Pluristem's Promising GvHD Indication Pits It Against Osiris

| About: Pluristem Therapeutics, (PSTI)

Pluristem Therapeutics Inc. (NASDAQ:PSTI) just added a new, potential indication to its already impressive pipeline -- that of treating graft-versus-host disease (GvHD). Preclinical studies in animals subjected to bone marrow transplant showed a statistically significant drop in symptoms associated with GvHD such as weight loss, diarrhea, and the potential for liver disease. Central to the results is the fact that efficacy was achieved regardless of PLX cell administration, whether into a muscle or through a vein. This is vital for future treatment because patients and their physicians prefer the more convenient, less taxing intramuscular route.

GvHD is a highly dangerous complication following an allogeneic tissue transplant; that is, tissue from a source other than the patient. Incidence can be as high as 50% of all surgeries involving a donor. White blood cells, called into action like in any immunogenic response, attack the implanted tissue as foreign with the consequence of severe skin rash, liver enzyme elevation possibly leading to jaundice, difficulty breathing, gastrointestinal ailments, and compromised joint movement. Cyclosporin is a common but toxic drug used to treat GvHD, with an extensive side effect profile that includes fever, vomiting, shortness of breath, rash, yellowing of the eyes and skin and loss of joint mobility -- making the cure not much better than the condition itself.

Pluristem's inroads into GvHD pit it against stem cell company Osiris Therapeutics (NASDAQ:OSIR), but with a significant difference -- potentially greater efficacy. Prochymal, first approved for Osiris in Canada, then New Zealand for GvHD, has made little traction through our regulatory system. Prochymal was once considered a driver behind Sanofi's (NYSE:SNY) $20 billion buy-out of Genzyme in February 2011. After the merger, Sanofi unexpectedly discontinued work on Prochymal for GvHD, which had made it to Phase III trials, giving back rights to the compound with no money changing hands. Osiris was eventually successful with approval, yet sales have been disappointing. Since its launch in the second quarter of 2012, no revenues have been generated.

Investors in biotechnology should question why Osiris is trading at a market cap of $642 million and Pluristem at slightly under $200 million. Pluristem's platform technology supports a much fuller pipeline and may soon encroach on Osiris' hopeful GvHD franchise. Also separating Pluristem from Osiris and other cell therapy companies is its manufacturing prowess. Independent researchers have recognized in scientific journals that placental cells of the kind Pluristem processes (mesenchymal) are best done in a bioreactor with appropriate quality control for a large and consistent yield. Harvesting of mesenchymal cells can be performed at the laboratory level, but no one yet has been able to translate the technology to an industrial scale. This is Pluristem's core competitive angle, ready to be exploited.

Besides general risks to an investment in Pluristem that include funding and the success of compounds being investigated, more specific considerations involve forward progress in clinical trials without regulatory roadblocks. The company has enjoyed good relations with government agencies responsible for new drug approvals, recently echoed by a favorable nod from the Israeli Ministry of Health to conduct its Phase II study in intermittent claudication there, and would facilitate international clinical trials in this indication, and peripheral artery disease in general. Very important is that this action represents the first trial in Israel using PLX's brand of cell therapy -- that of allogenic material, often termed "off-the-shelf," derived from the placenta. Again, Pluristem's bioreactor manufacturing expertise comes into play.

Pluristem's success in GvHD would be complimentary to its indications being pursued in hematology. Last February, Orphan Drug status was awarded for using PLX cells in aplastic anemia, a by-product of bone marrow transplant that broadens the potential market to $1.3 billion. That notwithstanding, Pluristem's recent announcement marks another success in preclinical studies in a new disease indication, adding to value not yet recognized by investors. Findings of Pluristem's study also open up the opportunity for collaboration with medical researchers, which could lead to clinical studies, furthering the company's reputation in the global scientific community and validating its PLX cell therapy worldwide.

Disclosure: I am long PSTI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.