Geron versus PluriStem @ Seeking Alpha? That's the wrong question......

We saw an article at Seeking Alpha talking about Pluristem versus Geron. The PluriStem CEO does a compare and contrast. While PSTI CEO Zami makes some good points regarding market size, were not sure that any comparison to Geron makes any sense.

Allogeneic cells (other peoples cells) do fit the pills in a bottle model that Pharma craves but as we have heard Zami himself say at multiple conferences, these allogeneic cells (even though they are from a placenta) do not integrate long term to the host. Therefore the effect is likely moderate, and that may be fine depending on the indication.

CLI (Critical Limb Ischemia) itself is a very variable disease and PluriStem has Phase 1 data and is just beginning their Phase 2 trial. So its early days for sure. Aastrom is also pursuing CLI and now is in a Phase 3 trial. As we have said in the past we are hopeful that the results will be good for both companies but neither company has definitive data sets yet and the disease itself is very variable. As such investors can't be sure what the outcome of these trials might be. In the case of Aastrom the P2 first interim analysis looked great but the second did not (the amputation rate in the placebo group improved and narrowed the difference between active and control). CLI is a variable disease and this happens. Aastrom is smart, they expanded the P3 trial (made it larger), which gives them a greater chance of success but it also means it will be more expensive and probably take longer to complete.

We would push the concepts here back to basics and get away from a comparison between an off the shelf allogeneic cell that is targeting angiogenesis (new blood vessel formation), improving circulation versus an embryonic approach that it was hoped could repair damaged signal conduits (nerves), paralysis.

Rather we ask how did CLI patients become ill in the first place? Poor circulation, diabetes, and other co-morbidities are likely part of the problem. So while fixing circulation, locally, may stave off an amputation, it seems like it is not addressing the underlying cause. Why inject intra-muscular versus intra-arterial? Basic science questions such as dose, biological mechanism of action, clinical effect, even product variability remain issues with many of the institutional investors who are following these cell therapy companies.

We note that Biotech giant is Celgene (CELG) is also working on placental based cell therapy but here it is for down-regulation inflammation, in Crohns Disease for patients who have failed steroids. We also know that Athersys and Pfizer are pursuing this approach also with an allogeneic therapy (MultiStem). Proof of Concept from a Celgene or a Pfizer would be a big deal for all in the space.

We certainly believe that there is a role for allogeneic therapy as well as autologous and that indications should dictate, which therapy is best for which indication. The lower cost of goods and the multiple treatments likely for CLI do favor allogeneic players where the opposite is true in cardiovascular disease (heart attacks, CHF and cardiac ischemia). For example news today that Cytori has filed its Investigational Device Exemption (IDE) application to begin a clinical trial of the Celution® System for chronic myocardial ischemia (CMI). Cytori's ATHENA represents a device-based (Phase I/II) to investigate the use of autologous, clinical-grade adipose tissue (fat) derived stem and regenerative cells (ADRCs). This all happens at the patients point-of-care with Cytori’s Celution® System.

The institutional community evidenced by stock prices is not excited about CLI (long and expensive trials, variable disease), but granted, very much an unmet medical need. So while Geron's departure in the space is (was) a disappointment the clinical advances of other companies like MesoBlast, Athersys, Cytori, Aastrom, NeoStem, and yes PluriStem are positive.

In fact we are excited to see what happens with the work that PluriStem is doing with United Therapeutics in the COPD (airways) space.

Stem Cells Inc. (STEM): Prices $10M secondary at $1.25

In a surprise offering Stem Cells Inc. (NASDAQ: STEM) announced the pricing of 8 million share offering with matching warrants for gross proceeds of $10M, at the bottom of what has been a declining valuation. Earlier in the week we discussed the perfect storm, the macro-economic outlook coupled with declining balance sheets has hurt biotechnology companies that have "miles to go" before they can reach commercialization. Dendreon's implosion and Geron's departure did not help. As a result valuations have declined for everyone in the cell therapy space. Raising capital at the bottom hurts, but it is the nature of biotechnology and the rule here is dilution versus extinction.

It is surprising to us that the company announced earlier in the week news that the first cohort of the Phase I/II trial in chronic spinal cord injury has been treated (successfully transplanted with the STEM's proprietary HuCNS-SC® neural stem cells).

This trial has a unique design, in which patients with progressively decreasing severity of injury will be treated in three sequential cohorts. The first cohort of patients all have spinal cord injury classified as AIS A, the most severe level identified by the American Spinal Injury Association Impairment Scale (AIS).

We have seen Dr. Stephen Huhn MD, FACS, FAAP, (Vice President and Head of the CNS Program at StemCells) present in the past. He is considered a KOL (Key Opinion Leader) in the field and is highly respected. He is quoted:

"Having completed dosing of the AIS A cohort, screening for AIS B patients, who have a less severe, incomplete type of spinal cord injury, can now begin. Of course, our first priority is to assess safety in each patient, but we will also be evaluating trial patients for changes in sensation, motor and bowel/bladder function."

It’s still early days for STEM and impossible to know if these cells will translate into any efficacy but the good news is that this raise does give the company some runway to see a signal from this trial. It’s a longshot for sure and there are other companies in the space with more mature trials, defined mechanisms of action, dose responses defined, large target markets, and great efficacy signals established in P1 and 2 trials. Look at the developments in cardiology (AMI / CHF) - Mesoblast, Cytori, NeoStem, where we believe proof of concept is coming, but the holy grail of stem cell therapy is to be able to show a signal, anything, in paralysis. STEM now will carry that banner.

Conference on Cell Therapy for Cardiovascular Disease (January 25-27) NYC - Baxter & More...

We picked up on an advertisement from the Cardiovascular Research Foundation for the seventh International Conference on Cell Therapy for Cardiovascular Disease. January 25-27, 2012 in New York. What struck is the lineup of the companies and panelists and the implications for the cardiovascular companies in the space, such as Baxter, Cytori, MesoBlast, NeoStem.

What caught our eye is the panel on the second day, "Acute Injury: STEMI and NSTEMI". The panel will be moderated by some very well-known KOL's such as Henricus J. Duckers, Gregg W. Stone, Andreas M. Zeiher. Dr Zeiher is one of the founders of a German private company also working on a cell based therapy (cells that follow an ischemic gradient) for AMI. Cytori will talk about the PRECISE trial (Adipose (from fat) stem cells for chronic ischemia. Dr. Doug Losorodo (who is not the principal investigator in the Baxter phase III trial) which uses CD 34+ cells (just like NeoStem (NBS) Amorcyte trial) will also present on the following panel which will review CLI (Critical limb ischemia) and CMI (Chronic Myocardial Ischemia). Even Dr. Robert Bolli who was recently features on CBS talking about his myocytes that repair dead heart muscle will be a panelist.

Our take away message: When we see Baxter and other prominent researchers now talking in these forums , presenting data and defined mechanisms of action, it raises our confidence level that proof of concept from trials is not far behind. Watch the work that NeoStem (NBS) is doing in AMI as a value play versus Baxter (BAX) with a very similar therapeutic approach. Doug Losordo (PI Baxter) has been working in the space for 20 years and adds a measure of credibility as do the entire panel members.

Link to the Conference web site: http://celltherapy.crf.org/home.html

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Day 2 Panel Agenda

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Acute Injury: STEMI and NSTEMI

8:30 am - 9:55 am

Moderators: Henricus J. Duckers, Gregg W. Stone, Andreas M. Zeiher

8:30 am

Trial I. Long-term FU of Patients with an AMI Treated with Adipose-Derived Stem Cells (APOLLO)

Henricus J. Duckers

8:40 am

Trial II. LATE-TIME and Others

Stephen G. Ellis, Timothy D. Henry

8:50 am

Trial III. MAPC Results and Directions

Marc S. Penn, Warren Sherman

9:00 am

Trial IV. TBA

Raj Makkar

9:10 am

EPTS

Henricus J. Duckers, Marc S. Penn

9:25 am

Discussion

Break

9:55 am - 10:25 am

CLI/CMI

10:25 am - 12:00 pm

Moderators: Francisco Fernandez-Aviles, Amit Patel

10:25 am

Trial I. CD34+ Cells for Refractory Angina

Douglas W. Losordo

10:35 am

Trial II. Adipose-Derived Cells for Chronic Ischemia: The PRECISE Trial

Francisco Fernandez-Aviles

10:45 am

Trial III. Update on Standardization of CD133 Intramyocardial BMSC

Gustav Steinhoff

10:55 am

Trial IV. BMAC for CLI: Status of a Phase 3 Trial

Thomas F. O'Donnell

11:05 am

Trial V. Placenta-Derived Cells for CLI

Christof Stamm

11:15 am

Abstract Presentation

11:20 am

EPTS

Timothy D. Henry, Amit Patel

11:35 am

Discussion

Lunch

12:00 pm - 1:00 pm

Heart Failure and Chronic Disease

1:00 pm - 2:30 pm

Les Miller

1:00 pm

Trial I. SCIPIO

Roberto Bolli

1:10 pm

Trial II. Cell Wave

Andreas M. Zeiher

1:20 pm

Trial III. SDF-1 and SDF-2

Marc S. Penn

1:30 pm

Trial IV. Cardiocyte-Driven Bone-Marrow Precursors

Jozef Bartunek

1:40 pm

Trial V. MPC's for Ischemic and Non-Ischemic Heart Failure

Emerson C. Perin

1:50 pm

EPTS

Jozef Bartunek, Randall J. Lee, Amit Patel

2:05 pm

Discussion

Celladon is focused in Heart Failure...gets Fast Track Designation (private)

Cell Therapy fan's know that on the Regenerative Medicine front the next major breakthrough may very well be in cardiovascular medicine. Several companies are in trials now with a wide range of cell therapies to stabilize failing hearts. What caught our eye today is news that private biotech company Celladon received fast track designation for Mydicar.

Celladon's MYDICAR® is a genetically targeted enzyme replacement therapy that is designed to restore functional levels of "SERCA2a", (a regulator of calcium cycling and contractility). In other words, this enzyme is required for the heart to beat properly and in patients whose heart is failing leading the enzyme levels to decline. MYDICAR® is a gene that is delivered using a recombinant adeno-associated virus (AAV) as the vector. This is really high tech gene therapy at a cellular level.

So what does this have to do with regenerative cell therapy ?

The phase 2 trial results (previously announced) showed the therapy met its primary safety and efficacy endpoints at 6 months for high dose MYDICAR® versus placebo. Additionally, 12 months after receiving a single infusion of MYDICAR®, patients treated with the highest dose versus placebo had an 88% risk reduction (Hazard Ratio = 0.12, P=0.003) of major cardiovascular events such as death, or a need for a left ventricular assist device (LVAD), cardiac transplant, or episodes of worsening heart failure and the related heart failure hospitalizations.

So now we are starting to see cardiac trials with therapies that are reporting a preservation of heart function and risk reduction as the therapeutic goals. We believe that in the cell therapy space, we will see a host of therapies developed along these same lines. We would take note on the autologous side of Baxter (P3) trial, NeoStem (NBS) (P2) trial, Aastrom (P2) and on the allogeneic side, MesoBlast (MSB), Cytori (CYTX), Athersys (ATHX), and others.

Critical Limb Ischemia (CLI) gets a lot of attention with Aastrom (ASTM), PluriStem (PSTI) and Aldagen (private) all talking about the potential but investors have not been convinced. We would watch closely the developments on the cardiac side as the unmet medical need here remains large. 

Why? The historical data sets and trial designs are well understood, so the feasibility of a successful trial based on what's known about the space is positive. News like Celladon, and a close examination of the trial goals bode well for the space.

Cell Therapy - Is there value for stock market investors?

The cell therapy space has been hit hard over the past year triggered by a perfect storm of events from the macro-economic environment:

• Biotechnology has come under pressure, where investors fear not only dilution but extinction; and
• Companies in the Small-Cap Biotech space often operate with a years worth of cash, and this has made investors nervious.

We have been down this road in the past, can anybody say Y2K?

Dendreon's (NASDAQ: DNDN) rise became the rallying cry for investors so its subsequent plunge became the proof for the bears that cell therapy just doesn't work. Both examples are in our opinion false. Provenge, like so many biotech products before it, is the first in a new therapeutic category. We lived through the monoclonal antibodies in the 90's, and then the HIV market in Y2K. Most recently the success of the nucleosides (Pharmasset) is now destined to be acquired by Gilead (GILD). We hope our followers saw the run up in Inhibitex (INHX) that resulted.

What's the connection? A pattern has emerged, and Provenge is not just a cell therapy but the first of a cell based approach to immunology/cancer. The follow-on products will be better. Take a look at the work that PrimaBioMed (ASX: PRR) is doing or even better, Coronado (OTCBB: CNDO) (which we have been following for some time).

What we want to begin discussing today is cell therapy on the regenerative medicine side of the equation. Oncology has always had tough hurdles but on the regenerative side the unmet medical need is often just as great, in fact, greater in some places. 

No one yet has been able to explain Mesoblast (MSB-Australia) to us but Cephalon and now Teva are in partnership and the stock has a market cap approaching $2 billion. This is an allogenic (other peoples cells) model, which pharma likes. It is the so called pills in a bottle model. Peer companies include Pluristem (PSTI) and Athersys (ATHX), at much lower valuations ($100 million or lower). On the autlogous side no one seems to be paying any attention to NeoStem (AMEX: NBS). This company acquired Progenitor Cell Therapy the contract manufacturing company that worked on Provenge and today is working with many of the cell therapy companies we are following.

Can an autlogous model work?  Baxter thinks so, and has been highlighting their autlogous cells for cardiac ischemia. Interesting because the Baxter product is very similar to the NeoStem product - both are CD34+ cells with some differences. NeoStem is begining their Phase 2 trial for a cell therapy that promises to stabilze failing hearts after a heart attack.

We recently attended the Stem Cell Therapy on the Mesa conference, and we were "blown away" with the number of products in clinical trials. We saw companies from all over the world - some had revenues with approved products, and others had great data and proof of concept with thereapies that can work for everything from cardiovascular disease to healing damaged muscles and tendons.

Going Forward: We will be actively following the "Cell Therapy Space" now. That means we will be watching the developments on two fronts:

• Oncology/Immunology side, and
• Regenerative Medicine side.

We will be commenting on the trials, the news developments in the space, the competitive landscape, talking with managment, and posting our articles on where we believe the ground breaking science, product profiles, and catalysts lie that can trigger the next paradigm shift in the space.

Remember, Lipitor is going to leave a big hole in Pfizer's pipleine as it goes generic. Pharma and Biotech have to act. Early signs abound that cell therapies are no longer a case of if, but when, and the answer to that is tied to clinical trials, which represent a highly defined process.