In just a few short months, NeoStem (NBS) will present data on a product that could make many investors very wealthy. If successful, this product should create more than a billion dollars in peak sales; and with NeoStem having a $200 million market capitalization, the post-data gains could be tremendous. Albeit, there is a lot of uncertainty, as the stock has been particularly fickle in the last couple of months, following the complete enrollment announcement. Yet, independent data published in late February might hold the key to what investors should expect when the data announcement is made.
What's the Product?
The product of discussion is AMR-001, and it's known as a cell therapy. The therapy is comprised of autologous bone marrow-derived CD34+/CXCR4+ cells selected to treat damaged heart muscle following acute myocardial infarction (AMI). According to the company's website, AMR-001 is being evaluated to determine safety and the effect of an intracoronary infusion of AMR-001 on myocardial perfusion (amount of blood in the heart) at six months post-randomization in subjects post-acute ST elevation myocardial infarction ("STEMI"), a particular type of AMI. AMR-001 is also being evaluated to determine its effect on preservation of left ventricular function and risk of major adverse cardiac events following AMI.
In other words, NeoStem is targeting a large patient population with heart attacks that result in a high rate of disability despite the best standard of care. Currently, when a patient experiences one of these severe heart attacks, they live with a great deal of damaged heart muscle, and then the remaining healthy tissue surrounding the heart attack zone has to work very hard to overcome the stress caused by the heart attack. As a result, those remaining healthy cells are at high risk of dying in a short period of only three to six months.
As of now, there is no treatment for this patient population, but various investigators have researched ways to keep those healthy heart muscle cells from dying. This research has led to cell therapy, CD34+ cells, and more specifically, AMR-001.
NeoStem is hoping to show that AMR-001 can improve the heart's function following a severe heart attack. In a 31-patient trial, AMR-001 was successful; no patients injected with at least 10 million cells experienced a deterioration of heart muscle function. However, as data draws near, and with analysts projecting anywhere from $1.0-$1.5 billion in peak sales for AMR-001, investors are scrambling to assess known data and form conclusions based on the outcome of prior pieces of independent cell therapy studies on AMI. And while this process is normal prior to a data announcement of this caliber, investors missed a five-year follow-up report that might provide the best indication of what to expect when NeoStem reports data on AMR-001.
What's the Study?
On February 25, a follow-up analysis on an independent trial by a highly regarded group led by Dr. Andreas Zeiher was published in the European Heart Journal, entitled, "Long-term clinical outcome after intracoronary application of bone marrow-derived mononuclear cells for acute myocardial infarction: migratory capacity of administered cells determines event-free survival." The analysis showed the long-term clinical outcome following intracoronary application of bone marrow-derived mononuclear cells (like AMR-001) for acute myocardial infarction (same indication being tested by NeoStem).
Basically, Dr. Zeiher performed a study using all of the cells in the bone marrow, many of which are inactive, in an attempt to gauge the overall effect and outcome of specific cells in connection to preserving heart muscle function. And what the 204-patient trial showed is truly remarkable in favor of NeoStem.
Before I explain, you should know that Dr. Zeiher has done a number of studies on patients with heart attacks or forms of heart failure, and has been able to show significant clinical benefit with such studies. But now, Dr. Zeiher and his team have gone back, looked through the data, and have reported findings that validate NeoStem's core technology, which is the mobility and effect of CD34 cells in injured heart tissue. Dr. Zeiher shows the ability of these cells to detect and react to the gradient, which then ultimately correlates with long-term clinical outcome, meaning reduced mortality, hospitalization, and subsequent heart attacks.
Essentially, NeoStem's technology is to enhance the function of these particular cells, and Dr. Zeiher has now proved that a higher function of these cells is associated with a long-term clinical benefit. This serves as strong outside validation of NeoStem's technology, and just months before the biggest data announcement of the company's history.
Now, going back to my prior statements regarding researchers (such as Zeiher and NeoStem) seeking a solution to the dying of healthy heart cells following an AMI, NeoStem had already published data indicating that cells that are mobile in an SDF-1 gradient exhibited a dose-dependent increase in blood flow and decrease in infarct size. SDF-1 is a protein released into the blood stream from a dying cell that calls upon the bone marrow for healthy regenerative cells. In doing so, healthy cells are prevented from dying, which in turn, preserves the heart muscle function - the primary goal of NeoStem's study.
With that said, NeoStem showed that if you administer these SDF-1 mobile cells in a sufficient dose, then the heart muscle is preserved. However, Zeiher and his team went one step further - he had a much larger trial and has had longer term follow up - and he showed that not only do these cells preserve heart muscle function, but that this improvement in heart function also translates into fewer clinical events, meaning fewer deaths, heart attacks, and cases of heart failure.
Investors should realize that Dr. Zeiher's trial was unbiased, simply wanting to identify any reaction to bone marrow cells as a whole in a damaged heart. NeoStem uses specific cells; but to conclude, it was those specific cells that showed a distinct ability to migrate to the site of injury, induce blood vessel growth, and preserve overall function in Zeiher's trial, which in turn, prevents adverse events. Albeit, these findings should translate to a favorable outcome in NeoStem's Phase II trial.
Usually, Trial Comparisons Don't Add Up
Oddly, this very large study, using a method and with an outcome that can be linked directly to AMR-001, is yet to be discussed by NeoStem investors. Given these results, the uncertainty surrounding AMR-001 should begin to diminish. Yet still, despite this proof there are doubters, which implies to me that there are still many who do not understand the science, or are just wary of cell therapy as a whole, perhaps attaching a stigma to it.
In January, one blogger noted a Swiss study in his article to predict an AMR-001 trial failure. This reference alone further proves my point: people are not able to identify the difference between such studies. And while many of these other trials look similar to the naked eye, there are countless degrees of separation, making them nearly meaningless in regard to AMR-001.
The Swiss study alone was based on a very premature four-month follow-up; Zeiher's study was much larger, with all patients followed out to five years minimum, making the data much more reliable and meaningful.
The TIME trial, which is another that bears reference, did use active cells in the study, it used only three million. This is important because NeoStem established a lower threshold dose at 10 million cells, which explains why the TIME study was not statistically significant. Furthermore, there were other elements such as product administration that were also inconsistent with the process being used in NeoStem's trial. Then, if we look at the Caduceus trial, a favorite by NeoStem shorts, you'd see that the cells used weren't even derived from the bone marrow, nor were they administered similarly, nor was the dose the same. Essentially, comparing Caduceus to AMR-001 trials is to imply that Tylenol and Pepto-Bismol are used for the same conditions. It just doesn't make sense, nor do most of the trial comparisons used with AMR-001.
In cell therapy, there is a fundamental assumption that one study is a reflection of another, regardless of how different the two trials may be. This is evident with AMR-001, as investors have been willing to entertain the bear opinions and shorts have provided multiple comparisons of trials that have no direct correlation with AMR-001, whether it be due to cells used, treatment method, endpoints, potency, etc. However, if investors interested in AMR-001 are going to compare any trial, then Dr. Zeiher's study is without a doubt the closest match and best indication of AMR-001's clinical outcome. Zeiher's study was large, used cells derived from the bone marrow, and was dosed at a similar time frame. In looking at the entire picture of cells derived from the bone marrow, it was those being used by NeoStem that had the greatest effect on the preservation of the heart's function.
With that said, patients with massive heart attacks who don't die initially will still be at increased risk of disability and death as the healthy heart muscle surrounding the heart attack deteriorates. What NeoStem has proven is that with an adequate dose of cells that are mobile in an SDF-1 gradient, you can improve blood flow and preserve heart muscle function. Dr. Zeiher finishes the story -- not only do you preserve the function, but you prevent bad events from happening over a longer period of time. When you put it all together, it equals an FDA-approvable drug if it's proven in trials. For NeoStem investors, this fact, combined with the consistencies of its trial and Zeiher's study is about as good an outlook into the future as can be, especially with data upcoming in the next four to five months.
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.