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.

Reuters reports on Stem cell research: "It will only take a few successes to really change the field"

Very interesting VBlog today at Reuters on Stem Cell Research, it states:

"Dozens of adult stem cell treatments are moving through clinical trials and showing early success, raising hopes that some could reach the market within five years.

"It will only take a few successes to really change the field," said Gil Van Bokkelen, chief executive of Athersys Inc and chairman of the Alliance for Regenerative Medicine. "As you see things getting closer and closer to that tipping point, you're going to see a frenzy of activity take place."

Many of the trials focus on heart disease and inflammatory conditions, some of the biggest markets in medicine. The cells used are derived from adult tissue such as fat, or bone marrow, thereby circumventing the ethical concerns raised by the use of cells derived from embryos.

Data for the most part remains early, but as more results emerge, pharmaceutical companies are beginning to take note.

"A lot of big companies are looking to place bets on some Phase II products once that data has been confirmed," said Paul Schmitt, managing partner at venture capital firm Novitas Capital. "Even now they're attending all the medical meetings and talking to all the stem cell companies."

Venture funds like Novitas are taking different approaches to playing the emerging field. Novitas invested $4 million in Amorcyte Inc, a company recently acquired by NeoStem ($NBS) that is developing a treatment for heart disease. It is sticking to that investment for now."

 See the full story and slideshow at Reuters.

Coronado Biosciences' New York Investor Presentation

Last week we attended a presentation by Coronado Biosciences which is on our radar screen as a new rising star in the world of small cap biotech. Coronado is anticipating an OTCBB listing in the coming weeks, with plans to apply for an uplisting to NASDAQ shortly thereafter. We note that the company has already raised capital and reports $29M in cash as of the last reported quarter (July 2011).

Coronado management made the point that their current capital will carry them across several quarters, which we believe should translate into a higher valuation for the company.

CNDO-201

• Filed IND - completed
• Report results from Phase I safety study - expected 2012 first quarter
• Initiate Phase 2b Crohn's trial - by second quarter of 2012
• Report additional Phase I MS data - 2012 second quarter potentially

CNDO-109

• Report final Phase I data in AML - Q4 of 2011
• Complete IND-enabling CMC - Q4 of 2011
• File IND - Q1 of 2012
• Initiate US Phase 1/2 Study - Q1 or Q2 of 2012

We would like to take a moment and highlight the Coronado pipeline. The first product is unique in that it is Trichuris suis ova (TSO) or a Porcine (pig) whipworm ova. While initially it does not sound appetizing, the reality is that human beings throughout time have adapted to being carriers of certain parasites.

This is the the “Hygiene Hypothesis”. In the modern world, human beings have clean drinking water and shoes, and are not typoically exposed to these parasites. Coronado believes, based on mountains of scientific literature and trial work done by others, that TSO actually exerts a dramatic therapeutic benefit. This relationship is symbiotic in that both the parasite and the host benefit.

One of the slides from the presentation shows the amount of autoimmune disorders in the western “clean” world (left side) and the whipworm infected populous (right side). The charts show an uncanny correlation !

• TSO represents a novel approach to treating autoimmune diseases – the “Hygiene Hypothesis”.
• Natural immunomodulator - regulates T-Cells (Th1 and Th2) and inflammatory cytokines.
• Proof of principle established in inflammatory bowel disease and MS.
• Natural properties suggest strong potential for a safe profile – not associated with risks of immunosuppressant drugs.
• Oral bi-weekly administration, colonization is self limited in human host and worms do not multiply (so it is safe) and there is no direct transmission.
• Initial indications have well established clinical trial pathways.
• North, South America, and Japanese rights for all indications from OvaMed.

A clinical trial has already shown great results in Crohn’s Disease (which is still a large unmet medical need today).

So what the plan going forward ? Coronado has filed an IND (permission to start clinical trials) on September 16 with U.S. FDA. A phase I trial will investigate safety, efficacy and dosing in n=36 Crohn’s patients and results are expected in the first quarter of 2012. A phase II FDA study will follow.

Dr. Dolmetsch on Stem Cell Possibilities in Autism Research

Dr. Ricardo Dolmetsch and his colleagues have generated stem cells from children with autism allowing them to study how the brain develops in children on the Autistic Spectrum: