By Jason Napodano, CFA
A Big Opportunity - For Everyone
Spinal Cord Injury (SCI) refers to an injury to the spinal cord that is caused by direct trauma or secondary damage to the surrounding bone, tissue, or blood vessels. Classification of the extent of the injury is based on neurological responses, touch and pinprick sensations tested in each dermatome (an area of the skin supplied by a single spinal nerve), and strength of ten key muscles on each side of the body, including the hip flexion (L2), shoulder shrug (C4), elbow flexion (C5), wrist extension (C6), and elbow extension (C7). The four categories of SCI classification and their respective percent of the market are: Complete Tetraplegia (16%), Incomplete Tetraplegia (41%), Complete Paraplegia (22%), and Incomplete Paraplegia (21%) (source).
Incidence of spinal cord injury occurs at about 40 cases per 1 million persons. In the U.S., we estimate there are approximately 12,000 new cases per year. Include Canada and Western Europe and the total number of new cases per year is around 20,000. Adding in India, China, Australia, Latin America and Japan and the total grows to over 100,000 new (acute) cases of SCI worldwide per year. Prevalence of SCI in the U.S. is around 300,000 individuals between the U.S. and Canada. We estimate that 75% of these patients would benefit from a new treatment paradigm.
According to the National Spinal Cord Injury Center, the mean age of an SCI patient is 41 (median 38), although a large number of injuries occur from motor vehicle crashes in persons between the ages of 16 and 30. Life expectancy (for persons that survive the first 24 hours) decreases with the severity of the injury. Below are statistics from the National Spinal Cord Injury Statistic Center on life expectancy vs. SCI severity:
SCI can be caused by any number of injuries to the spine. The most common is vehicular crashes, at roughly 40% of all SCI cases. Accidental falls account for another 28% of SCI cases. Violent crimes, with or without a firearm, account for another 15%. Sports related injuries account for 8% as well, with diving making up 75% of all sports-related SCI injuries, followed by snow skiing, football and surfing.
Injuries from vehicle accidents usually occur through direct trauma, or through cuts or protruding fragments of metal. Direct damage can also occur if the spinal cord is pulled, pressed sideways, or compressed. This may occur if the head, neck, or back are twisted abnormally; this is typical in sports-related injuries. Individuals prone to falls, such as patients with multiple sclerosis, epilepsy, stroke, or osteoporosis, are at high risk for SCI. Although, most spinal cord injuries occur in young, healthy men, typically through vehicle accidents or sports-related injuries.
Symptoms of SCI vary greatly with the severity and location of the injury. SCI causes weakness, loss of motor function, and sensory loss at and below the point of injury. The severity of the symptoms depends on whether the entire cord is severely injured (complete) or only partially injured (incomplete).
A complete injury frequently means that the patient has little hope of functional recovery. The relative incidence of incomplete injuries compared to complete spinal cord injury has improved over the past half century, due mainly to the emphasis on better initial care and stabilization of spinal cord injury patients. Incomplete SCI accounts for approximately 62% of all SCI cases, up from below 45% in 1970. Most patients with incomplete injuries recover at least some function.
In addition to sensation and muscle control, the loss of connection between the brain and the rest of the body can have specific effects depending on the location of the injury. Patients with SCI can experience pain, weakness, spasticity, loss of bowel and bladder control, sensory changes, numbness, loss of sexual function, and difficulty breathing. Other complications include blood pressure changes, chronic kidney disease, deep vein thrombosis, contractures, pulmonary infections, skin infections, urinary tract infections, and pressure ulcers.
The time between the injury and treatment is a critical factor affecting prognosis. Spinal cord trauma is a medical emergency and requires immediate surgical attention. The primary objective is to remove fluid or tissue pressing on the spinal cord (decompression laminectomy), remove bone fragments, disk fragments, or other foreign objects that could do further damage, and then stabilize the cord by fusing bone or implanting spinal braces. In some cases, if spinal cord compression is caused by a mass, such as a hematoma or bone fragment, removal may improve the paralysis. Surgery is often followed by use of corticosteroids, such as dexamethasone or methylprednisolone, to reduce secondary swelling that may damage the spinal cord. Corticosteroids should begin as soon as possible after the injury because it is often this secondary inflammation and immune response that does the long-term damage to the spinal cord. Ideally, patients with SCI should be on bedrest to allow the bones in the spine to heal. Spinal traction or a neck brace may be useful in aiding in reducing secondary damage to the weakened bone.
Following a SCI, the nerve cells below the level of injury become disconnected from the brain. This is due to scar tissue which forms in the structure of the damaged area of the spinal cord, blocking messages from the brain to below the level of injury. This can cause muscle spasticity. However, spasticity may not occur immediately following an injury. Often the body is in shock following SCI; this may last several weeks. During this time, changes occur to the nerve cells which control muscle activity. Once spinal shock wears off, the natural reflex reappears, which may be followed by spasticity if there is structural damage in the cord. Spasticity may also cause pain, loss of range of motion, contractures, sleep disorders and impair ambulation in patients with an incomplete lesion. Medications like Botox, baclofen, dantrolene, and tizanidine may be used to control spasticity. We note that none of these above pharmaceutical options, either corticosteroids, anti-inflammatory drugs, or anti-spasticity drugs, are designed to treat paralysis.
Extensive physical therapy, occupational therapy, and other intense rehabilitation therapies are often required after the acute injury has healed. Much of the rehabilitation takes place in a hospital or acute care setting. The average hospital stay for someone with SCI is two weeks. However, the average stay in the rehabilitation unit is five weeks. We note the trend over the past decade has been towards shorter inpatient rehabilitation and longer post discharge therapy.
Historically, the leading cause of death among persons with SCI has been renal failure. However, today, the leading causes of death are pneumonia, pulmonary emboli, and septicemia. In addition, pain resulting from SCI can be debilitating. Immobility can lead to muscle atrophy and pressure ulcers. Infections are a major life-threatening side-effect of paralysis. Besides corticosteroids, spasticity medications, and pain medications, SCI patients may find themselves on and off antibiotics and antifungal agents to combat infections.
The acute care market for SCI is significant. Below are estimates of what it costs, per year, to treat and care for an SCI patient by severity, and what lifetime costs are for SCI patients ages 25 and 50.
Combining our stats from above, we calculate that each year, in the U.S., nearly $18 billion is spent for the care of patients with SCI. It's an enormous market opportunity and one where significant new medical breakthroughs are necessary. Besides the estimated $18 billion being spent for acute SCI patients each year. We estimate another $20 billion is being spent each year on chronic care for patients. These costs include hospitalizations, nursing homes, new catheters, rehabilitation, wheel chairs, etc. Yet, even with this significant amount of money being spent, there are no approved pharmaceutical or medical device treatments to cure paralysis.
Three Names To Watch
On January 14, 2013, Neuralstem, Inc. (CUR) announced the U.S. FDA had granted approval to start a phase 1 safety trial testing NSI-566, the company's human spinal cord stem cells, in patients with chronic spinal cord injury. The trial is designed to be an open-label assessment of NSI-566 at multiple sites around the U.S. Neuralstem will seek to enroll eight patients with thoracic spinal cord injuries (T2-T12), who have an American Spinal Injury Association (ASIA) A level of impairment, between one and two years after injury. ASIA-A impairment refers to a patient with no motor or sensory function in the relevant segments at and below the injury (complete paralysis).
All patients in the study will receive six injections in or around the injury site. The first four patients will receive 100,000 cells per injection, the second four patients will receive 200,000 cells per injection. All patients will also receive physical therapy post surgery, as well as immunosuppressive therapy, which will be for three months, as tolerated. The trial study period will end six months post-surgery for each patient.
The primary objective of the study is to determine the safety and toxicity of NSI-566 transplantation for the treatment of paralysis and related symptoms due to chronic spinal cord injury. We remind investors that the investigational new drug (IND) for this application was originally filed in August 2010. The FDA put a hold on Neuralstem initiating the study while the company collected additional safety data from the ongoing phase 1 study in patients with amyotrophic lateral sclerosis (ALS).
The secondary objectives of the study are to evaluate graft survival in the transplant site by MRI, as well as the effectiveness of transient immunosuppression. DNA fingerprinting analysis from the phase 1 ALS trial shows the company was able to establish long-term survival of NSI-566 post transplant independent of immune suppression medication that can cause tolerability and side-effect issues.
This is big news because it means that Neuralstem's spinal cord stem cells not only survived the procedure, but also grafted as designed to potentially rebuild circuitry and protect existing neurons from further degradation from the disease. We've written previously about our belief that NSI-566 has demonstrated some benefit to select patients with ALS.
Neuralstem will also seek to collect efficacy data from the phase 1 study, looking at potential changes in ASIA level, ISNC SCI motor and sensory index scores, bowel and bladder function, pain, UAB IMR scores, SCIM scores, evoked sensory and motor potentials, and electromyogram (EMG). The open-label design of the planned phase 1 study will allow for a rolling assessment of these outcomes. We would expect data roughly twelve months after the first patient is treated. Neuralstem has published preclinical data demonstrating growth and connectivity of neural stem cells after severe spinal cord injury in rats. Additional work shows functional recovery of rats with ischemic paraplegia after receiving Neuralstem's spinal stem cells.
Besides Neuralstem, perhaps no company has generated more enthusiasm in spinal cord injury than InVivo Therapeutics (OTCQB:NVIV). InVivo's biodegradable polymer scaffolding device was designed to promote long-term functional recovery following an acute spinal cord injury. InVivo takes a completely different approach from Neuralstem. The device provides protection to the spinal cord and prevention from secondary injury rather than regeneration from spinal stem cells. InVivo scientists believe it is the secondary immune response and inflammation that does the majority of the tissue damage sustained following an acute injury.
The company's technology (view animation) focuses on minimizing this tissue damage sustained following acute injury and promoting neural plasticity of the spared healthy tissue, which may result in full or partial functional recovery. Rarely does preclinical data create so much excitement in the investment community, but InVivo's preclinical data turned heads in 2011. The company has published data showing that its biodegradable polymer scaffolding device, both in combination with drug and seeded with human neural stem cells, yielded some impressive results.
InVivo plans to publish its full primate data in Nature in the next few months. The company has made available some incredible videos showing the dramatic recovery of previously paralyzed African green monkeys up and running weeks after surgery.
The key question for InVivo is - When do human trials begin? We heard rumblings throughout 2012 that the FDA was pulling back on its previous guidance that the product would be regulated as a device, seeking to regulate the scaffolding as a drug. This pushed the stock down to $1.30 in October 2012. However, on October 12, 2012 the company issued a letter to shareholders noting that the FDA has confirmed the regulation of the scaffold product as a device. This is good news, because it saves the company significant time and money.
In December 2012, InVivo filed a request with the U.S. FDA for a Humanitarian Use Device (HUD) designation. The request came after an April 2012 meeting in which InVivo and the FDA discussed the requirements for the HUD designation and the potential for the device to be regulated and distributed under a Humanitarian Device Exemption (HDE). An HUD designation and a subsequent approved HDE would enable InVivo to commercialize the device in the U.S. faster than the Pre-Market Approval (PMA) process.
InVivo is guiding to start an open-label study in patients with ASIA-A acute thoracic spinal cord injury in the next few weeks. InVivo will seek to enroll five patients at two Level-1 trauma centers in the U.S., Harvard Brigham & Women's in Boston and Geisinger Health System in Philadelphia. We expect enrollment of the first two patients with subsequent follow-up analysis before the next three are enrolled. We expect similar endpoints to the Neuralstem study, with the primary endpoint in safety and secondary endpoints in ASIA score, motor and sensory index scores, bowel and bladder function, etc.
We've received a number of questions from investors on how a five-patient trial can qualify for HDE approval. The number of patients and design of the trial certainly raises questions in our mind. We've seen a number of papers noting that patient selection and protocol design are important when looking at outcomes in patients with spinal cord injury. However, if the trial begins, investment in InVivo at this level is a "no-brainer," specifically because of the potential for spontaneous recovery.
We think InVivo's device works - the primate data and videos are proof. Primate models of spinal cord injury have been validated and peer-reviewed by many respected organizations. Given the complete lack of effective treatment options for ASIA-A acute spinal cord injury patients, if InVivo can demonstrate recovery in just one or two of the five patients, we expect the market to react favorably. However, the U.S. FDA will probably require a more throughout analysis of the device for chronic use.
One final name worth mentioning in this area is StemCells, Inc. (STEM). In December 2010, the company received approval from Swissmedic, the Swiss regulatory agency, to initiate a phase 1/2 clinical trial in Switzerland with its proprietary HuCNS-SC (purified human neural stem cells) product candidate. StemCells, Inc. designed the trial to assess both safety and preliminary efficacy in patients with varying degrees of paralysis who are 3-12 months post-injury.
The trial initiated at the University of Zurich in March 2011. The trial will enroll 12 patients with thoracic (T2-T11) spinal cord injury who have both complete and incomplete injuries as classified by the ASIA Impairment Scale. Management is enrolling patients in three cohorts: Cohort 1 has enrolled patients classified as ASIA-A (complete injury with no movement or feeling below the level of the injury). Data from these three patients was presented in September 2012 at the 51st Annual Scientific Meeting of the International Spinal Cord Society in London, England. Data showed good safety and tolerability, with (what management referred to as) considerable improvement in sensory function. The gains in sensation have evolved in a progressive pattern below the level of injury and are unanticipated in spinal cord injury patients with this severity of injury, suggesting that the neural stem cells are having a beneficial clinical effect. Unlike the acute patients that InVivo plans to enroll, sensory function in all three patients was stable (baselined) before transplantation.
StemCells, Inc. is now progressing with the second cohort, seeking to enroll patients classified as ASIA-B (some degree of feeling below the injury). A third cohort will consist of patients classified as ASIA-C (some degree of movement below the injury). All patients are evaluated regularly for twelve months post treatment, and will be enrolled in a separate four-year observational study at the conclusion of the trial to assess long-term safety and efficacy.
StemCells, Inc. has not received the investor attention that perhaps Neuralstem or InVivo Therapeutics has received over the past few months, perhaps because the trial is being conducted in Switzerland and not the U.S. Conducting trials outside the U.S. can be a cheaper way to generate proof of safety and concept prior to a larger U.S. study. We note Neuralstem plans to conduct a spinal cord injury trial in South Asia with South Korean partner, CJ CheilJedang, in 2013. We remind investors that StemCells, Inc. was awarded a $20 million grant from the California Institute for Regenerative Medicine in July 2012. The goal is to file a U.S. IND in the next four years.
We would be buyers of Neuralstem, not only based on the announcement that the company will start a phase 1 trial in spinal cord injury, but also based on the previous data in ALS and the company's opportunity to partner NSI-189, a phase 1 small molecule asset for depression and anxiety (see related article).
We would be buyers of InVivo Therapeutics on final confirmation that the IDE/HDE trial has initiated. We like the InVivo story, but the delays that hurt the stock throughout 2012 could easily begin to weigh on the shares again in 2013 unless management can push forward very soon.
We are neutral on StemCells, Inc. Spinal cord injury is just a small part of the company's story, and we admittedly have not delved deep enough into the company's programs for Pelizaeus-Merzbacher Disease (PMD) and Dry Age-Related Macular Degeneration (AMD).
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