In a celebratory July 23 press release related to its uplisting to the NASDAQ, Neostem (NBS) mentioned how happy to be joining other "cell therapy" companies trading on the exchange, including Celgene (CELG), Shire PLC (SHPG) and Stemline Therapeutics (STML).
It's not surprising that Neostem would want to be identified with these successful companies, and in addition to a stable of successfully marketed products both Celgene and Shire have cell therapy programs among their many pipeline endeavors.
Why does this matter? On July 24 an article was published online in the journal Stem Cell Reports calling into question the scientific underpinnings of certain approaches to regenerative cell therapy. While not definitive, the paper created enough of a cloud over Neostem to cause the stock to drop more than 15%. Unfortunately, it appears that confusion around this issue also dragged down Stemline shares by a similar amount, despite the fact that there is no relationship whatsoever between the stem cells discussed in this paper and Stemline's development programs in oncology.
Despite their name, however, Stemline is not a regenerative cell therapy company. Instead, Stemline is an oncology company with assets in late stage clinical trials that have demonstrated clinical benefit including complete responses. Regenerative cell therapy programs, such as Neostem's, aim to administer cultivated "good" stem cells into a patient's body to cure diseases. In contrast, Stemline's programs administer drugs, not cells, to target "bad" stem cells known as cancer stem cells (CSCs) that already exist in the body of cancer patients. These cells cause cancer and make it resistant to chemotherapy. Stemline's drugs have a dual action in that they target not only cancerous cells, like traditional chemotherapy, but also CSCs - the underlying source of a tumor that leads to recurrence - and hence the name Stemline.
I have written previously about Stemline's potential and its development programs, so I will not spend too much time on that here. The company's lead clinical program is SL-401, an interleukin-3 receptor (IL-3R) inhibitor. Stemline has shown that IL-3R is highly expressed on tumor cells and CSCs, but not on normal cells, so SL-401 is a very targeted therapy. The company has received orphan designation for SL-401 and plans to move to a pivotal clinical trial in the rare cancer blastic plasmacytoid dendritic cell neoplasm (BPDCN). Data from a Phase I/II trial of SL-401 in BPDCN showed a response rate of 83%. An initial approval in this indication would open the door to treating multiple other cancers including acute myeloid leukemia (AML), myelodysplastic syndrome (MDS) and multiple myeloma.
As a quick reminder, Stemline debuted as the first biotech IPO in 2013, selling 3.8 million shares of stock at $10 per share. There has been very strong investor support since the IPO and the share price has more than doubled since then. On May 22, 2013, Stemline announced the closing of a secondary offering of stock, raising gross proceeds of $69 million. The secondary offering was priced at $14.50 per share, a 45% premium over the IPO price, in a deal that clearly demonstrated investor excitement for this company. Stemline now has over $95 million in pro forma cash at the end of the first quarter 2013. With important clinical trials set for 2014, I continue to see significant upside potential for Stemline and view this temporary confusion as a particularly unique investment opportunity.