Stem Cell Therapy Gaining Ground And Investor Attention

by: A. John Hodge

Stem Cell Therapy Gaining Ground

In the U.S., the approval process for a drug, therapy, or medical device is a tedious, sluggish and drawn-out process. The FDA is often criticized for its lack of urgency when reviewing innovative therapies, in particular cancer drugs-- and then the FDA is even more criticized when it denies the approval of these drugs for reasons such as the trial not being "flawlessly executed." In 2011, an article in the Wall Street Journal described the FDA as "an agency that cares more about its regulatory prerogatives than about the thousands of patients who might benefit and will die waiting (for new drugs)." Although this might sound somewhat harsh, some could argue that there is some measurable truth to this opinion.

For a small biotechnology company, the regulatory path is a costly, risky, and time-consuming venture. It is even more so for innovative or breakthrough treatments that may differ from what's considered traditional in terms of technology or drug delivery. In some ways, the FDA process is needed, as all measures must be taken to ensure safety for the patients who suffer from life-threatening diseases. However, with so many suffering from these diseases or injuries, and many without viable treatment options, I can assume that many patients would be more than willing to risk a new, unproven treatment regimen than to simply be treated for the complication's symptoms and still allow the disease or injury to "run its course".

Finally, a U.S. Company Stem Cell Therapy Approval

Currently, there are numerous cell therapies in development with promising results that look to treat conditions with large unmet needs that traditional medicine or surgery cannot treat. Additional good news for patients is that cell therapies have been widely discussed and buzz is growing. There is a lot of interest surrounding the space, especially after Canada's May 18th approval of Osiris Therapeutics' (NASDAQ:OSIR) Prochymal for the treatment of graft-vs. -host in children, only the second worldwide approval for a stem cell therapy. It's hard to say when more approvals will occur in the future. However, at this moment, cell therapies have the growing support of patients and healthcare providers who were previously without options for many indications. The support surrounding the therapy continues to grow, therefore, forcing the FDA to acknowledge its potential.

Aastrom's Emerging Orthodontic Contribution

Last week, Aastrom Biosciences (ASTM) made headlines due to its 24-patient trial and its collaboration with the University Of Michigan School Of Dentistry. The small biotechnology company was testing a cell therapy on patients who needed jawbone reconstruction following a tooth extraction. The patients were treated with tissue repair cells or a guided bone regeneration therapy, with the idea being that a patient will respond better to his/her own cells being used to regenerate tissue. After 6 and 12 weeks, the patients who received tissue repair cells had greater bone density and did not require as much bone grafting. Aastrom's technology was utilized by processing the cells taken from the bone marrow in the patients' hips, then planting them throughout the mouth and jaw. This therapy could possibly provide orthopedic surgeons with an easier method of treatment, and allows patients to avoid reconstructive surgery that may or may not be effective. Although at least five years away from being used in practice, it is yet one more space that stem cell therapies are proving to be effective.

American Athletes Bring Stem Cell Treatment into the Spotlight

The most controversial stem cell therapy, though the therapy that is also gaining the most wide-spread use, is in sports. Just recently, Oakland Raiders LB Aaron Curry had told that he has been receiving stem-cell treatments on both his knees extracted from bone marrow from his hip. He went on to state that the therapy was the only thing that has been able to help him. He's not the only player in the NFL reaping the benefits of cell therapies. In fact, he's not the only person on his team, as former first round pick Rolando McClain has also used stem cell therapies for injuries related to his knees and legs-an increasingly prevalent procedure among athletes in all three major American sports. Unfortunately, these athletes are often forced to seek treatment in other countries. The stem cell therapy's acceptance from professional athletes could very well create a sense of urgency, or at least put pressure on regulators, to approve cell therapies in the U.S. When Americans are treated with cell therapies in other countries, it means potential revenue to the American healthcare sector is being lost. If the use of stem cell therapies continues to grow in sports and is adopted among the general public as a way to treat disorders with unmet needs, then it could lead to a large number of approvals in the near future by helping to put pressure on regulators to look at even more effective cell therapies with large revenue potential for the budding stem cell sector.

Two Investment-Quality Companies with Novel Cardiovascular Disease Treatment Therapies

The process of using stem cell therapies for regenerative purposes is still an emerging technology. Although cell therapies in sports and in dentistry may help to push regulators to approvals (and may educate the general public on the benefits of cell therapy), the most successful and most advanced cell therapy is still for cardiovascular disorders. At this time, there are two companies leading the charge in the cardiovascular space for cell therapies, and I expect that both will ultimately earn approvals: Baxter International (NYSE:BAX) and NeoStem, Inc. (NBS). Both of the companies' candidates are strikingly similar. However, the technologies and indications differ somewhat. Baxter's CD34+ stem cell candidate treats patients who currently have chronic heart conditions, while NeoStem's AMR-001 treats patients following a heart attack.

In Baxter's Phase 2 trial, its stem cell therapy achieved success in increasing exercise capacity while reducing angina in patients with chronic heart conditions. The reason this was so significant is because it was the first time that these endpoints had been reached, by any treatment. This provided more clinical evidence that stem cell therapies can treat diseases with unmet needs that have no other treatment alternatives. The company is now evaluating the cell therapy in a 450-patient trial. Ironically, NeoStem's PCT division is the company that is manufacturing the cells for Baxter's cell therapy.

NeoStem is currently enrolling its own trial, a 160-patient Phase 2 PRESERVE study, as it will attempt to address yet another large unmet medical need and improve perfusion, preserve cardiac function, and improve clinical outcomes. The targeted market for AMR-001 is quite large, with over 160,000 patients annually in the U.S. alone. If proven effective, it and Baxter shall force regulators to acknowledge the benefits of cell therapy, and return massive gains to shareholders. The interim study results are expected in the second-half of 2013, and if effective, AMR-001 will enter a market that some estimate could be worth over $700 million in annual sales.

The interesting aspect to NeoStem is that it has two ways to grow with the advancements of the space: It has its own promising cell therapy and it is the leader in manufacturing of cell therapies, with over 65,000 square ft. of manufacturing capacity and has manufactured over 30,000 cell therapy products. Baxter is just one of NeoStem's many clients, and Baxter's cell therapy just so happens to be very similar to NeoStem's AMR-001. These two cell therapies are each making huge strides in advancing the space, with regenerative benefits for the heart, but for different conditions, and with huge upside potential.

The Future

Common sense dictates that, if clinical data is significant enough, regulators will have no choice but to approve cell therapies for the treatment of diseases with large unmet needs. Most are unaware of the lawsuit between the FDA and Regenerative Sciences, which was to determine whether or not autologous stem cells are drugs. This litigation has been ugly at times, and has been in the works for the last four years. Last month the U.S. federal court finally ruled and gave the FDA explicit power to regulate stem cells as drugs. This could be the start of a new era for the approval of stem cell therapies whether for cardiovascular conditions, athletic injuries (or for Texas governor Rick Perry who was injected with stem cells following back surgery), or in dental procedures. The possibilities are seemingly endless. With stem cell therapies staying in the news and making progress beyond the laboratories, I don't think it will be long until we see wide-spread adoption of cell therapies, and patients will have a fighting chance with diseases and injuries that currently have no viable treatment options.

Disclosure: I am long NBS, BAX.