Osiris Therapeutics (OSIR) has rallied 80% over the last month after receiving the first approved cell therapy product. Actually, it is not the first cell therapy in use however, but is being marketed as such by investors and even writers due to the level of unfamiliarity surrounding the cell therapy space. The company's stem-cell therapy, Prochymal, for the treatment of acute graft-vs-host disease, has now been approved in both Canada and New Zealand, which is encouraging for the company considering the initial problems that it encountered with the drug. The company may still be far from reaching an FDA approval, as the U.S. has been slow to adopt the benefits of cell therapy, however I don't think it will be long before companies in the cell therapy space force the U.S. to acknowledge the benefits and we see the first FDA approved cell therapy.
Despite the fact that the U.S. does not yet have an FDA approved cell therapy doesn't mean that there are not benefits to the treatment, nor does it mean that we won't soon see an approved therapy. The use of regeneration has been around for many years, and the results from cell therapy trials have indicated a clear benefit that could address a large unmet need for patients. Cell therapies have made several moves in the right direction, and I believe that patients suffering from complex diseases will have access to effective methods of treatment in the near future.
Prochymal now joins Pharmicell's Hearticellgram as approved cell therapies, although there is a significant pipeline of candidates in early and late stage trials. Over the years, the regenerative ability of cell therapies has shown exceptional success at treating diseases of the heart, which is the area of treatment that I believe will succeed in obtaining the first FDA approval. The reason being is the early success we've seen in the treatment of cardiovascular disorders, more specifically, those treatments that are autologous and bone marrow derived.
Baxter (BAX) is one of the major players in the space, with a Phase 3 cell therapy that is being tested for patients with refractory angina and chronic myocardial ischemia, and is expected to enroll over 400 patients. The goal is to increase exercise capacity and reduce the reports of angina episodes in patients with chronic heart conditions that have exhausted all other options. In the Phase 2 study, Baxter's cell therapy reached both goals (increasing exercise capacity and reducing angina episodes), making it the first time that these particular endpoints had been met, therefore showing a clear advantage in treating diseases that have been treated unsuccessfully in the past.
NeoStem's (NBS) Phase 2 candidate is often compared with Baxter's cell therapy, as an autologous, bone marrow-derived therapy that also treats conditions of the heart. However, the two differ because Baxter treats patients with chronic heart conditions, meanwhile NeoStem's therapy, AMR-001, treats patients immediately following a heart attack for the prevention of downstream adverse events after acute myocardial infarction. Both companies are achieving success by utilizing CD34+ cells for regenerative purposes of the heart. Thus, both candidates are similar in nature, but with a different treatment approach.
A lot of people don't realize that NeoStem is the leader in the cell therapy space. The company's $65 million market cap is misleading, seeing as how the company recorded nearly $80 million over the last year, which is in line with Nektar Therapeutics (NKTR), a $1 billion company. The company has its clinical segment, which is developing AMR-001, but also a manufacturing business which has manufactured every cell therapy product, more than 30,000, including Baxter's cell therapy. NeoStem has manufactured cells for a multitude of companies, such as Dendreon (DNDN), and therefore has a good grasp on the benefits and upside potential of various cell therapies, as it knows which are most effective. Therefore, Neostem, along with Baxter's, decision to focus on regenerative issues of the heart should be encouraging to investors, as years of research, results, and experience all played a role in the decision to focus on this particular area (cardiovascular) of cell therapy.
Osiris' Prochymal may be marketed as the first approved cell therapy, but I don't believe it will be the last. At this moment, the potential market for cell therapies is massive, as there are numerous diseases and conditions that cannot be treated with conventional medicine or surgery. One analyst in particular valued NeoStem's lead candidate, AMR-001, with revenue over $700 million. Of course, additional testing is needed, but there is significant research to suggest that using cell therapies, in particular for cardiovascular disorders, are beneficial and present significant upside. Furthermore, I think in the next year we will see a push for cell therapies in the U.S., as Baxter's product continues to impress, putting pressure on the U.S. to approve and allow such a therapy to treat patients in a very large cardiovascular market.
Disclosure: I am long NBS.
Additional disclosure: The material in this article is for informational purposes only and should not be used to make any particular investment decisions.