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Another clinical score for Pluristem Therapeutics (NASDAQ:PSTI) with the FDA's recent grant of Orphan Drug status for PLX cells in aplastic anemia (AA), a rare and hard to treat blood disorder affecting under 200,000 patients in the US. In the bigger picture, AA often appears in cancer cases that require bone marrow transplant, broadening the possible market to $1.3 billion.

Two designations for Orphan Drug status (one for Buerger's Disease, a severe peripheral artery disease, was granted in August 2011) make Pluristem noticeable as an emerging drug firm with potential. Good standing with our US regulatory body is no small accomplishment and, in the current political environment, being recognized by the FDA as a company with clinical inroads to rare diseases could prove highly beneficial.

Orphan drug statistics show a global market expected to reach $112 billion in 2014, with the US accounting for over 50%, an unusual skew of worldwide demographics where our country typically claims about one-third disease incidence and prevalence verses the rest of the planet. Biologics make up 64% of orphan drugs with revenues surpassing $50 billion, and orphan drugs for cancer form about one-third of that.

Besides the potential economics, Pluristem is in a perfect position to gain from recent FDA changes. Years of pressure from patient advocacy groups and pharmaceutical lobbyists paid off in the newly-formed Food and Drug Administration Safety and Innovation Act (FDASIA), with a section devoted to a 'Breakthrough Therapy Designation' intended to go beyond fast track or accelerated approval of drugs for very serious and life-threatening diseases.

Still with a few criteria to hammer out, the Act will allow the FDA to grant progressive approval to companies whose compounds show outstanding results in early trials, where there is a clear improvement over existing therapies, and where the continuation of a control group getting less effective treatments would be unethical. The agency would lend itself to intensified communications with drug companies as early as during Phase I.

For rare diseases, there are two parts of the Act that 1) carve out a special priority review program for pediatric patients; and 2) establish a new consultation process where rare disease specialists confer with companies to form and refine the application to the FDA. Both of these are of enormous potential benefit to Pluristem because seeking a breakthrough designation like bone marrow transplant failure (up to 20% of patients are children) could make it eligible for progressive approval under aplastic anemia, the underlying disease for which it has proven clinical data in a life-threatening situation. The same could be said for Pluristem's treatment for Buerger's Disease, with no cure and high mortality.

The lack of completed final guidelines for the FDA's progressive approval program and the upcoming sequestration budget cuts of a proposed $85 billion that could slow the agency's speed in new drug approvals are two very real risks for Pluristem in its goals toward reaching the market; however, there is a strong grassroots commitment in making FDASIA work, particularly from patient groups like the Friends of Cancer Research, original sponsors of the Act. Since the initiative was put into motion late last year, two drug companies have benefited - Vertex Pharmaceuticals (NASDAQ:VRTX) for cystic fibrosis, where the FDA awarded the breakthrough designation based partly on pre-clinical data and Janssen, a Johnson & Johnson (NYSE:JNJ) company for two rare forms of lymphoma.

I believe Pluristem is a safe bet for investors seeking an undervalued biotechnology stock that is reliably delivering on clinical and regulatory progress, has over $50 million in capital, and good relationships within the approval process in the US and overseas. Good news like this should be a strong indication of more to come.

Source: New Orphan Drug Designation For Pluristem Could Gain Access To FDA 'Progressive Approval'