 45-day option to purchase up to an additional 2,250,000 units to cover over-allotments." 

 

The financing is expected to close on or about April 3, 2012, subject to the satisfaction of customary closing conditions.

Read more at Nasdaq.com. 

Data From American College of Cardiology: $NBS, $BAX, $ASTM, $CMXI

Data came out over the weekend in Advance of the American College of Cardiology meeting in Chicago. The article reviews the Focus-CCTRN trial which uses autologous bone marrow to treat heart disease in a Phase II trial.  Specifically the trial evaluates the injection of bone marrow in ischemic cardiomyopathy.   This trial is similar to what Baxter is working on in their phase III trial using not bone marrow but what they believe is the active cell in marrow, CD 34+ cells. Incidentally this is similar to what NeoStem is doing with the Phase II Amorcyte Heart Attack “PRESERVE” trial which is using IRA (Infarct related artery) injection of CD 34+ cells (NeoStem is also doing the manufacturing for Baxter).
 
The results of the study are fascinating. They showed that the greatest efficacy was shown in those patients who received the greatest number of CD 34 cells.
 
Specifically the article states: 

"A regression analysis showed that higher CD34 cell or CD133 cell counts were associated with greater absolute unit increase in LVEF. The range of CD34 was 0.5% to 6.9% (SD, 1.2%). Assuming that differences of 1.96 for SD or 2.4% are more likely due to biological variability, the effect of differences in CD34 cell level beyond that expected due to natural variability was examined, using a 3% level to be conservative. Every 3% higher level of CD34 cells was associated with on average a 3.0% greater absolute unit increase in LVEF in a multiple variable model that included age and treatment as predictor variables (3.06 [95% CI, 0.14-5.98];P=.04)."

This article seems to confirm what NeoStem’s Chief Medical officer, Andrew Pecora MD, and Phase II Trial Investigator, Arshed Quyyumi MD, FRCP wrote in their Letter to the editor (Published in JAMA, March 14, 2012) that reviews the results from another Bone Marrow Trial (The Late TIME trial) that was presented last Fall at the American Heart Association (AHA).

“In the Late TIME trial, treated patients received a median CD34 cell dose of 3.8±1.5x106 cells, well below 10x106 CD34 cells. Additionally, in vitro SDF-1 mobility of the infused cells was not measured and may have been adversely affected by the absence of autologous serum in the infused product. Future studies must account for the quantity and mobility of infused (potent) cells before conclusions regarding efficacy are made.”

Daily Dose Conclusion: A lot of work has been done with Bone Marrow cells and its all shown trends but there have not been any home runs. The data seems to be pointing to the active ingredient (there may be more than one, that’s for sure) is CD 34+ cells. Patinets with greater numbers of these cells  are showing efficacy. The Amorcyte Phase 1 data was very compelling showing a statistically valid correlation between the number of CD 34 + CXCR4+ cells and the effect on both perfusion and infarct size. The fact that Baxter is also pursuing a CD 34+ cell approach is validating. The trial is being run by Dr. Doug Losordo  who is considered a Key Opinion Leader (KOL) and Pioneer in cell therapy. Dr. Losordo’s team last summer published the results of experiments that showed that among all the various cells present in marrow, it is the CD 34+ cells that generate the greatest amount of blood vessel growth.

Daily Dose Equities - Effect of Transendocardial Delivery - CCTRN TrialThis article showed in a sub-group analysis that patients with higher numbers of CD34+ cells did best.

View more documents from ProActive Capital Resources Group

Daily Dose Equities - Exosomes from Human CD34 + Stem Cells

This article is published by Dr. Doug Losordo, who since the article was printed, has joined Baxter to run their CD 34+ Cardiac Ischemia Trial (Angina – heart pain).

View more documents from ProActive Capital Resources Group

Daily Dose Equities - Intracoronary Bone Marrow

Two Letters to the Editor of JAMA; 1) Dr Hung Q Ly MD, MSC, FRCPC and 2) Drs. Arshed Quyyumi and Andrew Pecora (NeoStem) discuss the flaws in the LATE-Time trial.

View more documents from ProActive Capital Resources Group

Key markets covered include:

• Stem Cell Research
• Cardiac Heart Repair
• Benefits of using your own cells
• Stem Cell Trials
• Heart Attack Cell Therapy
• Proof of Concept
• Clinical Trial Data

NeoStem Provides Updates and Reports Year End Results; $NBS

NeoStem, Inc. (AMEX: NBS; Stock Twits: $NBS) is engaged in the development and manufacturing of cell-based therapies in the U.S.  Its January 2011 acquisition of Progenitor Cell Therapy, LLC ("PCT") is central to the Company's strategic mission of capturing the paradigm shift to cell therapy.  The acquisition of PCT gives NeoStem not only access to a world class contract manufacturing cell therapy company but provides a platform and expertise around the evaluation, development and regulatory requirements to develop autologous, allogeneic, immunomodulatory and vaccine-based therapeutics. NeoStem also holds the worldwide exclusive license to VSEL(TM) Technology, which uses very small embryonic-like stem cells, shown to have several physical characteristics that are generally found in embryonic stem cells, and is pursuing the licensing of other technologies for therapeutic use. 

 

NeoStem has reported its audited results for 2011: 

 

"Consolidated revenues for the year ended December 31, 2011 were $73.7 million compared to $69.8 million for 2010. The Company's consolidated net loss for 2011 was $56.6 million, which included $10.3 million of non-cash equity-based compensation expense, $19.4 million of goodwill impairment charges and $9.0 million of depreciation and amortization. Overall, the Company's consolidated cash loss for 2011 was $15.5 million (see reconciliation below). Net loss attributable to NeoStem common shareholder interests for 2011 was $47.8 million, or $0.54 per share. 

 

As of December 31, 2011, the Company had consolidated cash and cash equivalents of $12.7 million, and an additional $2.5 million in cash held in escrow (classified in Other Assets)." 

 

Despite a persistently difficult financial environment, Neostem believes that "the opportunities that exist today in cell therapy are robust and growing" and that current conditions make this "an opportunistic time to pursue the monetization of the Company's 51% ownership of Suzhou Erye Pharmaceutical Co., Ltd. and bolster its cell therapy business." 

 

Read the full release at Nasdaq.com.  

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full NBS chart at Wikinvest

JAMA: Letter to the Editor : Intracoronary Bone Marrow Mononuclear Cells After Myocardial Infarction

We picked up on a JAMA letter to the editor (below) that reviews data from the TIME trial that was presented last fall. The author, Drs Arshed Quyyumi (NeoStem PI) and Andrew Pecora (NeoStem CMO) clearly identify that the effective dose given in the "Late TIME" trial appears to have been low , (3.8 million CD 34 cells) versus data that the Amorcyte trial reported that an effective biological threshold exists at 10 million cells. The authors in the letter to the editor state:

In the LateTIME trial, treated patients received a median CD34 cell dose of 3.8±1.5 x106 cells, well below 10 x106 CD34 cells. Additionally, in vitro SDF-1 mobility of the infused cells was not measured and may have been adversely affected by the absence of autologous serum in the infused product. Future studies must account for the quantity and mobility of infused (potent) cells before conclusions regarding efficacy are made.

Daily Dose Conclusion: NeoStem (NBS)  and Baxter (BAX) are both pursuing the use of CD 34+ cells in STEMI and CMI (angina) respectively. CytoMedix just reported that ALD-br cells show hints of efficacy and Aastrom seems to be moving forward in DCM. All cardiology indications. The NeoStem message is focused on the dose, timing and method of delivery, biological effect and clinical outcome. We see this as a core strength and part of what Progenitor Cell therapy (PCT) brings to the company.

On a separate note we believe Cardiology is the next major breakthrough to be seen in the regenerative medicine space. While NeoStem is well positioned as a manufacturer for Baxter and their own Amorcyte the company also has attractive valuation measures. That is not to say that other players like Aastrom , Athersys and Cytori are likely to move forward with P2/3 plans in the cardiac care space. Also keep an eye out for MesoBlast which has seen a decline in valuation since the TIME (& their own data) was presented at AHA last fall.

---

Intracoronary Bone Marrow Mononuclear Cells After Myocardial Infarction

View more documents from ProActive Capital Resources Group.

NeoStem (NBS): Interesting Article Published in Nature

 Nature, Volume 480, December 2011 - This is a fascinating article on Autoimmune Disease and the role of T-effector cells versus T-Regulator cells.

Nature, Volume 480, December 2011

View more documents from mws13.

Typical of autoimmune conditions is the flare aspect. In the referenced article, Rosenblaum et al, sought to understand the immunological basis for this, by investigating it in a mouse model. What he observed was striking in that on flare onset there is a spike in the number of T-effector cells that is then followed by a number of T-reg cells. The balance or homeostasis of this system seems to be at the heart of controlling disease flares.

In auto-immune disease the stakes are high, as the markets for Asthma, Type 1 diabetes are very large. The only company that we are aware of, that is focused on this unique approach to the space is Athelos, a jointly held subsidiary between NeoStem (NBS) and Becton-Dickinson (BDX).

Our understanding is that Athelos is expecting data from several Phase 1 trials on safety (physician / investigator sponsored) and that the results will be used to determine the most promising direction for Athelos to proceed forward with a corporate IND.