The Vatican / NeoStem Partnership Looks To Create Interest And Advance Cell Therapy

| About: Caladrius Biosciences, (CLBS)

One of the more exciting upcoming conferences is the Second International Vatican Adult Stem Cell Conference: Regenerative Medicine - A Fundamental Shift in Science and Culture. A couple of weeks ago Scott Matusow wrote an article looking at the conference, and more specifically, one of its featured speakers. The conference itself promises to include an informative presentation on what is innovating and transcendent in the medical field. One reason it's interesting is because of the Vatican's involvement and its collaboration with The Stem for Life Foundation and partner NeoStem (NBS). With the Vatican being known for its history and tradition, it does spark a little curiosity as to why they would be willing to work with, fund, and support the development of cell therapy.

So why is the Vatican partnering with NeoStem and The Stem for Life Foundation? And what is it that they hope to accomplish? NeoStem seems like a strange choice- the company is valued at just $110 million and has revenue of just $14.33 million, meaning NeoStem is a small company and The Vatican is a presence that could have partnered with any Big Pharma name. A couple weeks ago I got to speak with Monsignor Trafny during a trip to New York, where he and Dr. Smith were discussing the partnership and its purpose. As a result, I had the opportunity to ask these questions and many others.

The first question that I asked the Monsignor was, "Why cell therapy?" He responded by saying, "We have found that there are some ranges of knowledge that are highly expandable-and regenerative medicine and cellular biology are among them. This research is very important to all of us; therefore we choose to support those that do scientific research on very high levels. This will change the future."

Monsignor is right, cell therapy is advancing at a rapid rate and is one of those therapies within medicine that could change the way we view and treat disease. Looking alone at the Vatican's partner, NeoStem, the company has found a threshold dose (10 million cells) for cells that might have the most upside in the entire space. It has also built off last year's Nobel Prize winners, Sir John B. Gurdon and Shinya Yamanaka, developing cells that can be reverted to an earlier state, with its very small embryonic-like cells (VSELs). As a result, Monsignor is correct when he says that this research could "change the future".

Monsignor made clear that this particular "industry" is highly expandable. He answered, "What I'm doing is working on cultural analysis and looking for discoveries in science and medicine that will have a significant impact on the development of society for the future," to a question that was in regards to the Vatican's interest in cell therapy.

This leads to a very interesting observation because, although NeoStem may have been the Vatican's choice as partner, there are other great companies in the space that have aided in the Vatican's decision to invest and partner in its development. For example, Neuralstem (NYSEMKT:CUR) has made significant progress in attacking various issues related to spinal cord injuries, ALS, and stroke. The company has also made progress in treating neurodegenerative diseases, which Monsignor actually referenced in saying, "If you look at data, you would discover that we have more than 24 million people in Western countries affected by neurodegenerative diseases and that they desperately seek hope. Scientists expect that this number will increase to 80 million by 2040." This statement alone might show why the Vatican is looking to partner with one of the industry's elite.

In addition to NeoStem and Neuralstem making progress in cell therapy, there are also companies such as Pluristem Therapeutics (NASDAQ:PSTI), which is making progress in treating diseases like intermittent claudication, critical limb ischema and Buerger's disease; many believe its PLX cells have capabilities that expand far beyond these indications. StemCells (STEM), an early development company, created waves with its research and progress in Alzheimer's disease and its studies on dry-age-related macular degeneration, and may become a favorite as it secures adequate financing and progresses in development.

The potential for a space such as cell therapy is limitless, and the good news is that it is still somewhat under-the-radar and undervalued, although it continues to expand every year. Besides Osiris Therapeutics (NASDAQ:OSIR), most of these companies have market caps around $100 million. Yet there are many (those cited above) that have announced positive data and have upside in the billions for annual sales. As a result, it is a space with great potential and, with the Vatican's involvement, we could very well see a much higher level of support over the next few years.

Last month I spoke with Stephen Potter, who was vital in his leadership role at Osiris Therapeutics, the first company to have an approved cell therapy product. Potter is now on NeoStem's board of directors, and he summed up the progress of the space very well by saying, "A decade ago, everything was about the future promise of what cells could do. Now there are thousands of clinical investigations and trials on a huge range of tough diseases using a wide range of cells, approaches, and delivery." What does this mean? It's further proof from an industry vet of the expanding research that is taking place and the speed at which progress is occurring within the space for the industry leaders.

Despite the future being limitless in terms of potential and the progress being rapid, like any industry, companies have different areas of concentration and are at different points of development. NeoStem is really trying to operate with ethical concerns in mind, and has over a decade of research at its disposal due to it owning PCT, the cell manufacturing side of its company. Thus, by using CD34+ cells the company is developing one of the more common and promising cell therapies in development, AMR-001. These are cells that Baxter (NYSE:BAX) has already proven effective: While in a Phase 2 study Baxter showed that its CD34+ cell therapy reduced episodes of angina while increasing exercise ability. It was the first time that such endpoints had been reached. NeoStem (who manufacturers the cells for Baxter) is building off this success, but while Baxter's therapy strengthens the hearts, NeoStem's AMR-001 repairs the heart.

Like I said, staying clear of potential ethical problems is important to NeoStem, and no doubt important to the church. I asked the Monsignor about this issue, because with the Catholic Church being known as "traditional", it does seem like a priority. The Monsignor had already said that the therapy is expandable, but he also added in regards to selecting NeoStem by saying, "We had a very tough time in trying to find who would be our partner and meet our requirements. We were looking for companies and institutions who had never been involved in embryonic stem cells and who have very clear statements on their work. Secondly, we looked for someone who would share knowledge with us and give us access to their labs and be trained by their experts. The third part, which is important, is that we looked for someone who was interested in cultural issues. NeoStem met all of our needs."

The Vatican was attracted to NeoStem for the same reason that many investors believe in the company's upside- and that is its clinical development, diversity, and research. One of the best examples of these factors coming together is with NeoStem's VSELs, and as I mentioned earlier, this is the use of cells that have embryonic-like capabilities, but are not really embryonic, hence the name "embryo-like cells".

Yet despite NeoStem being able to overcome these potential issues with its approach to preserve human life, the obvious concern, of course, is how the church might respond to the Vatican's involvement, and how the election of a new Pope would play a role in the future of this five-year partnership. Monsignor Trafny addressed both by saying, "I think the church is moving in the right direction. I am in charge of the science department so I am mainly dealing with the scientific community. From my perspective the election of Pope Francis is something significant because he has a scientific background. He studied chemistry so it gives us great hope that he understands the importance of science to contemporary society. We really believe that the church today cannot avoid science."

The fact that Pope Francis has a scientific background is very encouraging to the future of the Vatican and its involvement in medical discoveries, not necessarily just cell therapy. Monsignor Trafny explained, "We really want to focus on global exposure and discuss the belief that in order to be good Catholics people have to make a choice between religion and science. We want people with this belief to know that the Church is supporting research and science and that they don't need to make a choice. This is especially important for the new generation-we want to reach them and teach them that they can be good Catholics without the moral concerns of research."

Personally, I am excited to see where this partnership will go, and what it could create for the industry as a whole. The partnership itself is huge for NeoStem, as the stock rallied 8% last week alone with the Monsignor visiting NeoStem during the period. Furthermore, the Catholic Church is among the oldest institutions in the world with roughly 1.2 billion members worldwide. Therefore, it has a massive presence, and although its partnership with NeoStem may be a big win for the company alone, it is also big for the industry. The international conference in April will no doubt be watched closely and perhaps more seriously, as the partnership with such a prominent institution is sure to open many new doors in development, support, and in funding.

Disclosure: I am long NBS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.