Osiris (OSIR): Look's Like Sanofi (acquired Genzyme) is saying No to Prochymal

News is swirling on Osiris Therapeutics (NASDAQ: OSIR) that Sanofi (SNA) in the post Genzyme (GENZ) acquisition will discontinue Prochymal for GvHD. Prochymal is a mesenchymal cell (MSC) that is allogeneic. Similar to what Athersys (ATHX) is developing with multi-stem. Osiris has struggled with GvHD and even Biodefense company Soligenix (SNGX), just reverse split 20:1, saw Orbec, a locally acting steroid that had every indication of success fail when the pivotal trial was halted for futility. In Biotech land we often say that the "graveyard is full of companies who tried to develop xxx for yyy indication", in this case its GvHD.

We would advise investors to try to understand the following when evaluating a new cell therapy:

What is it? What we mean is "what is the active ingredient". An allogeneic MSC means a lot of things, it’s a heterogeneous cell population, and as such, just not that well defined, so from a starting point, other than saying there is a paracrine effect where the cells act like cellular Advil, it’s a tough climb to say, what is it ?

Next - What does it do exactly ? or What is the Biological Mechanism of Action (MOA) and as such, what is the clinical effect that will be measured in the trial ? How closely related are they ? Again, these are critical elements that the FDA will look for beyond, I squirt it in, and it works. Don't forget dose, homing, and integration.

Thus far developers of cell therapy seem to be struggling with these questions with a few exceptions. Baxter (BAX) and NeoStem (NBS) stand out, with a highly defined cell product (CD34+/CXCR4) cells for Preservation of Heart function. Islet BioSciences stands out with their porcine islet cells (pig) for diabetes.

Daily Dose Conclusion: OSIR has approx. $50 mln in cash as of Sept. 2011 against a $160 mln market cap. Prochymal is still being developed for a number of other indications from Crohn's disease, Type 1 diabetes and Cardiovascular indications. With that said, we need to do more analysis to understand the probabilities of success in these areas given the questions (what is it, MOA, clinical effect) that we raise above.

Intellipharmaceutics (NASDAQ: IPCI) Announces 2011 Year End Results

Intellipharmaceutics International (NASDAQ: IPCI; TSX: I; $IPCI) is engaged in the research, development, and commercialization of controlled-release and targeted pharmaceutical products. Controlled-release means releasing a drug into the bloodstream or at a target site in the body, over an extended period of time or at predetermined times. In some circumstances, controlled-release drug delivery can enhance efficacy and patient compliance as compared to immediate release formats for the same drug.

The company's proprietary Hypermatrix™ technology is at the core of their controlled-release drug delivery approach. The flexibility of the Hypermatrix™ technology allows for the intelligent and efficient design of drugs through the precise control of a number of key variables. This allows the company to respond to varying drug attributes and patient requirements, producing a desired controlled-release effect in a time and cost-effective manner.

The company has reported the results of operations for the year ended November 30, 2011. All dollar amounts referenced in this article are in United States dollars unless otherwise noted.

The loss for the year ended November 30, 2011 was $4.9 million, or $0.33 per common share. By contrast, the loss for the year ended November 30, 2010 was $5.8 million, or $0.53 per common share. The reduced loss "can be attributed to the fair value adjustment of the derivative liability associated with the issuance of warrants in Intellipharmaceutics' February 2011 private placement financing, and revenue from the amendment of the existing development and commercialization agreement between the Company and Par Pharmaceutical, Inc. to include additional strengths of Focalin XR(R) generic products." Under the terms of the expanded agreement, Intellipharmaceutics received a cash payment from Par and will continue to receive a share of profits from any future sales of our generic versions of Focalin XR(R). Revenue of $0.5 million was recognized from the $0.6 million cash payment received principally related to a developed generic product. The fair value adjustment of the derivative liability for the year ended November 30, 2011 was $5.3 million versus $0.2 million in the prior year.

Loss from operations for the year ended November 30, 2011 was $7.8 million compared with loss from operations of $6.1 million for the year ended November 30, 2010. Research and development expenditures increased to $5.1 million, compared to $4.5 million for the prior year, primarily due to the advanced development of several generic product candidates including two multi-strength products that were filed as abbreviated new drug applications ("ANDA") during the year, and the development of a number of other pipeline product candidates. Selling, general and administrative expenses for the year ended November 30, 2011 increased to $2.9 million versus $2.7 million in the prior year.
At November 30, 2011, Intellipharmaceutics' cash and cash equivalents totaled $4.8 million, compared with $0.8 million at November 30, 2010. The increase in cash and cash equivalents during the year ended November 30, 2011 is mainly a result of net proceeds of $10.5 million in cash provided from the private placement financing, reduced by cash used in research and development activities, and the repayment of C$817,822 owed to a related party.

Read more at Yahoo Finance.

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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Prima Biomed (ASX: PRR) enrolls first patient in Canvas CVac™ Trial

Prima BioMed (ASX: PRR) is an Australian health care company focused on technologies in the fields of cancer immunotherapy and immunology. Prima’s lead product is the CVac™ ovarian cancer therapy treatment. It has completed two successful clinical trials and is progressing toward eventual commercialisation in the United States, Australia, Europe, and globally. The Company’s broader, long term goal is to develop commercial cancer treatment technologies and programs for global markets. 

The company has announced that it has commenced patient enrollment in CANVAS (CANcer VAccine Study), a clinical trial for the CVac™ ovarian cancer therapy vaccine. Its first patient was recruited in the United States. CANVAS "is a multinational, multi-centre, randomised, double-blinded, placebo-controlled trial of CVac™ as a maintenance treatment for epithelial ovarian, primary peritoneal, or fallopian tube cancer in complete remission. The Study will enrol 800 women to assess those who are in complete remission after completing first-line treatment (surgery and chemotherapy) for ovarian cancer."

Prima BioMed Chief Executive Officer Martin Rogers commented,

“We are excited to have commenced patient enrollment for our major CVac™ trial. This represents a significant milestone in CVac™’s development timeline to date. The ability to embark on such a large scale study across multiple sites in different continents is a testament to the commitment and expertise of the Prima team, and also for the potential for CVac™ to provide a viable, commercially available treatment option for ovarian cancer patients globally.”

With its first patient now enrolled in the study, The Company expects to ramp-up enrollment through sites in Europe, Australasia and the US through 2012. 

Read the full press release at PrimaBioMed.com. 

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.

Neuralstem (AMEX: CUR): Raising Capital while Pursuing Gehrig's Disease

Neuralstem (AMEX: CUR) is set to raise $5.2M in a registered direct offering through T.R. Winston & Company. The company announced the agreement for a registered direct placement (5.2M shares of common) at a price of $1.00 per share or "at the market". Each investor will also receive a warrant to purchase a number of shares of common stock equal to the number of shares purchased by the investor in the offering or 1:1, with the offering set to close February 10, 2012.

Neuralstem is working on Fetal Derived cells for Lou Gehrig’s disease. The company received a lot of press on this program a few years ago when CNN (Sanjay Gupta) featured the treatment. Our concern in that this is a very tough disease to show efficacy and the regulatory pathway is anything but clear, certainly long and expensive. While ALL (Lou Gehrig’s Disease) is an unmet medical need, and the payoff could be large, it’s more likely than not, that the effect will be modest (this is a very debilitating, progressive, fatal disease) so definitive proof of concept will likely require a lot of patients and time.

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Athersys ($ATHX) More News Flow, Does it Matter ?

Athersys (NASDAQ: ATHX) reports more news flow from its data on Multi-stem in stroke. From the press release:

"Medical researchers from The University of Texas Health Science Center at Houston (UTHealth) Medical School presented new research results this morning at the American Heart Association International Stroke Conference that highlight the role of the spleen in the mechanisms underlying how MultiStem reduces damage and enhances functional recovery in animals after an ischemic stroke.

The study illustrated the potential benefits of MultiStem therapy for treating stroke using standard preclinical models. Researchers observed that intravenous administration of MultiStem one day after a stroke resulted in a substantial reduction in brain tissue loss 28 days post-stroke.

The spleen is believed to play a significant role in the body's immune response to the stroke that can result in additional damage following the primary ischemic event. After administration, MultiStem cells limit the inflammatory cascade that results from the initial stroke, thereby reducing the secondary damage that occurs.

These outcomes support prior research at UTHealth, in which researchers found that animals treated with MultiStem showed normal spleen size and increased levels of anti-inflammatory cytokines in the blood whereas animals treated with placebo showed a reduction in spleen size and an increase in inflammatory cytokines in the blood."

Daily Dose Conclusion: Not sure that anyone cares about pre-clinical models in stroke. Athersys is cheap based on market cap but the clinical pathway ahead for multi-stem is not clear and definitive proof of concept, for multi-stem has yet to be established. On the positive side multi-stem looks like it could have utility in a wide range of indications from ulcerative colitis, GvHD, to ischemic disease (cardiovascular, stroke).

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Dendrion ($DNDN): Its Complex but Gold is Gone so is Platinium Ahead ?

A very significant event in the world of cell therapy occurred this week when news came that Mitch Gold, CEO of Dendreon (NASDAQ: DNDN) has left the company. Wall Street analysts reacted positively and the stock was up modestly on the news and has since settled back. Dendreon has been the shining example of what's possible in the cell therapy space until the company seemed to over-inflate expectations, and over-ramped manufacturing. When sales numbers failed to meet high expectations the stock corrected sharply (this past summer DNDN was >$40) and fell back to the $7 range. Savy investors who bought the over-sold stock at $7 have been rewarded as it bounced back to $14 (range). 

The key question now is what should we expect going forward ?

Dendreon remains a solid example of the utility a cell based immunological cancer therapy can have in the marketplace. We see Immunocellular (IMUC) as a very viable and cheaper play but granted earlier stage. PrimaBioMed (AUX: PRR) also falls into this space, chasing Ovarian cancer. Stay tuned for the results of Stimuvax, which would validate the MUC-1 antigen for Ovarian. As for Dendreon we believe a slow and steady climb back is likely as the company smooth’s out its commercialization and manufacturing ramp associated with Provenge.

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