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:

StemCells ($STEM) Announces webcast to discuss Pelizaeus-Merzbacher disease clinical trial results

A summary of the trial results will be presented on Saturday, 31-Mar, at the 2012 European Leukodystrophy Association (ELA) Families/Scientists Meeting in Paris:

• Webcast: Monday, 2-Apr, at 11:00ET 
• http://investor.stemcellsinc.com/phoenix.zhtml?c=86230&p=irol-irhome

BackGround: What is Pelizaeus-Merzbacher Disease (PMD) ?

PMD is a myelination disorder that primarily affects young children. It is a rare central nervous system disorder in which coordination, motor abilities, and intellectual function are delayed to variable extents. In November of 2009 STEM began a trial at the University of California, San Francisco (UCSF) Benioff Children's Hospital. In February 2010 the cells were used to treat the first patient enrolled in the trial, marking the first time that neural stem cells have been transplanted as a potential treatment for a myelination disorder.  In February 2011, the fourth and final patient was enrolled and dosed.  Results of the trial will be reported on Monday (see link above).

This Phase I trial has been designed to assess the safety and preliminary efficacy of STEM's HuCNS-SC cells as a potential treatment for PMD. While the primary focus in this first trial is safety, the company is looking for evidence of new myelin formation in the patients’ brains following the transplantation of the cells, as well as any signs of improved neurological function.

The four enrolled patients have connatal PMD, the most severe form of the disease. All patients were transplanted with the HuCNS-SC cells and were evaluated regularly over a 12-month period in order to monitor and evaluate the safety and tolerability of the HuCNS-SC cells, the surgery and the immunosuppression. In addition, MRI examination of the brain post-transplant should enable the measurement of new myelin formation. The company is hoping to follow the effects of this therapy long-term, so,we expect a four-year observational study to be reviewed.

Daily Dose Conclusion: This is cutting edge science. Safety come first but STEM is moving in areas that represent totally unmet medical needs. The tough financing environment as hurt the whole stem cell sector but the science is marching forward. STEM remains a pioneer with their HuCNS-SC technology.

Myelination Disorders / PMD (continued)

The gene mutations responsible for PMD result in improperly produced or too much proteolipid protein (PLP), which proves toxic to oligodendrocytes, the CNS cells that produce myelin. Myelin, comprised of fats, cholesterol and protein, is critical to healthy functioning of the central nervous system because it provides the insulation needed for proper transmission of nerve impulses.

In myelination disorders, the deficient myelin sheath does not properly insulate the axon, so transmission of nerve impulses is impeded.

Neuron with deficient myelin

The StemCells Approach: Myelin Production to Protect Nerve Cells

When StemCells human neural stem cells are transplanted in animals, they migrate to the sites where myelin is deficient. They differentiate into oligodendrocytes, which form healthy myelin sheaths to protect axons, helping nerve cells communicate with each other. They do this by developing myelin appendages that wrap around the axons of nearby neurons to provide the insulation (myelin) needed for proper transmission of nerve impulses.

HuCNS-SC^® Cell

Oligodendrocyte forms healthy myelin sheath around axon.

Neuron

Oligodendrocyte

Normal transmission of nerve impulses.

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Stem ($STEM) Reports the Q4: $13 Million left in the bank

Daily Dose Conclusion: STEM has some cash, enough to see operations through for the next year. The company remains one of the last standing pioneers in embryonic research. The spinal trial is exciting but its early days and the approval pathway isnt clear nor is it near term.  Great data from the trial is the "wildcard" here.

From the SEC Filings:  For the full year 2011, cash used in operations totaled $22 million. However, in the last six months of 2011, (which includes the effect of the reduction in force effected in the second quarter, cash used in operations was slightly less than $9 million).

At December 31, 2011, the Company's cash, cash equivalents and marketable debt securities totaled $16,592,000. In the first quarter of 2012, the Company has also received aggregate gross proceeds of approximately $1.4 million from the exercise of warrants and receipt of a licensing fee. Including these proceeds, the Company’s pro forma cash balance at December 31, 2011, would be approximately $18 million.

 SEC Filings: Fourth Quarter and Recent Business Highlights

Therapeutic Product Development

• In February 2011, the fourth and final patient in our Phase I clinical trial in Pelizaeus-Merzbacher Disease, was enrolled and transplanted with our proprietary HuCNS-SC® cells (purified human neural stem cells). This trial, which is being conducted at UCSF Benioff Children’s Hospital, is the first to evaluate neural stem cells as a potential treatment for a myelination disorder. 
• In March 2011, we initiated a Phase I/II clinical trial of our HuCNS-SC human neural stem cells in chronic spinal cord injury. The trial is expected to enroll a total of 12 patients who are three to 12 months post-injury, and will include patients with both complete and incomplete injuries as classified by the American Spinal Injury Association Impairment Scale (AIS). The trial was authorized by Swissmedic and is being conducted at the Balgrist University Hospital, University of Zurich, a world leading medical center for spinal cord injury and rehabilitation.
• In April 2011, we entered into a collaboration with Frank LaFerla, Ph.D., a world renowned leader in Alzheimer’s disease research, to study the therapeutic potential of our HuCNS-SC cells in Alzheimer’s disease. Dr. LaFerla’s published research has shown that mouse neural stem cells enhance memory in a mouse model of Alzheimer’s disease, and the goal of our collaboration is to replicate these results using our human neural stem cells.
• In June 2011, at the International Society for Stem Cell Research (ISSCR) 9th Annual Meeting, we presented evidence of engraftment, migration and the long-term survival of our HuCNS-SC cells following transplantation into patients with a severe neurological disorder. Importantly, the results show that the cells can persist following the cessation of immunosuppression. The data support our premise regarding the viability and utility of neural stem cell therapy as a potential treatment for a wide range of CNS disorders.
• In September 2011, the first patient in our Phase I/II clinical trial in chronic spinal cord injury was enrolled and successfully transplanted with our HuCNS-SC cells. This landmark clinical trial has a unique design, in which patients with progressively decreasing severity of injury will be treated in three sequential cohorts. The first patient has an injury classified as AIS A, with complete loss of sensation and mobility from the waist down.
• In November 2011, we reported that an interim review of one patient’s MRIs from our Phase I PMD trial showed changes consistent with the development of new myelin in the regions in which the HuCNS-SC cells were transplanted, and that the safety data suggest the procedure and cells have been well tolerated.
• In December 2011, we successfully completed the enrollment and dosing of the first cohort of patients in our Phase I/II clinical trial in chronic spinal cord injury. The first cohort of patients all have spinal cord injury classified as AIS A, the most severe level. We also announced that enrollment for the remainder of the trial, which will include patients classified as AIS B and AIS C, would be open to patients living in the United States and Canada.
• In January 2012, we published preclinical data demonstrating that our HuCNS-SC cells protect host photoreceptors and preserve vision in a well-established animal model of retinal disease. Moreover, the number of cone photoreceptors, which are responsible for central vision, remained constant over an extended period. The preclinical results are highly relevant to human disorders of vision loss, the most notable of which is dry age-related macular degeneration (AMD). The data was featured as the cover article in the February 2012 issue of the international peer-reviewed European Journal of Neuroscience.
• In January 2012, the U.S. Food and Drug Administration (FDA) authorized the initiation of a Phase I/II clinical trial of our HuCNS-SC cells in dry AMD, the most common form of AMD. AMD is the leading cause of vision loss and blindness in people over 55 years of age, and approximately 30 million people worldwide are afflicted with the disease. There are no approved treatments for dry AMD.
• In February 2012, the fourth and final patient in our Phase I PMD trial completed the twelve-month follow up and evaluations required by the trial protocol. Results of the trial will be reported at the European Leukodystrophy Association meeting to be held in Paris, France, March 31-April 1, 2012.

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STEM ($STEM): AMD N=16 Trial gets the Green Light from the FDA

Stem Cells, Inc. (NASDAQ: STEM) gets the "green light" from the FDA to kick off a Phase I/II clinical trial of HuCNS-SC in AMD.

The Phase I/II trial will evaluate the safety and preliminary efficacy of HuCNS-SC cells as a treatment for dry AMD. While there are now therapeutic options for wet AMD there is no treatment for dry. The promise of cell therapy in this space is great. Advanced Cell Therapy (ACTC) is also pursuing this indication.

In the case of STEM, the trial will be an open-label, dose-escalation study, approx. N=16. STEM's HuCNS-SC cells will be administered by a single injection into the space beneath the retina. Patients' vision will be evaluated using conventional methods of ophthalmological assessment at predetermined intervals over a one-year period. Patients will then be followed for an additional four years in a separate observational study.

Daily Dose Conclusion: AMD is a promising area as the physical space in the eye is small and the market opportunity is large. The ability to rebuild rods & cones and restore vision is great. Several firms such as ACTC are working in the area. The key question for investors who have been patient with STEM for years and have lived through the most recent raise and reverse stock split: Is there a way back ? With Geron's (GERN) departure STEM is one of the only remaining embryonic (public) company left in the space. STEM is also pursuing the "holy grail" with a spine trial. Certainly the bet here is that STEM hits it big at some point but data is not immediate.

See all $STEM articles @ Daily Dose.

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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.