Having been somewhat non-committal regarding stem cell research in the past, big pharma's gradual investment in stem cell based biotechnologies indicates a significant, although slow paced, shift in attitude. Many apprehensions for these investments were due to an abundance of unproven clinical trial data and the ethical implications associated with this type of research.
With more clinical trials advancing past phase I and II with positive results and a clear view of the financial and health benefits, big pharma is now showing more of an interest in these biotech firms. Some companies using this shift in attitude to their advantage are Athersys (ATHX) with Pfizer (PFE) and Mesoblast (MBLTY.PK) with Cephalon.
On December 21, 2009, Athersys entered into a global agreement with Pfizer to develop and market its stem cell therapy MultiStem which is used to treat Inflammatory Bowl Disease. Athersys' proprietary MultiStem therapy is currently undergoing clinical trials for several other conditions, including the treatment of cardiovascular disease in Phase I and neurological problems which are in Phase II trials. Athersys displays an open door policy with outside collaboration, stating that one of its business strategies is to
partner with other groups, including leading research centers, clinical institutions, and commercial partners to accelerate and enhance our development efforts, and enable us to do things more cost effectively (as opposed to trying to do everything ourselves).
This strategy makes Pfizer a good fit for partnership. With Pfizer's global resources and large cap. (153.39 billion) financial assets, Athersys gained access to a farther reaching platform for its MultiStem therapy. In this agreement, Pfizer offered $6 million in initial research funding with eligibility for up to $105 million for MultiStem reaching a commercial milestone. This announcement caused a notable surge of over 150% increase in ATHX's shares. On the 18th of December 2009, ATHX closed at $1.00 with a volume of 67.15k, compared with the 24th of December after the announcement, closing at $5.52 with a volume of 113.83 million.
On March 14, 2011 ATHX announced its enrollment of patients for Phase II of its MultiStem therapy collaboration with Pfizer with an estimated date of completion around May 2013. Pending results, which many seem optimistic about, successful completion of this Phase II trial could be the milestone that Pfizer and investors are waiting for. Currently, Athersys has a 52 week range of 1.00-3.14 with a market cap of 33.03 million and last traded at 1.39.
Almost a year later, Cephalon (now Teva (NASDAQ: TEVA)) made a deal to acquire a 20 percent stake in the Australian company Mesoblast. Mesoblast is a leading developer of biological products used in regenerative medicine. Currently in phase II trials of its leading cardiovascular treatment product, Revascor has shown positive interim results. The alliance between Mesoblast and Cephalon focuses on commercializing the adult stem cell products used to treat degenerative central nervous system and cardiovascular conditions. Obtaining worldwide rights for specific Mesoblast products, Cephalon fronted $130 million, with another $220 million to follow. Mesoblast's 52 week range is 2.69 to 10.04 with its market cap at 2.23 billion and a 1 year target estimate at 8.00. This deal sparked a nice boost in Mesoblast stock, which has continued an overall incline.
Advanced Cell Technology is a company which could greatly benefit with investments from big pharma. One of ACT's leading stem cell based platforms is its Retinal Pigment Epithelial (RPE) therapy used to treat Stargardt's Macular Dystrophy, a retinal disease that affects one out of every 10,000 children, and age-related macular degeneration (AMD), which affects 25 million people worldwide according to the American Optometric Association. With no currently approved treatments, dry AMD, the most common form of AMD, could represent a $10 billion market by some estimates.
Currently, this therapy is in phase I/II of clinical trials. With this large market potential and pending positive clinical trial results, investment from a deep pocked pharmaceutical company could not only impact ACT’s progress, but hopefully advance the slow moving trend of big pharma’s support. This would be a move that benefits patients, investors, and stem cell based therapies.
Although big pharma's move towards investing in stem cell technologies has been a slow and conservative one, encouraging clinical trial results and the large market for these treatments are keeping big pharmaceutical companies interested. With the impact from these investments, hopefully these treatments and therapies will one day become the standard of care for many of these elusive diseases that our current drugs cannot remedy.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.