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The stem cell sector has been showing signs of life for quite some time now with the technology taking small steps at improvement via some proven efficacy and improving safety profiles. The sector has been fighting everything from embryonic stem cell controversy to the logistical concerns of consistently growing stem cells and then inducing them to differentiate into the proper cell types on demand. These "baby steps" have helped the sector walk toward its first U.S.-company approval in the form of the May 17th Osiris Therapeutics Canadian approval for the treatment of acute graft-vs-host disease (GvHD) in children. GvHD is a complication of children having bone marrow transplants and leads to mortality in up to 80% of those diagnosed. The approval is only the second such for the sector, following on the heels of the 2011 Korean approval for the country's FCB-Pharmacill's Hearticellgram-AMI treatment for heart attack victims. Breaking this regulatory barrier is the likely highlight for the stem cell sector in 1H 2012. However, there are several other stem cell therapy companies with significant events occurring in the first part of 2012 that should garner investor interests. These events give an indication as to where these companies stand relative to the rest of the sector and may help define stem cell therapy treatment in the coming months and years.

Osiris Therapeutics (NASDAQ:OSIR) obviously tops the list for 1H 2012 accomplishments with its May 17th approval for Prochymal® for GvHD. The approval is generally accepted as a significant accomplishment as it is only the 2nd stem cell therapy to successfully navigate the regulatory path. However, Prochymal®'s approval has met recent criticism as many refer back to the January 26, 2012 Canadian Expert Advisory Panel in which the panel noted that the efficacy was not definitive but rather suggested by the trial data. Apparently, some members of the advisory panel had first-hand experience in seeing dramatic improvement in some children due to the Prochymal® treatment regimen. These observations and the panel's determination that the treatment was safe and "most probably effective" won the "thumbs up" from the committee. Although approved for marketing, the Health Canada's market authorization does require Osiris to further evaluate Prochymal® in a case matched confirmatory trial in which all patients would be encouraged to participate in a data collection pool to monitor the therapy's long term effects. The company received additional good news on June 14th with Prochymal®'s second approval for GvHD treatment, this time in New Zealand.

Osiris announced its 2Q 2012 financials and company update on July 30th. At the end of the quarter, the company had no debt and $40 million in cash, a good financial condition relative to most of the stem cell companies. The company's growing Biosurgery product line had a revenue increase of 43% relative to 1Q 2012, growing to $1.63 million. With the global incidence of GVHD ranging from 26% to 34% in recipients of full matched sibling donor grafts, to 42% to 52% in recipients of matched unrelated donor grafts, the GvHD indication is an unmet need with each marketing approval adding to Prochymal®'s potential revenue generation. Although the therapy's approval is currently only for New Zealand and Canada, it is available in seven other countries, including the U.S., under the Expanded Access Program. This allows the treatment to be used within those countries for individuals who do not have approved treatment options and are not eligible for clinical trials for their life-threatening disease. This gives the novel therapy a "foot in the door" with additional revenue and clinical data support while not actually performing a clinical in that country yet.

Aastrom Biosciences (NASDAQ:ASTM) had an eventful 1H 2012 highlighted by the initiation of its phase 3 REVIVE-CLI trial of ixymyelocel-T for the treatment of patients with critical limb ischemia (CLI). The primary end-point will be amputation-free survival at 12 months with an additional 6 month follow-up to evaluate safety. Per that time frame, interim and final data could come within a couple of years depending on enrollment rate. The FDA has assigned the trial a Special Protocol Assessment (SPA) as well as a Fast Track designation to guide the company through the regulatory process with clear-cut guidelines and an expedited regulatory process, respectively. The phase 3 trial follows a successful phase 2 trial with final data presented on April 5th involving 48 patients, half of which received ixymyelocel-T and the other half a placebo. The safety profile was similar for both patient sets. As for efficacy, the treatment group had a 62% reduction in risk relative to the placebo for first treatment failure occurrence with a (p=.0032) indicating strong efficacy correlation for the treatment group. Additional post hoc analyses of a subgroup of 45 patients with wounds at baseline yielded a 77% risk reduction in time to first occurrence of treatment failure (p=0.0002). There was also a positive correlation in the phase 3 endpoint of amputation-free survival (61% risk reduction, p=0.0915). However, the company needs to have a better correlation for this particular endpoint in its now-underway phase 3 trial for a successful regulatory path moving forward.

Aastrom will have a conference call on August 7th for 2Q highlights and financials. The company ended 1Q with $36.7 million in cash and cash equivalents after a $40 million financing with favorable terms and no warrants issued. With the phase 3 trial now well underway, 2Q results will give a strong indication of the company's current cash burn rate. The late-stage trial initiated in late February, so the 1Q cash burn of about $9.5 million may mean a 2Q burn rate of $10-$14 million due to the additional time for expenditures because of this trial (assuming other 1Q expenses were fixed and still in place). If this is the case, the company's cash position may begin to wane yet again in late 2012 emphasizing the need for a partnership or additional funding in the coming months.

NeoStem, Inc. (NASDAQ:NBS) has had a tumultuous year for traders with the company's stock hitting its year-to-date low of $0.30 on April 10th after its March 30th announcement of a $6 million offering, and it is now trading near its 2012 high of $0.80. As indicated by the share price extremes, the offering frustrated investors enough to cause a shareholder exodus, but recent events have improved the company's financial condition resulting in the almost-daily new highs for 2012 recently. NeoStem announced on June 18th that it was selling its 51% interest in its generic Chinese pharmaceutical company, Suzhou Erye Pharmaceutical, for $12.3 million in cash and a cancellation of 1.2 million options and 640 thousand warrants. Not only did this give the company's financials a shot in the arm, but it also streamlined the company to better enable it to focus on its two remaining divisions, Amorcyte and Progenitor Cell Therapy (PCT). Each of these two divisions had productive 1H activities and will be co-drivers for the company's increasing growth in the coming months.

NeoStem's Amorcyte division has the company's lead product in the form of AMR-001, an autologous (derived from the patient's own cells) bone marrow derived cell therapy enriched for CD34+ cells. The company initiated enrollment on January 25th of this year for a phase 2 trial, termed the PreSERVE trial, for acute myocardial infarction. The trial is a double-blind, placebo-controlled trial that evaluates AMR-001 administered 5-11 days after stent placement in patients diagnosed with an ST segment elevation myocardial infarction (STEMI). This is a condition in which blood flow restriction or total blockage result in heart muscle tissue dying. The targeted patient set is about 160,000 Americans annually and represents a large market set and area of need. The trial will enroll 160 patients over the next year with interim data being reported 6 months after enrollment completion, giving a likely 3Q or 4Q 2013 interim data date. The PCT division is the cell therapy manufacturing division that not only produces cells for NeoStem's Amorcyte division but also a host of other companies that have contracted the company's resources including Baxter, Johnson & Johnson, Hospira and even Dendreon during its phase 3 trial for Provenge (the author suggests that Dendreon should have retained PCT's services through the manufacturing period until Dendreon more closely analyzed Provenge's actual revenue generation which may have saved them some of the financial issues they re now dealing with). So far in 2012, PCT has added to its client base with Islet Sciences being added on January 12th for a diabetes therapy and SOTIO, LLC on July 16th for its phase 3 trial utilizing an autologous dendritic cell vaccine for prostate cancer (trial set to initiate in early 2013 pending FDA clearance).

As of the publish date of this article, NeoStem hasn't yet announced a 2Q financials or company conference call date. At the end of 1Q, the company, including its soon-to-be-divested Erye division, had $21.8 million in cash and cash equivalents. The actual closing of the Erye sale is set to occur in 4Q 2012, so that money is not "in the bank" yet but likely on the way. That money and the $6 million from the March offering help to stabilize the company's finances which should be in much better condition with additional customers added to its revenue-generating PCT division in 2012. The company also recently received a 2-year grant totaling just under $600,000 from the National Institute of Allergy and Infectious Diseases (NIAID) for evaluating NeoStem's VSEL stem cells to shore up the immune system for patients exposed to radiation due to a nuclear accident or terrorist event. The company's total revenue was $22.1 million in 1Q 2012 versus $19.6 million in the same period in 2011. Its net loss for the quarter was $9.2 million versus $9.7 for 1Q 2011. NeoStem's financials seem stable but obviously need to improve. It would be interesting to see the company's three current divisions' contributions to both the revenue stream and debt to better ascertain the long-term ramifications of the Suzhou Erye sale. Perhaps the company could more fully address this in the coming months as the sale's completion nears.

StemCells, Inc (NASDAQ:STEM) was fairly quiet in 1H 2012 but deserves to be included as it had an exciting June/July period. This propels it into the list despite being a month late with significant news. The company initiated a phase 1/2 trial in June for dry AMD, the leading cause of blindness in people over 55 years of age with 30 million patients being affected worldwide. StemCells' announced preclinical trial data on July 17th suggesting possible efficacy in patients with Alzheimer's, another large market indication with over 18 million currently affected globally. The company's HuCNS-SC cells were transplanted into two animal models' hippocampi with brain neural profiles relevant to Alzheimer's. Researchers observed increased synaptic density and memory function in the models with no reduction of beta-amyloid or tau protein, the hallmarks of the disease which are believed to cause the pathology of the disease. This is significant with Pfizer recently announcing failure in its phase 3 trial of Bapineuzumab, which targets beta-amyloid, for Alzheimer's. It appears more and more that the mere removal of this plaque, though thought to be the cause of the neural damage in Alzheimer's, does not cure the disease but hopefully will at least stop its progression. With that in mind, approaches of either plaque removal or therapies stopping the buildup of the plaque may be supplemented with a stem cell approach, like HuCNS-SC, to stop/decrease the plaque buildup and then repair the neural damage already taken place. Yes, this is a very early stage clinical, but it is significant by targeting the 6th leading cause of death in Americans. With the two huge markets targeted for dry AMD and Alzheimer's and a recent grant of $20 million to be used to evaluate HuCNS-SC in spinal cervical cord damage from CIRM, StemCells is having a very promising year and is contributing greatly to the stem cell sector.

StemCells announced its Q2 results and highlights on August 2nd. The company had $18.2 million in cash and cash equivalents with operating expenses down 24% and revenue from SC Proven® product sales up 14% relative to the same period in 2011. With an anticipated 2012 cash burn rate of $18-$20 million, the CIRM grant helps to provide much-needed income (although they receive the grant as part of a collaboration, so the true amount they receive hasn't yet been noted).

Like StemCells, Pluristem Therapeutics (NASDAQ:PSTI) just missed 1H with trade volume and share price increasing in July due to anticipation of its upcoming phase 2 trial for Peripheral Arterial Disease (PAD). Affecting 10 million Americans with projections of 23 million by 2014, PAD is a vascular disease causing circulatory issues in the legs resulting in pain in the early stages of the disease with blood flow restrictions progressing and causing CLI, dying arterial tissue, in latter stages resulting in gangrene and ulcers often requiring amputation. Current treatments either thin the blood or increase circulation but don't address the root causes of the disease. A recent press release by analyst Sharon Stefano mentioned several blockbuster or near blockbuster drugs currently utilized to treat the symptoms of the disease including Bristol-Myers Squibb's and Sanofi's Plavix®, Teva Pharmaceuticals' Pletal®, AstraZeneca's Atacand®, Bristol-Myers' Avapro® and Merck's Cozaar®/Hyzaar®. Each or any of these could potentially be replaced by or supplemented with Pluristem's PLX (Placental eXpanded) cells. Pluristem received FDA permission to initiate a phase 2 trial to treat Intermittent Claudication (IC), a subset of PAD, on April 17th. A July 18th update announced that the company has partnered with CPC Clinical Research to use its resources to leverage its clinical study expertise, including patient enrollment, study monitoring, pharmacovigilance, site audits, QA, statistical analyses, data management/control and medical writing. The news, along with the press release from the analyst, has spurred a flurry of buying with a share price increase from July 16th's $2.41 to the closing price on Friday, August 3rd of $3.31.

The company hasn't yet announced Q2 earnings or a corporate update but ended 1Q with $43 million in cash and deposits. It has been receiving grants from the Israeli government for 6 consecutive years, greatly shoring up the company's financials with its most recent receipt of $3.1 million on April 30th to cover expenses through the remainder of 2012. An interesting arrangement, Pluristem will be required to pay the Office of the Chief Scientist (OCS) royalties from 3%-5% of sales and services derived from the company's technology until 100% of all grants are paid back, plus interest. If no such sales or services occur, no payment would be required.

Although making many promises in its early days of research, the stem cell sector had been unable to live up to many of those promises until the last 2-3 years. Three regulatory approvals (two for Osiris with Canada and then New Zealand) have helped to validate the technology with much more hope potentially on the way as seen in the aforementioned companies. Each of these has had an impressive 2012 so far with more ahead in the immediate future. Potential investors should review the companies' websites for financials, pipeline progression, market potential targeted and recent developments to ascertain which of these, if any, are good fits into their portfolios. Additionally contributing to their futures, NeoStem and Aastrom have their own cell manufacturing facilities in addition to the clinicals with NeoStem's greatly contributing to the company's financial condition. This gives them diversification not seen in most companies in the sector. Pluristem does have a manufacturing facility under construction in Haifa, Israel, with plans to complete it sometime in 2013. StemCells does offer some diversification of its own with its own SC Proven® product line, which generated $249,000 in Q2.

The stem cell sector has grown and matured and should continue to do such, benefiting shareholders and the healthcare sector badly in need of a means to cure and prevent disease by novel cell regeneration technologies. This is a critical time for stem cell technology with some approvals in place and late-stage data due in the coming months that will further validate, or again bring into question, the legitimacy of the technology and the entire sector.

Source: Stem Cell Sector Validating Itself With Exciting First Half 2012