Athersys: A Potential Stroke Therapy Monopoly On Hand

| About: Athersys, Inc. (ATHX)

(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)

In my last article on Athersys (NASDAQ:ATHX) I took a look at the company's clinical pipeline, competition and near-term catalysts, to make a case as to why I felt the company's shares were significantly undervalued. This Tuesday after-hours, Cytomedix (CMXI.OB), who is Athersys' main competition in the stroke therapy market, announced that it plans to halt funding for its ischemic stroke therapy after this year in order to focus on its wound care division. Considering that Athersys and Cytomedix have both been assessed by analysts as being the two main companies' with potential blockbuster stroke treatments on hand, one can't help but wonder why Cytomedix is planning to halt funding for its therapy after this years end.

The Stroke Market

Ischemic stroke, which is considered by the CDC as being the #4 leading cause of death in the world following heart disease, cancer and respiratory failure, comprises a market opportunity of approximately $30B+ annually. While dozens of attempted stroke trials have ultimately failed over the past decade, the only current FDA approved drug for stroke treatment is Genetech's Activase. Activase, which is shown to be effective in some cases, is only used by approximately 3-5 percent of the stroke patient population due to its side effect of causing potential brain hemorrhaging. Aside from Activase, the only other current treatment option for ischemic stroke patients is a surgical attempt to remove the clot, yet needless to say this is not an ideal situation.


While currently the drug Activase dominates the stroke treatment market, this is certain to change if either Athersys or Cytomedix's stroke therapy receives FDA approval. Athersys which is currently conducting a Phase II stroke trial for its MultiStem® therapy is expecting results in Q2 of 2014. Per reviewing Athersys' numerous scientific journal publications documenting MultiStem's efficacy, as well as reviewing the company's past trial data from MultiStem applied to Ischemic stroke, I have an extremely optimistic outlook on the company's future Phase II trial results. Per Athersys' previous data presented at The American Heart Association's Stroke Conference, the company revealed that it's MultiStem therapy reduced damage and enhanced functional recovery in animals after an ischemic stroke. Specifically documented was that after receiving Athersys' MultiStem therapy these animals' experienced improved coordination, balance, motor skills, physical strength and neurological functioning. Since MultiStem is being developed as an off the shelf product which does not need to be prepared via extracting and processing a patients own cells, it provides an extremely convenient option for treatment. Following a stroke, MultiStem is administered intravenously into a patient's blood stream where the stem cells can then be transported to the patients area of injury and begin repairing damage.


Unlike MultiStem which is targeted to be administered as soon as 1 day after experiencing a stroke, Cytomedix's ALDH-401 therapy is to be administered roughly 2 weeks after experiencing a stroke. While the time lag posed by Cytomedix's therapy is clearly not as convenient, the company's ALDH-401 therapy did show efficacy in pre-clinical results. Pre-clinical data revealed a 41% improvement in motor function after receiving Cytomedix's therapy in comparison to an 11% improvement in the control group. Yet in looking at how Cytomedix's stroke therapy is formulated and administered, one can gain a quick understanding as to why it is not the most ideal approach. While MultiStem is manufactured prior to a patient being hospitalized, ALDH-401 requires that a patient have their bone marrow extracted in order for their therapy to be manufactured post stroke. Adding further discomfort is the administration of this therapy. Unlike MultiStem which is simply injected into a patient's blood stream intravenously, ALDH-401 requires that a patient undergo an intracartoid infusion procedure. While there is no reason why both therapies could not be potentially administered to the same stroke patient theoretically, it is apparent that ALDH-401 is a much more arduous therapy in nature.


In looking at both Athersys and Cytomedix's stem cell therapies for Ischemic Stroke, it is evident that both products have shown clinical efficacy thus far. While Athersys' Phase II trial results are expected a few months earlier than Cytomedix's, this aspect is more of a superficial one in comparison to what the companies actual trial results show. However, in considering yesterday's press release by Cytomedix stating its plans to halt funding for its stroke program after this year, one has to seriously question whether the trial will even make it to the finish line. In spite of Cytomedix's positive pre-clinical stroke data thus far, it is not a bullish sign that the company plans to halt funding for this trial after 2013 in order to focus its efforts on developing its wound care division. All aforementioned being the case, it is my opinion that Athersys would be the clear best investment in the stroke sector currently.

Disclosure: I am long ATHX. 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.