International Stem Cell's Management Discusses Positive Study Data of Parkinson's Disease (Transcript)

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International Stem Cell (OTCQB:ISCO) Positive Study Data of Parkinson's Disease Discussion Conference March 22, 2013 11:00 AM ET

Executives

Mark McPartland

John Simon Craw - Executive Vice President of Business Development and Investor Relations

Ruslan Semechkine - Vice President, Director and Chief Executive Officer of Lifeline Skin Care

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the International Stem Cell Corporation conference call to discuss positive study data in Parkinson's disease presented at the American Academy of Neurology 65th Annual Meeting. [Operator Instructions] I will now turn the conference over to Mr. Mark McPartland with MZ Group. Please go ahead, sir.

Mark McPartland

Thank you, operator, and good morning, everyone. Joining us today for International Stem Cell conference call to discuss the positive data of the Parkinson's disease study are Dr. Ruslan Semechkin, Vice President of Research and Development; and Dr. Simon Craw, Executive Vice President of International Stem Cell.

Dr. Craw will provide opening comments, and Dr. Semechkin will present the data from this week's American Academy of Neurology 65th Annual Meeting. Both will be available for -- to answer your questions after the prepared presentation.

Now we before we begin the call, I'd like to remind our listeners that on this call, prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties, and that management may make additional statements in response to your questions. Therefore, the company claims the protection from the Safe Harbor for forward-looking statements that is contained in the Private Securities and Litigation Reform Act of 1995.

Forward-looking statements related to the business of International Stem Cell Corporation and its subsidiaries can be identified by common use forward-looking terminology, and those statements involve unknown risks and uncertainties, including all business-related risks that are more detailed in the company's filings on Form 10-K, 10-Q and 8-K with the SEC.

For those of you who are unable to listen to the entire call today, there will be an audio replay available, and the call is also being webcast, so you can log in via the Internet to review any time. All details were provided on the conference call announcement in the press release earlier this week. You may also find more information on the company's website located at internationalstemcell.com.

Now at this time, I'd like to turn the call over to Dr. Simon Craw, who will provide the opening remarks. Simon, the floor is yours.

John Simon Craw

Thank you, Mark, and good morning, everyone. I'd like to introduce Dr. Ruslan Semechkin this morning, our Vice President of Research and Development. Ruslan will be presenting the most recent research from our Parkinson's disease program, specifically the results of the primate study, which was done in collaboration with Professor Evan Snyder of the Sanford Burnham Institute and Dr. Eugene Redmond of Yale University, which was presented at this week's American Academy of Neurology Annual Meeting in San Diego.

There is also a slide deck summarizing some of the key findings from this presentation, which can be downloaded from our website at internationalstemcell.com. This work will eventually be published in a peer review scientific journal.

At the end of Ruslan's presentation, I will make a few comments and then we'll open up the call for questions. Ruslan, over to you.

Ruslan Semechkine

Well, thank you, Simon. Good morning, everyone. Thank you for attending this call. I would like to start by talking about ISCO's stem cell technology. We believe stem cell replacement therapy does have a lot of promise and could become an everyday practice in a few decades. Transplants of stem cell derivatives can restore function in injured or diseased tissues and organs. As you may know, ISCO has pioneered the development of a new class of stem cells called human parthenogenetic stem cell, which are derived from unfertilized eggs that have been parthenogenetically activated. We believe parthenotes have the best characteristics of each of the other classes of stem cells. Moreover, differentiated derivatives of HLA homozygous parthenogenetic stem cells may reduce the risk of immune rejection after transplantation, thus offering significant advantages over embryonic stem cells for application in cell-based therapies. Since there is no forced change of gene expression patterns, parthenogenetic stem cells are not likely to face the same safety and regulatory hurdles as iPS cells. In addition, parthenotes may be particularly useful for the treatment of genetic diseases because in this case, it is possible to use cells obtained from a donor who does not carry this genetic defect. These advantages, combined with the advantage of derivation from unfertilized eggs, make parthenogenetic stem cells a promising source for cell-based transplantation therapy.

Using our own recently published protocol based on small molecules, we differentiate a human parthenogenetic stem cell into neuronal cells. In this analysis, using [indiscernible] staining gene expression microarray and RT-PCR confirmed their neuronal identity. More importantly, the neuronal cell population did not express the pluripotency markers Oct-4 and Nanog, meaning that there were no undifferentiated pluripotent stem cells left in their preparation. It is extremely important because it is known that pluripotent cells can cause tumors once the cells are implanted.

Our findings were recently published in a peer-reviewed journal scientific reports. If you're interested in learning more about the cell type we used in our preclinical studies, you can download our paper directly from Nature website.

The goals of this animal study were to evaluate therapeutic effects of derived neuronal cells in a model of Parkinson's disease. Now let me talk about the goals specifically. First goal is to compare viability, fate and efficacy of neuronal cells in nonhuman primate model of Parkinson disease. Second goal is to demonstrate that these cells can functionally integrate into host tissue as well as lead to functional improvement in tested animals. Third goal, to evaluate in vivo activity of these cells based on cell engraftment, differentiation and proliferation. Fourth goal, to evaluate the safety profile of the cells by examining the brain and other tissues for the presence of implanted cells.

To achieve these goals, we did the following. We generated and transplanted highly pure populations of neuronal cells from hpSC into a nonhuman primate model of Parkinson's disease. We assessed behavioral endpoints with parkinsonian scores, the primate version of the standard rating scale used in humans. We determined cell engraftment, viability and phenotype of the implanted cells through histology and HPLC at the end of the study. Tumorigenicity and the safety of the therapy was assessed by gross necropsy and histology. The MPTP-lesioned primate model is the closest approximation to the disease [indiscernible], showing signs and pattern of similar -- very much similar to that seen in PD patients, at least with monkeys, so therefore are essential for developing new treatments for Parkinson disease. In this study, we used 8 African Green monkeys. Four monkeys were implanted with neuronal cells, 2 monkeys were implanted with placebo and 2 monkeys were healthy. 8 million cells were implanted in each monkey in 4 sites: a key to the -- in striatium and substantia nigra basically, which means 2 million cells per site. Parkinson scores were recorded by blinded observers who scored the monkeys twice per day, 5 days per week by using a published and validated quantity time sampling [ph] method, which has been shown empirically to sample parkinsonian behaviors efficiently and rigorously [ph]. At the time of surgery, Parkinson score were below 10, which means that the monkeys were asymptomatic and did not have clinical symptoms of Parkinson disease. But they had depleted levels of dopamine compared to untreated monkeys. Parkinson scores were reported daily and remained stable after transplantation with even a slight improvement. Most importantly, we did not observe any adverse event, including dyskinesia or dystonia, which were evaluated by measuring parkinsonian scores.

The phenotype of transplanted neuronal cells was characterized by biochemical [ph] analysis of brain tissue samples. And biopsies of tissue from the striatium were taken from dorsal and ventral subregions of the caudate nucleus and putamen, the mid-coronal level. Dopamine and its main metabolite, homovanillic acid, HVA, were measured in these regions of the brain via HPLC. The HVA-to-DA ratio is used as an index of the rate of dopamine turnover of the dopaminergic neurons. Basically, the higher the dopamine levels and the lower the ratio, the better.

Subsequent to implantation of the neuronal cells, all monkeys in the treatment group had higher levels of dopamine and lower ratio of HVA-to-DA compared with the control group. The differences between groups are statistically significant for the dorsal regions, which is where the cells were injected. This is a good indication of therapeutic potential following hpSC-derived neuronal cell. We detected the presence of human cells in the transplanted hemisphere but not in the control hemisphere by staining the monkey brain slices with Stem-121, a human-specific marker that does not cross-react with the monkey brain tissue.

These data supports the survival antigraftment of the implanted cells 2 months after implantation. Now we know that HPC-derived neuronal cells survive. We would like to understand what happened with them in terms of through [ph] the differentiation. To answer this question, we stained the substantia nigra not only with human-specific marker Stem-121 but also with the dopaminergic marker tyrosine hydroxylase, TH. We observed that around 1% of the neuronal cells differentiated into TH-positive cells. We also observed that staining the cells with JPP [ph] marker, that some of the neuronal cells differentiated into astrocytes, brain cells which perform many support and nutritional functions.

So what happened with the remaining 98% of the implanted cells? In fact, the majority of the transplanted cells remained time [ph] differentiated 3 months after transplantation. We believe this is a very positive result because it supports the notion that some neuronal cells become neurons to restore dopamine production, which would treat Parkinson disease. And the rest of the cells starts to act as chaperones by releasing neuroprotective cytokines such as glia-derived neurotrophic factor, brain-derived neurtrophic factor and the vascular endothelial growth factor. So we can predict that neuronal cells not only replace lost gene [ph] neurons but also protect them.

Most importantly, we did not observe the presence of ectopic tissue or tumors in any of the analyzed brains. Coronal section of the monkey brain stained with hematoxylin and eosin shows a normal morphology without presence of ectopic tissue. Stating for human-specific antibody, Stem-121, and Oct-4, a typical marker of undifferentiated pluripotent stem cell opted detected that Oct-4 is completely absent in the graft site. These results not only demonstrate the efficacy and safety of HPC-derived neuronal cells but also validate our [indiscernible] Differentiation protocol for staining pure populations of cells from human pluripotent stem cells.

As a summary, we can conclude that HPC-derived neuronal cells survive engraft and to release dopamine upon transplantation in the animal model of Parkinson disease. Monkeys transplanted with HPC-derived neuronal cell had significantly higher level of dopamine compared to primates that received placebo. No abnormal behaviors were noted, and there was no dyskinesia seen in primates. PD scores and healthy behavior remained stable, and there were no significant slopes indicating changes. No ectopic tissue or tumors were found in either primate or other animals.

Based on this information, we believe the next major steps should be additional studies to relate the long-term safety and brain [ph] distribution of transplanted cells, including survival and migration [ph] following the administration of cells. Optimization of cell transplantation dose rose in target sites, which we'll mimic in standard clinical use.

Well, this concludes my presentation. Thank you for listening. Simon?

John Simon Craw

Well, okay. Thank you, Ruslan. That's a very exciting data. Let me just try to summarize this data and this study on why it's very important for several reasons. Firstly, we did not detect any adverse safety events after implantation. That's a significant finding of this study. There were no increase in negative behavioral symptoms, such as the dyskinesias that Ruslan mentioned, and no tumors or other tissue abnormalities. Secondly, we now know that the cells can survive implantation and engraft, and we know something about how they function in the brain. And lastly, when combined with our rodent data, we can see a disease-modifying effect of this implantation. And that's to say that this reduction in the symptomology after implantation is clearly present on these implants. And we can even see some, as Ruslan discussed, some dose effects and some neuroprotective effects, which were somewhat unexpected. This is really a big step forward in terms of our Parkinson's disease program. And in actual fact, for our stem cell platform in general is it clearly validates our approach of using human parthenogenetic stem cells to differentiate into terminally differentiated cells and implants to treat diseases. These results will be part of our preclinical package, which we're going to submit to the Food and Drug Administration in advance of our IND meeting.

Let me just conclude by saying that this is -- for us, this represents one step closer to our goal of treating patients with Parkinson's disease and using this incredible stem cell technology that we've developed to really improve the human condition. Operator, back to you.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Mr. Robert Lawrence [ph].

Unknown Attendee

I am also interested in finding out what's going on with the cornea transplants in India. We haven't heard a word about that.

Ruslan Semechkine

Well, Simon, this is a probably question for you.

John Simon Craw

Yes, let me take that. Well, let me just say -- I'm sorry, what was the speaker's name?

Unknown Attendee

Robert Lawrence [ph].

John Simon Craw

Well, Robert [ph], I'm afraid I can't comment on that on this call. I'm going to suggest that we defer that conversation to the conference call that we're planning to discuss our annual report, which will be filed next week. This conference call, we really want to focus on the unique and interesting results that we found in our Parkinson's disease study.

Operator

And our next question will come from the line of Heidi Marie Fuentes [ph].

Unknown Attendee

When do you have your meeting with the FDA for your -- to move forward on your IND?

John Simon Craw

Well, Heidi Marie [ph], so we have just completed our package, our preclinical package, and submitted it to the relevant department in the FDA, and we are awaiting confirmation for a meeting schedule. We anticipate it to be sometime in the next 3 months. I know that's a long window, but we simply don't know from the FDA when they can come back and provide us a first review of what we submitted.

Unknown Attendee

Okay. And what about costs to move forward in any -- the next phase?

John Simon Craw

What was your question?

Unknown Attendee

Do you have the funds to move forward to the next phase and. . .

John Simon Craw

That's a very interesting question, and I don't think it's something that we can discuss on this call.

Unknown Attendee

Oh, okay, okay. Well, the fact that you're moving forward with the FDA already, that's the most important anyway.

John Simon Craw

Yes, yes. And we've outlined in our package what the GLP toxin distribution studies will be. And of course, we know the cost of those studies and the provision of timing of them. We are just awaiting feedback from the relevant department in the FDA before commencing those studies.

Operator

Our next question comes from Wayne Palmer [ph].

Unknown Attendee

I'm always looking forward to when you're going to have the Parkinson's trial. And just let us know because we have patients.

John Simon Craw

Well, thank you. That's great to hear. Well, we'll probably be back in touch next year once we get our IND approved, and we'll be looking for patients and principal investigators.

Operator

Next question comes from the line of Steve Smith [ph].

Unknown Attendee

Simon, Steve Smith [ph] at Regal [ph]. I was just interested if you could give me some flavor on the meeting that you had with the neurosurgeons and give me some color on maybe what the doctors thought about your presentation.

John Simon Craw

Yes. Actually, let me -- yes, let me fill you in here. The meeting was -- the meeting is still ongoing. It's actually running from Sunday -- last Sunday through to this Saturday at the San Diego Convention Center. Our presentation was on Wednesday afternoon at the movement disorders session of the meeting, which is primarily focused on Parkinson's disease. There were a number of clinical presentations talking about different dose regimens of the current therapies. There was a tremendous amount of interest, I would say, from the physicians on our presentation, which presented a stem cell-based approach to Parkinson's disease. From a clinician's perspective, it's very novel and it solves a number of the problems associated -- or potentially -- has the potential to solve a number of the problems associated with current treatments. So we got some great feedback from that. We met a number of people from -- also from the Parkinson's Disease Foundation and got good feedback from those guys and a commitment to perhaps work together in the future on something with them in terms of patient advocacy. So the meeting was extremely positive for us. We made a number of contacts with physicians and with the nonprofit organizations.

Unknown Attendee

Great. Well, now, these physicians, were they all North American physicians? Or was this -- was there an international presence there? Interest outside the U.S. on this?

John Simon Craw

Yes, the meeting is actually the world's largest neurology conference, and it's kind of international. I can't tell you how many overseas physicians were there but a significant number. And the interest in our program is from both North American and overseas physicians.

Unknown Attendee

Okay. So I guess...

John Simon Craw

Go ahead.

Operator

[Operator Instructions]

John Simon Craw

Operator, would you just allow Steve [ph] to -- I think Steve [ph] had a follow-up question.

Operator

[Operator Instructions] Please go ahead, Mr. Smith [ph].

Unknown Attendee

Yes. So I guess the only other thing that I was curious about from the initiation of the nonhuman primates, the monkeys, until you reached the end point, how long was that exactly? And do you expect the same time frame for the study's equivalent to the monkeys to be about the same as a human trial would be? In other words, does it take about the same or would you expect the same amount of time to arrive at your endpoints with humans on Phase 1?

John Simon Craw

Okay. Well, in terms of the preclinical package, we've submitted our first pass of the package to the FDA now, and we're awaiting their response.

Unknown Attendee

Right.

John Simon Craw

We don't have time under the pre-IND meeting yet. But as I said before, we anticipate it to be sometime in the next 3 months. We're anticipating an IND filing if all the stars align, and we get what we think we'll get from the FDA to be sometime in the next 12 -- sort of in a 12-month period, first or second quarter of next year.

Unknown Attendee

Okay. I think you maybe misunderstood what I was saying because I'm not that well versed in FDA language. And -- but I'm just saying if you did the same thing to a human being, would it take the same amount of time to. . .

John Simon Craw

No. No, no. Let me -- now I was just getting to that point, Steve [ph].

Unknown Attendee

Okay.

John Simon Craw

So I think the Phase 1 study would actually be shorter. Well, it depends on the actual -- how we design the study, which we don't have a complete study design. But it could potentially be -- per patient a shorter study than the primate study. The primate study will be a 9-month or a 12-month study.

Ruslan Semechkine

Okay, but, well -- and it really depends on the FDA.

John Simon Craw

Yes. Look, it's such a novel therapy that we really don't know where the FDA stands on this and how much safety data they'll require even in a [indiscernible].

Unknown Attendee

Did you just tell me that there's going to have to be another primate study?

John Simon Craw

Yes.

Unknown Attendee

Okay. And that's going to be another 9 months?

John Simon Craw

We don't know what the timing. It will be between 6 months to 9 months, we believe.

Unknown Attendee

Okay. And what would the -- what is the difference between the study that you just got through doing and the one that's coming up for the primates?

John Simon Craw

Well, Ruslan, would you like to take that?

Ruslan Semechkine

Well, first of all, it will be extended study in terms of time line. Our current study is 4 months, and so the new study will be approximately from 6 to 9 months. Another thing, we'll have more primates in the study. We've had only 8 primates. We expect -- for the next study, we expect much more primates. And it [indiscernible] ICSO (sic) [ISCO] and to really -- many more parameters than we did in this study.

John Simon Craw

And Steve [ph], maybe the dose. We dosed these monkeys with 8 million cells, and we found that, that was -- that produced quite a lot surfeit of cells that gave us these neuroprotective qualities. We really need to perhaps look at that in more detail and perhaps optimize that a bit more. And then, of course, you need to scale that to a human brain.

Unknown Attendee

That would mean more cells, I guess, right?

John Simon Craw

Yes, yes.

Unknown Attendee

Okay. And no problem in the production of the cells, you guys have that in inventory?

John Simon Craw

No, no problems at all. And actually, we published this paper in Nature Publishing Group last week about how we create the cells, and we've got that down.

Unknown Attendee

Okay. And I guess only -- I said only I have a one more question. But my last question is, I believe the lady asked earlier about the funding for the company. Can you speak to the need for more capital raise this year?

John Simon Craw

I can't talk about that on this call, I'm afraid, Steve.

Operator

Okay, our next question comes from the line of Mr. Mark Cann [ph].

Unknown Attendee

I'm -- my question is referring to the results of the study. The -- apparently, the rodent model showed some significant decrease in symptoms of the, I guess, Parkinson disease tremors and things like that, but it didn't speak to the decrease in symptoms from the primate model. And I think I'm -- maybe I didn't understand correctly, but I think Dr. Semechkin said that the primate model is -- doesn't really show true symptoms of the Parkinson's disease. It just has a decrease in dopamine. And I was wondering if you could speak to that a little bit, if I heard that correctly.

John Simon Craw

Yes. Well, let me just -- yes, I'll answer that question. The primates, of course, were asymptomatic. They were -- they had dopamine depleted in their brains with lesion, but they were asymptomatic. And the dose that we injected was something like approximately tenfold what we think the clinical dose would be. And the -- their behavioral scores were measured, and we do -- even though they were asymptomatic, we did monitor them because we wanted to ensure that there is no increase in the amount of dyskinesias and other motoric symptoms. There's always a -- even though they're asymptomatic, there's always a fairly low level of symptomology, and we wanted to monitor that to ensure that it didn't increase in these primates because the dose was so high that we implant it. Does that answer your question?

Unknown Attendee

[Indiscernible]. Sorry?

Ruslan Semechkine

Because there will. The main purpose of the primate study was safety because we know that our neuronal cells are effective and can potentially treat people. The main point was are they safe, and that's what we wanted to assess in monkeys. And under safety, I don't mean only like tumorigenicity. But also, I mean side effects like dyskinesia. Very important to the therapy.

John Simon Craw

Did that answer your question?

Unknown Attendee

Yes. I think so, yes. And based on the decrease in dyskinesias in the rodent model, that is a, I guess, proof of concept for proceeding with eventually human trials, is that correct?

John Simon Craw

Exactly. Yes.

Operator

Your next question comes from the line of Joe Kegler [ph].

Unknown Attendee

My question is pretty much answered, but I'll ask you this. Realistically, how long do you think in time line before you have a product on market?

John Simon Craw

For Parkinson's disease, that's very hard to predict. We hope to be in a Phase 1 trial in 2014. It will be several years after that, at least, before the FDA will give you a -- give us a license to market a product. So I can't give you an exact time line, but it's 3 to 5 years.

Unknown Attendee

What about in Europe?

John Simon Craw

It's approximately the same in Europe. The stem cell regulations are a little bit different in Europe. But it wouldn't be substantially shorter. At least in Western Europe, it wouldn't be substantially shorter.

Unknown Attendee

Is the Q&A going to be in print form as well on this meeting?

John Simon Craw

I don't know the answer to that. Operator, can you tell us if the Q&A would be transcribed?

Operator

There is no transcription booked at this time, no.

Unknown Attendee

Okay. Well, congratulations on the great work you've been doing and keep it up.

John Simon Craw

Thank you, Joe. We're super excited about these results.

Operator

Okay, gentlemen, there are no further questions at this time. So I'll hand the call back over to Dr. Craw.

John Simon Craw

Okay. Well, thank you, everyone, for participating. It's been a very lively debate, I think, on these results. And I'm very pleased to hear so many good questions and so much interest in this presentation. We -- like I was saying, we're very excited by these results. We think it's very strong validation of our approach, and we're very proud of this work that we've done. And it really sets us up. And like I was saying, we're -- we think we're just -- we're one step closer to treating Parkinson's patients. So thank you, everyone, for participating, and we'll be talking to you on the next call. Thank you.

Operator

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.

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