Baxter And Neostem Validating Each Other's Cell Therapies

by: The Swiss Trader

Cell Therapies Earning Support & Producing Results

The process of using one's own adult autologous stem cells for self-restoration purposes is becoming a hot topic in biotechnology. Over the last couple of years, there have been multiple studies portrayed in journals about the potential benefits of using these cells to treat unmet medical conditions that cannot be treated with standard medications and/or therapy. It is potentially a multi-billion dollar industry that marketing approval regulators are now starting to accept as indicated by the recent approval of Osiris Therapeutics' (NASDAQ:OSIR) lead candidate in Canada. We are now starting to see more companies begin trials to test the efficiency of cell therapies to capitalize on this promising and underserved space.

Earlier this year, Baxter (NYSE:BAX) announced that it had initiated a Phase III pivotal clinical trial to evaluate the efficiency and safety of adult autologous CD34+ stem cells to increase capacity and function in patients with chronic myocardial ischemia (NYSE:CMI). The use of the CD34+ stem cell is being tested in various therapies involving the heart and is showing promising results in early studies. Baxter, which is the most high profile company to enter the cell therapy space, is hoping that, by using CD34+ stem cells, it can increase exercise capacity in patients with CMI through repair and the restoration of cells.

According to Baxter's press release, chronic myocardial ischemia is one of the most severe forms of coronary artery disease, causing significant long-term damage to the heart muscle and disability to the patient. It is often diagnosed based on symptoms of severe, refractory angina, which is severe chest discomfort that does not respond to conventional medical management or surgical interventions. As a result, the use of cell therapy, and more specifically CD34+ cells, is often a last resort to treat the condition when all else has failed, so a large unmet need exists.

The exciting fact surrounding cell therapies is that most treat conditions in which a significant unmet need exists. There have been multiple studies that show CD34+ cells can both restore and repair heart muscles and increase blood flow. Baxter's Phase II study proved that CD34+ stem cell injections can effectively improve exercise capacity and reduce reports of angina episodes. According to Dr. Douglas Losordo, the vice president of new therapeutic development at Baxter, it is "the first time these endpoints have been achieved in a population of patients who have exhausted conventional treatments". This statement from one of the leading researchers in the space validates the efficiency of the treatment and opens the possibility of new doors.

Baxter investors should feel particularly confident about the company's ventures in cell therapies over the next few years. Dr. Losordo is one of the leading experts in the field with in- depth knowledge and expertise. Losordo and a team of scientific experts in cell therapy performed a study portrayed in the August edition of the journal Circulation Research that investigated the mechanism of CD34+ stem cell-induced proangiogenic paracrine effects. The study concluded with data that demonstrated human CD34+ cells secrete exosomes that have independent angiogenic activity. These exosomes compose a large amount of the paracrine effect of progenitor cell transplantation for therapeutic angiogenesis.

One of the primary purposes of this study was to determine whether or not exosomes play a role in the process of new blood vessel growth. Exosomes are involved in the communication of cells, which could provide insight into CD34+ cells' ability to repair and grow cells. The study provided evidence that exosomes are secreted by CD34+ cells and can indeed produce new blood vessel growth. As a result, companies such as Baxter that are using this therapy for regenerative purposes have a jump start on the biotechnology industry with a therapy that has endless potential.

Another reason I am optimistic for the future approval of Baxter's cell therapy and the use of CD34+ stem cells is because of a small stem cell company, NeoStem (NBS) and the company's decision to focus its clinical development on a similar therapy that almost mirrors that of Baxter. On the surface, NeoStem looks to be just a small company that couldn't possibly indicate the future of the therapy. A more in depth look reveals that this undervalued company returns over $70 million in annual revenue, is perhaps the leader in the manufacturing of cell therapies including Baxter's cell therapy, has the most experienced staff in the space, and is developing its own CD34+ cell therapy for the treatment of acute myocardial infarction (which also relates to the heart).

NeoStem is leading the field in the manufacturing of cell therapies, which include those of Baxter and even Dendreon's (NASDAQ:DNDN) Provenge while in clinical testing. The company has seen every cell therapy under the sun and has the best, and most experienced, team of professionals who understand cell therapy and the advancements within the space. Therefore, I find its decision to develop a cell therapy, AMR-001, which restores tissue and improves heart function following a heart attack, to be quite enlightening for the future of cell therapy and Baxter's therapy. I also believe it provides validation to the multiple research publications that identify the benefits of CD34+ cells and the possibilities of treatments using the CD34+ cells.

NeoStem's AMR-001 and Baxter's cell therapy are very similar by nature. NeoStem's therapy is a Phase II candidate with encouraging early data that is being developed for the treatment of patients following acute myocardial infarction to prevent progressive cardiac tissue damage. Both candidates repair and restore tissue to treat different diseases of the heart. One difference is that AMR-001 uses CD34+CXCR4 cells, which are better for their particular purpose because the combination is believed to perform more efficiently and reduce post-AMI tissue damage, while Baxter's goal is to treat patients with ischemic diseases. The Phase I trial was positive with key measures of cardiac function, ejection fraction, safety, and further validates the findings of recent publications regarding the effectiveness and benefits of CD34+ cell therapies. Much like Baxter's therapy, NeoStem's will treat an unmet need, with one analyst projecting sales of over $700 million.

Some have expressed concern that regulators will never accept the benefits of cell therapy and that the chances of one being approved are slim-to-none, but if people understood the developments that are occurring throughout the globe, then more would be optimistic. Last month, Osiris' Prochymal was presented as the world's first stem cell approval for the treatment of Graft-vs-host-disease in children, a very deadly disease. However, there are other cell therapies such as Apligraf and Hearticellgram, a cell therapy that has received a Korean FDA approval. In fact, the latest developments in foreign countries such as Japan and China, along with domestically in the U.S. and in Canada, speak volumes to how quickly local governments are adopting cell therapies as a potential treatment options. Japan, which ranks in the top 10 in stem cell and regenerative treatment techniques, announced that it will invest 33 billion won (roughly $26 million USD) into stem cell research, approximately 4x last year's budgeted amount.

If you consider the latest support of government and the advances within the space, it appears as though cell therapies could become somewhat of a bubble in the biotechnology space in the next five years. The use of CD34+ cells is one of the more promising areas in the space, which is being led by the name power of Baxter and the industry-leading research of NeoStem. So far, all clinical testing has been positive, and scientific research suggests the therapy is efficient in the restoration and repair of new cells in very difficult to treat diseases. To conclude, I think the space is worth watching for all biotech investors who prefer to be one step ahead of the market to capitalize on its huge potential.

Disclosure: I am long NBS.