Formation Of A New Expert Group Moves Pluristem Into The Expansive Hematology Field

| About: Pluristem Therapeutics, (PSTI)

Hematology is hot. A branch of internal medicine investigating blood and blood diseases that is typically linked with oncology, it is defined by the Cleveland Clinic as a group of 29 types of blood disorders, from anemia to acute leukemia, and comprised a 2010 global market of nearly $40 billion with growth of 4% over the next five years. The reason for growth is simple - our aging worldwide population.

A rising market based on the immutable fact of demographics makes Pluristem Therapeutics' (NASDAQ:PSTI) entry into hematology all the more thrilling, and it's a natural progression for the company's science and clinical thrust. Back in August, Pluristem filed for Orphan Drug relief to use its PLX cells in aplastic anemia (AA), a rare blood disease characterized by bone marrow that does not produce enough blood cells, with an annual US incidence of around 750 patients and roughly double that worldwide. Although small, AA carries a global market of $7 million with positive growth going forward. Because exposure to chemotherapy is a leading cause of AA, it often appears in cases of cancer that require bone marrow transplants, a $1.3 billion market in itself.

However, a clinical move to the much broader area of hematology would open new medical worlds for Pluristem, away from AA and closer to conditions with a wider base of patients. In anticipation of this and using a very smart strategy, the company approached seven leaders in stem cell and bone marrow research to form a clinical advisory board. The result is a line-up of talent ranging from one individual responsible for making bone marrow transplants the core of the Fred Hutchison cancer center, to one who founded the country's first center for regenerative medicine at Massachusetts General and has been instrumental in designing clinical trials using stem cells to treat hematological cancers from his seat at the Harvard Stem Cell Institute, to one who is a recipient of the Lifetime Achievement Award for work in allogenic stem cell therapy in bone marrow transplant.

Scientific advisory boards of similar-stage stem cell or cancer companies do not have nearly the breadth and depth of scientific aptitude. For example, Aastrom Biosciences' (NASDAQ:ASTM) SAB consists mainly of oncology professors, much like Neostem, Inc. (AMEX:NBS). Others including Curis, Inc. (NASDAQ:CRIS) and Galena BioPharma (NASDAQ:GALE) populate their boards with medical practitioners and consultants.

The move to hematology was a huge plus for one of biotechnology's most famous success stories. From a origin of pinning hopes for thalidomide in treating AIDS cachexia (wasting) to actual approval for treating the side effects of a drug for leprosy, Celgene Corp.'s (NASDAQ:CELG) break into hematology came after a landmark approval for myelodysplastic syndrome (MDS), once known as pre-leukemia, a catch-all collection of blood disorders that paved the way to the widespread use of Revlimid, a thalidomide redesign, in multiple myeloma and $3 billion in revenue.

Pluristem has been recognized for its collegiate relationship with the FDA and recently heard from the agency about its Orphan Drug filing for AA. Final approval and its new advisory board made for a beautiful segue to the broader hematological indications and will prove timely, too, as the FDA receives continued pressure to step up approval of cancer-related treatments. The National Cancer Institute years ago established a Central Institutional Review Board (CIRB) to speed up reviews of new drugs by eliminating redundancy, no small task for a government entity. The effort is always under scrutiny, and a recent examination found that the CIRB is indeed doing its job with drug reviews 34 days faster on average with research staff efforts and time to final review approval cut in half. Two years ago, an advisor to the National Institutes of Health formed another initiative to further facilitate reviews of clinical trials, especially for blood cancer treatments, the primary focus of which would be the oversight of clinical trials. Protocols for trials and data analysis are targeted to be made faster through standardization intended to reduce by half the time needed to start new studies. Also, trials that do not begin within two years of concept approval would be immediately stopped, affording a strong incentive to fast-track enrollment and completion.

Treating rare diseases received its biggest boost in the form of monetary and marketing incentives with the 1983 passing of the Orphan Drug Act - tax incentives, help with study design, possible grant funding, application fee exemption and seven years of market exclusivity - and patients have benefited from approval of more than 350 new drugs for over 200 orphan diseases in the first 25 years of the Act's existence. Recent evidence of the Act's influence was the approval of three drugs for rare forms of cancer - Marquibo, by Talon Therapeutics for a subset of acute lymphoblastic leukemia; Synribo by Teva Pharmaceuticals (NYSE:TEVA) for a unique type of chronic myeloid leukemia; and bosutinib by Pfizer, Inc. (NYSE:PFE) for a rare form of chronic myelogenous leukemia.

Now there's more help on the way. Last January, Congressman Henry Waxman of the Energy and Commerce Committee, responding to pressure from 100 advocate groups around the country, proposed legislation to accelerate approval of orphan drugs for the benefit of patients, in addition to promoting biotechnology innovation and stimulating job growth. In an attempt to lessen the economic burden of expensive orphan drugs, Senator Kay Hagen proposed a bill whereby drug makers can bypass phase III clinical trials by using only Phase II data for approval and promising the FDA that aftermarket studies will support actual improved outcomes. The goal would be to sufficiently reduce the cost of clinical studies that are now passed on to the marketplace. Finally, the FDA and its overseas counterpart, the European Medicines Agency (EMA), have collaborated to streamline the orphan drug submission process by accepting a single annual report from manufacturers of such products.

All of these actions outside of and within the FDA can only benefit Pluristem in its new effort in hematology. An investor's risk, in addition to the usual vagaries of clinical trials, regulatory bodies, and physician acceptance, would specifically be the negative of an FDA rejection of Pluristem's submission for AA as an orphan drug. My understanding is that the kinds of questions the company received are standard and given that AA is by no means a tiny financial market and has very few treatment options, I think this risk is low. More importantly, Pluristem's move to hematology should garner it a lot of industry attention and I believe will earn it a place with the big pharmaceutical players.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.