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  • The Barbell Approach Builds Powerful Healthcare Stocks: StoneCastle's Bruce Campbell

    Portfolio manager Bruce Campbell wants the best of both worlds in his Canadian healthcare investments. He looks for companies that are strong and balanced, with muscular organic growth on one side and healthy acquisitions on the other. In this interview with The Life Sciences Report, the founder and president of Canada-based StoneCastle Investment Management spotlights six names that have proven themselves with good runs but have potential for much bigger gains.

    The Life Sciences Report: As StoneCastle's portfolio manager, my understanding is that you invest in healthcare companies that can help patients in the near-term, as opposed to those that are years away from monetizing a product. Is that close to your theme?

    Bruce Campbell: Typically, we're looking for companies that have cash flow or earnings presently, or that have catalysts on the horizon that will enhance earnings and cash flows for their businesses. We don't typically invest in biotechs with binary events down the road, and if we do, they are certainly not going to have very big positions in our portfolio. The event might be further out than a quarter, but it's certainly in the immediate future. We do not invest in research-intensive companies doing drug development that won't get to market for a decade.

    TLSR: At StoneCastle, your goals are capital preservation, powerful performance and risk management. In the one-year returns on some of your holdings, I can really see the powerful performance. But I note that you have some very small market-cap companies in your portfolio. How do those themes, particularly capital preservation and risk management, fit with these small- and micro-cap names?

    BC: We look at it a little bit differently than maybe a larger institutional investor might. We have the ability to be pretty nimble because of our size. We invest in smaller companies, and because of that we tend to have better access to management, and we get better, more current updates than we would from a large, multibillion-dollar healthcare company. We feel that really helps us protect our capital because we know what's going on and we can act very quickly. There are not situations where we're handcuffed and can't get out of a position. That's capital preservation.

    Second, looking for near-term catalysts and earnings growth, as opposed to events that are many years down the road, also helps with capital preservation and risk management because we are able to make course corrections very quickly if we see something that we don't like.

    TLSR: Being able to make course corrections in a hurry implies that you invest in shares that are marketable. You have to have adequate trading volume in these names, even though they are small caps. Is that, in part, what you are looking for in a company?

    BC: That's correct. First, we don't invest in any private companies in the healthcare sector. Second, when we do take positions in this sector, we are typically looking for a name we could move out of in one day's trading volume, at minimum, or less.

    TLSR: Before you founded StoneCastle, you worked at major buyside firms in both the U.S. and Canada, where billions of dollars were under management. In that setting, you generally can't buy micro- and small-cap stocks. You clearly had to perform diligence on much larger names in the past. Comparing very large names to very small could be like comparing apples and oranges. What did you take from that type of major fund management experience that applies to this smaller-cap universe?

    BC: With many companies we invest in, I don't think it is necessarily apples and oranges. It's a variety of apples that we're looking at.

    Some of the smaller names have the same characteristics as larger companies. For instance, we look at companies that have revenue, cash flow and earnings. The big difference is the following, or institutional support, that the large-cap names have. In a lot of cases, we're looking at companies with lower multiples just because they are not well followed by analysts and investors. Generally speaking, if you were to look at a company's history, you would be looking for the same types of things. For instance, you'd be looking at how the company compares in growth rate to its peers. One major difference, of course, is that these smaller names have a lot more ability to grow-to double, to triple and more. But you get more volatility with smaller valuations. We've worked that into our process, and we're trying to maintain enough flexibility and freedom if that volatility does show up.

    TLSR: You own medtech, drug development and healthcare delivery companies, the latter being clinical companies that could be described as physician practice management groups. From your point of view, what is the easiest of these three categories to analyze as an investor?

    BC: I would say that healthcare delivery is probably the easiest, because it comes down to the numbers and the growth catalysts going forward. I would say drug development would be the most difficult, because you're trying to handicap the probability of that drug being successful. Then, if the drug moves successfully through the regulatory hurdles, you must also handicap its market share and its pricing in the market, and whether there is a royalty deal with a larger or smaller company.

    TLSR: Let's talk about healthcare delivery for a moment. Some of your Canadian holdings operate in the U.S. Aren't margins poised to shrink in healthcare delivery? Medicare and Medicaid are tightening controls, and private payers are likely to follow that lead in holding down increases in reimbursement. How do you make money in this kind of environment?

    BC: Obviously, that's an important thing to be cognizant of. It is going to be one of the longer-term themes in the space. We look at the potential for shrinking margins from a couple of perspectives. One is that the pie itself is growing. If you can get more pieces of that pie, even though the pieces might be smaller than they were five years ago, the pie itself is growing, and therefore you can keep your business growing. But we think that the trend over the next few years is going to be that margins are going to continue to shrink.

    TLSR: Does a business model in direct healthcare to patients have to include acquisitions?

    BC: We've been very focused on, and very attracted to, companies that have an acquisition strategy. That said, we like to see companies with acquisition strategies that also have some ability to grow organically. What we've found in the industry is that typically a straight acquisition story will be very much in vogue when acquisitions are coming fast and furious. But it becomes a balancing act on how to grow and integrate all of those businesses into a company. The market can start to sour a little if acquisitions don't go so well. When acquisitions start to slow down, the valuation that the market will pay for a company might disappear. That is why we're looking for companies with the ability to grow organically as well. I think there is a lot of opportunity in both of those areas going forward.

    TLSR: Let's continue on the direct patient care theme. Could you mention a name in that category?

    BC: Nobilis Health Corp. (NRTSF) [HLTH:NYSE] is a company we own. It has gone out and acquired ambulatory centers from the physicians who originally started the practices, and has kept those doctors as partners. Nobilis does not own 100% of its facilities in most cases. It has also developed a marketing component to drive more business to the individual centers, and has been very successful with that. It has grown by acquisition, but it is also growing organically with its marketing expertise.

    TLSR: It's hard to train physicians to be employees-especially entrepreneurs who have founded or originated a business. Do you see physician ownership as a major part of the strategy here?

    BC: It is. What Nobilis' experience has shown is that a lot of founders are great physicians, but after their businesses have grown, they discover they are not necessarily great business people. Maybe that's a function of how much time they have to spend working on business versus patient care.

    Typically, when Nobilis buys an ambulatory center, the business hasn't been very strong. It keeps the physicians as partners to incentivize them to stay at that center and not go out to compete against Nobilis. With its management skills, the company is able to manage the facility, and the doctors are able to practice medicine. That's the formula Nobilis has found works best, as opposed to just having physician employees.

    TLSR: Do the centers keep their original names, their original identities?

    BC: They have in some cases, and in others, they've changed the name. In some cases, they've brought the Nobilis name into the original name. What you'll end up seeing over time is that the company will eventually move to a branded Nobilis center once it becomes a recognized brand.

    TLSR: Nobilis is a Canadian company that operates in the U.S. Is there any way to make money delivering healthcare in Canada?

    BC: That is not in Nobilis' business model at this time. I think there is bigger opportunity for the company in the U.S. than there is in Canada. At this point in time, it is not looking too closely at Canada.

    TLSR: You also follow medtech. Give me a name you like in that category.

    BC: One of the companies that's growing from both an acquisition and an organic standpoint is Patient Home Monitoring Corp. (OTCPK:PHMZF) [PHM:TSX.V]. Its name reflects what the company is doing. It has a number of different monitoring systems that allow a patient to be tested for different conditions at home, and that information gets relayed to the patient's doctor automatically.

    This company has been very aggressive in making acquisitions in the last year, but it is also seeing great organic growth because it cross-sells to its customers. For example, Patient Home Monitoring might go out and buy a company that does Coumadin [warfarin] monitoring. It may find that a certain number of the patients it has just acquired also have diabetes, for which monitoring is very necessary and for which it already has a program. The company is able to cross-sell its services and increase its revenue on that basis, by providing more services to existing customers who have more than one disease indication that needs to be monitored.

    The model is to acquire a patient via acquisitions, then to cross-sell a number of other indications that can be monitored from home, and also to acquire small, reasonably priced businesses and then roll them up into one nationwide business.

    TLSR: This company's market cap has more than tripled over the past 12 months. By the way, I could say this about any number of the companies you own. Do you worry about some of these valuations, and about the profit taking that could occur?

    BC: Certainly we do. But in managing the portfolio, we're continually monitoring our position size. In Patient Home Monitoring's case, for example, we originally bought the name when the stock was significantly lower than it is now. We have had to trim our position to keep its portfolio weighting in check. As you implied, that could be said for quite a few of the names in our portfolio. That's typically how we manage things.

    TLSR: Will the smartphone, with specialized apps, enter into Patient Home Monitoring's business model?

    BC: If it could, I think Patient Home Monitoring would really like that functionality, because its larger costs cover the monitoring devices it has to buy. If the company were able to pay a software developer to come up with some type of app that could be on a smartphone, it would significantly reduce its hardware costs.

    TLSR: Let's go to another name.

    BC: Again, we have the acquisition and organic growth theme with Concordia Healthcare Corp. (OTCQX:CHEHF) [CXR:TSX]. Concordia has gone out and acquired drugs that are off patent. It has also acquired companies at attractive valuations. And now Concordia is starting to see organic growth materialize, both from the companies and from some of the drugs as well. It has been able to increase pricing on some products, sustain the numbers of prescriptions being written for these drugs and, at the same time, increase its revenue and cash flow.

    TLSR: Concordia's share price is up five times from 12 months ago, and it is now a mid-cap company with a market valuation of about CA$2.9 billion [CA$2.9B]. What exactly has been the driver here? Was it just adding to its product line?

    BC: I think that's it. Its valuation was significantly cheaper than that of its peers when it came out as an initial public offering a little over a year ago. Now Concordia is making significantly larger acquisitions. At every step, the market has questioned whether the company could accomplish these acquisitions, and so the valuation has come up every time the company has done what it said it would do. At the same time, the market questioned whether Concordia could put some of these price increases through, and it has. The number of prescriptions being written has been pretty stable, even with the price increases. So its cash flow has been stronger.

    TLSR: Did you want to mention another company?

    BC: One company that we're pretty excited about going forward is CRH Medical Corp. (OTCQX:CRMMF) [CRH:TSX]. Again, this is an acquisition story. The company has its own device for hemorrhoid surgery that is a little different from existing treatments. It announced at the end of 2014 that it was acquiring an anesthesiology services group, which performs anesthesia services specifically for gastroenterologists. By having access to so many GI doctors, it will also be able to market its hemorrhoid system, which will drive the organic growth that we've talked about today.

    TLSR: This stock has had a pretty good run-up since mid-October. What was the driver?

    BC: The anesthesiology services acquisition is fairly significant because the cross-selling could be significant. This business is very high margin, but it's also very fragmented. We think there is lots of room, from an acquisition standpoint, to continue to roll up anesthesiology groups. As CRH does that, it's also going to build the hemorrhoid business. This is a name that we are excited about.

    TLSR: Could you mention another name?

    BC: Another company that we find quite fascinating and that has done very well is ProMetic Life Sciences (OTCQX:PFSCF) [PLI:TSX]. When we originally looked at ProMetic, we treated it as a manufacturing/commodity business. Its technology allows the removal of different proteins and components from blood, and no one else in the marketplace has the ability to get the same results that ProMetic does. A lot of drug companies in different levels of clinical trials are using ProMetic's product. Its business could grow exponentially as some of these drugs in development get approved. ProMetic could go from small clinical trials to being mass-marketed.

    The company has also developed drug candidates for some orphan diseases. If it is successful with one of those, the company could be putting a drug into a fairly significant category, where we could see sales that would propel ProMetic much higher than where it is today.

    This name has a base manufacturing business that I don't think you could describe as boring, although it's certainly not exciting when you talk about the biotech world. But it also has a biotech aspect. That's really what we want-the safety of the manufacturing business as well as the straight-out, aim-for-the-fences biotech business.

    TLSR: Bruce, thank you.

    This interview was conducted by George S. Mack of The Life Sciences Report and can be read in its entirety here.

    Founder and portfolio manager of StoneCastle Investment Management Inc., and a former portfolio manager for some of the largest investment dealers in Canada and the U.S., Bruce Campbell brings more than 22 years of experience to fund management. A graduate of the University of Alberta with a bachelor of commerce degree specializing in finance, Campbell has earned multiple designations in investment management, including the Chartered Alternative Investment Analyst [CAIA] and the Chartered Financial Analyst [CFA] designation, one of the most prestigious designations in the financial industry. Campbell is a past president of the Okanagan CFA society.

    Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

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    1) George S. Mack conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and he provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
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  • AIM's Tory Williams Unites Patient Advocacy With Stem Cell Funding In The Deep South

    Stem cell research is controversial, little understood by both the public and the legislators who set the framework governing it. In this interview with The Life Sciences Report, Tory Williams of the Alabama Institute of Medicine [AIM] describes how her patient advocacy group is working with research institutes to advance stem cell science and provide the early-stage funding and contacts that researchers and young companies need to grow and prosper.

    The Life Sciences Report: You wrote the book Inevitable Collision, which details your journey from being outside the scientific community to being at the center of stem cell therapy advocacy. In many ways, this book is about relationships with family, friends and God within the scientific and patient advocacy community. What led you to frame the story of stem cell research in this way?

    Tory Williams: Inevitable Collision intertwines the process of research and funding with the experiences of TJ Atchison, the first patient enrolled in the Geron Corp. (NASDAQ:GERN) clinical trial that used human embryonic stem cell treatment to cure paralysis, and Dr. Hans Keirstead, a brilliant scientist integral to the work of overcoming paralysis.

    The telling stems from my personal experience dealing with disease. My sister has battled cancer throughout her life, and I was diagnosed in 2010 with polycystic kidney disease [PKD]. Then, TJ Atchison, the son of a good friend, was in a tragic car accident in 2010. TJ participated in the first clinical trial combining drugs and human embryonic stem cells to regenerate spinal cord tissue.

    As TJ went through therapy, I realized this cutting-edge treatment needed a strong voice and patient advocacy to help rid it of the misconceptions surrounding it. Specifically, it needed someone who could communicate the benefits of stem cell therapy successfully in the conservative, religious South. The use of human embryonic stem cells is particularly sensitive here, but we have broken through many barriers and made tremendous strides in educating people on the power and importance of stem cell research.

    TLSR: You aren't a scientist. You had to educate yourself about stem cell research, correct?

    TW: I spent countless hours reading, researching and speaking with experts. I knew I needed to get in front of the researchers, specifically Dr. Keirstead, who developed the treatment used in TJ's trial. Roman Reed, president of the Roman Reed Foundation [which funds Dr. Keirstead and other researchers], and cofounder and chair of AIM, introduced me to Dr. Keirstead at the University of California Irvine [UCI]. Roman and I had a several-hour meeting discussing the nuts and bolts of the Geron clinical trial, and the funding mechanisms that support the research. Through this network of relationships, I've built additional relationships with the leaders at the California Institute for Regenerative Medicine [CIRM]. It has been remarkable to be part of this medical breakthrough in regenerative medicine.

    TLSR: When I was reading Inevitable Collision, I was struck by the speed with which everything moved. In only four years you helped create TJ's Law [The TJ Atchison Spinal Cord Injury Research Act, funding stem cell research in Alabama], founded AIM, and also formed several spinoff companies. How did everything move so fast?

    TW: Timing has been critical. We tried to maximize every opportunity, from speaking before city councils to addressing classrooms. Our No. 1 goal is educating people about the importance of stem cell research. But we also want to demonstrate tangible proof that what we're doing makes a difference. We are making great progress.

    In 2010, Alabama passed TJ's Law to fund spinal cord injury research. We received bipartisan support that awarded funding to the University of Alabama at Birmingham [UAB], which opened the door for me to work with researchers in our state. There's a need not only for funding spinal cord injury studies, but also for funding studies of cardiovascular disease, sickle cell anemia, diabetes and other chronic conditions. I thought it was unfortunate that there was no program to incentivize researchers to stay in Alabama and conduct stem cell research. That's when Roman and I decided to found AIM.

    We launched AIM in 2013. Since then, we've raised over $2.2 million [$2.2M] from individuals. The state also added funds: Because of TJ's Law, UAB received $800,000 [$800K] it otherwise wouldn't have received.

    AIM, a nonprofit organization, awards grants to investigators at research-based institutions in Alabama. We call for applications, which our review committee assesses using a double-blind approach to eliminate conflicts of interest or favoritism. In the past year, we awarded approximately $900K to UAB to support research. One program targets sickle cell anemia and may enter clinical trials within a few years. Another program targets cardiovascular disease. A third provides early seed funding for Dr. Kejin Hu's study of gene expression involving the PODXL gene, which he believes could transform to an embryonic state similar to that of induced pluripotent stem [IPS] cells. Only 10% of the funding for AIM stays with us for our overhead, salaries, consultants and fund-raising operations.

    Stem cell researchers in Alabama are excited and optimistic about our program because it incentivizes them to stay in Alabama, so they don't have to relocate to another state or country in search of funding. That's our aim-to keep our researchers and their families here in Alabama.

    AIM has also spun off three thriving companies: VivoStem LLC, WellPace Medical LLC, and Sacred Cells Research Partners LLC. It also has created local jobs. The economic impact will be amplified when we build a research plaza here in Birmingham. This will incentivize researchers to use our facilities to conduct experiments and to collaborate on various projects. We hope to move toward that goal later this year.

    TLSR: It would be an embryonic stem cell research center?

    TW: The research plaza wouldn't be limited to embryonic stem cells. Our nonprofit organization supports many types of stem cell research, including adult, embryonic and IPS cells. Our bylaws, however, state that we will not support any projects that use fetal cells.

    TLSR: Let's talk about the patient advocacy community. Partnering conferences routinely emphasize the importance of patient advocacy foundations like yours. How does this type of foundation interact with the community?

    TW: Roman and I have seen, firsthand, the challenges that patients and their families face in searching for better treatments or chronic care. We receive dozens of e-mails every week from patient advocates wanting to know where clinical trials are being offered, and so we recommend our great friend and brilliant researcher Dr. Paul Knoepfler's blog site as a tool for searching ongoing clinical trials using stem cell therapy.

    Patient advocacy is just part of our program, though. Oftentimes, people come to us for inspiration. We've helped others who are considering starting similar programs in other states.

    Social media, including Facebook and Twitter, as well as our own website, our book and our spinoff companies, have enabled us to publicize our information more effectively.

    TLSR: From an investment perspective, what can foundations like yours offer startup companies?

    TW: There are hundreds of great organizations that either fund projects independently or offer an application process similar to what we offer at AIM.

    One of the most productive conferences I've attended is the annual World Stem Cell Summit, hosted by the Genetics Policy Institute. This year's summit-the eleventh-will be in Atlanta in December. When I spoke about the role of patient advocates in the biotech community last year at the Summit, there were many investors in the audience. Investors certainly are concerned about the potential returns on their investments when they consider funding a company or a study, but they also want to know there are dedicated people included on the company's leadership team. They notice our level of commitment and say it's astounding.

    We've had to be really clever in developing a stable funding mechanism for our nonprofit organization. Our spinoff companies were created from necessity. Both Sacred Cells Research Partners and VivoStem have intellectual property [IP], and WellPace Medical has unique products and a dedicated staff, so we are on investors' radar. We're a young startup, so we have the time to prove ourselves to the industry as we expand operations for each of these companies.

    TLSR: Let's talk more about these companies, all of which are spinoffs of AIM. Can you share the prospects for each?

    TW: VivoStem, a for-profit company, is headquartered here in Birmingham, with an operation in Fremont, California, where Roman Reed lives. It will conduct stem cell research in collaboration with researchers globally. An incredible group of researchers are committed to various studies on spinal cord injury, cardiovascular disease and gene expression. These researchers have opened their arms to us, shared their advice and wisdom, and offered opportunities to collaborate on projects by combining our IP with their IP to create new drugs for regenerative medicine therapy.

    We have especially strong relationships with researchers in California. They include Dr. Keirstead, who is president of NeoStem Oncology [NeoStem Inc. (NBS)], and Dr. Jane Lebkowski, president of research and development at Asterias Biotherapeutics (OTC:AST). Dr. Lebkowski, an advisor to our nonprofit organization, is a stem cell expert and has submitted numerous investigational new drug [IND] applications to the FDA, and received approvals as well. This knowledge and expertise of the clinical process is invaluable for our young organization. At the Gladstone Institutes, we work closely with Dr. Deepak Srivastava, the director, and the research lab of Dr. Shinya Yamanaka, who won the 2012 Nobel Prize in Physiology or Medicine for his discovery that adult stem cells can be reprogrammed to become pluripotent. We also have connections with researchers from the Harvard Stem Cell Institute, directed by Dr. Brock Reeve. He has advised us on many endeavors.

    Roman and I launched Sacred Cells Research Partners in 2013. We have worked for more than two years to secure patented license agreements and worldwide exclusive rights to progenitor cell therapy.

    Our first study, to build tissue for spinal cord injury research, is scheduled to begin in May. Dr. Aileen Anderson at UCI and Dr. Raj Singh, CEO of Vivo Biosciences Inc. [private] are co-principal investigators. The project uses Dr. Singh's HuBiogel platform technology, which is a matrix created from discarded human amniotic tissue that enables normal or diseased human cells to grow outside the body while functioning much like they do in vivo. Once we begin the study, topline results are expected in six to eight months.

    Through Sacred Cells Research, we also would like to collaborate with other companies to advance treatment for diabetes and organ regeneration. Sacred Cells holds four global patents that have significant clinical value to this stem cell line. We've worked hard for two years to secure the necessary licenses, so it's exciting for us to be able now to put the study in motion.

    TLSR: Tell me about WellPace Medical.

    TW: WellPace Medical is our marketing and distribution company. It is headquartered in Birmingham and operated by Ron Williams, my husband, based upon his relationships with sales managers and sales representatives established during his 25 years with the medical device and equipment manufacturer Stryker Corporation (NYSE:SYK). WellPace will help place our products with physician groups across the U.S. and around the world.

    Right now, Ron and the WellPace team are exhibiting at medical conferences and talking with physicians to build new relationships while maintaining longstanding relationships.

    TLSR: Regenerative medicine finally is at the point of providing cures. There are about 60 therapies approved by the FDA. What reaction have you had from the biotech community since Inevitable Collision was published?

    TW: We've had a tremendous response from the biotech community. We've been invited to speak at multiple conferences. Those opportunities helped us network with other not-for-profit organizations, as well as for-profits, in the biotech arena. People seem interested in learning from our experiences, and also in helping us improve and better position ourselves to penetrate various markets through our spinoff companies.

    After Geron halted the clinical trial TJ participated in [for patients with complete cervical spinal cord injury], I noticed many people were discouraged and frustrated because the company halted the trial after so much time and money had been put into it. It had a negative effect on the biotech community.

    However, in March 2014, hope returned to our community as Asterias announced that it was resuming the spinal cord injury clinical trial, and expanding it from 13 to 40 patients. This Phase 1/2a trial evaluates three escalating dosages, so we should see great results. People are excited again, not only for spinal cord injury research, but also for the whole field of stem cell research.

    TLSR: What happened to the stem cell patients in the initial Geron trial?

    TW: The five patients treated by Geron each received 2M cells. That's roughly 10% of what Geron believed was necessary to help them regain function. The trial was a safety study. It showed no adverse effects, even five years after the initial injection, and is considered a success.

    TLSR: In the decade since embryonic stem cells have been studied, alternatives have emerged, including IPS cells. With all of these advances, is there still a strong case for using embryonic stem cells?

    TW: Which stem cell type is best continues to be the most debated question in research labs around the world! Embryonic stem cells are the gold standard simply because they can be used for anything. They can be programmed to become any cell type in the human body-bone, skin, brain, etc. Embryonic stem cells are programmed by nature to build tissue, and even organs.

    IPS stem cells, in contrast, lack this diversity. And, while research involving IPS cells shows promising data, it takes 10 to 12 years to develop a good stem cell line using this cell type. Then, the manufacturing costs are astounding. Therefore, researchers shy away from using IPS cells.

    Manufacturing embryonic stem cells is relatively easy. They can be developed in abundance without the complexity involved in creating other cell types. Statistics from the National Institutes of Health [NIH] suggest that more than 500K embryos are discarded as medical waste every year. So we have an abundance of embryonic stem cells that can be harvested for this potentially lifesaving research.

    TLSR: Regarding the NIH figures on embryo waste, do you mean blastocysts?

    TW: Exactly. The early union of sperm and egg truly is a blastocyst-an undifferentiated cell. When people hear the word "embryo," they think "baby." When we are out talking to people, this is the first fact I try to mention. People need to understand the harvesting process and where these cells come from. Once people understand that these cells come from abandoned embryos at fertility clinics, and they are not being created specifically for research, it's almost an epiphany.

    TLSR: Nearly every state has jumped on the biotech bandwagon, but it takes a life science infrastructure to support a biotech industry. Many states lack that. Alabama has researchers at UAB, and some spinoffs have occurred. What more is the community doing to help these companies grow and remain in Alabama?

    TW: We are conducting an aggressive campaign for stem cell research here in Alabama, and I wish I had an army of people to help.

    Our spinoffs are generating jobs, so we are demonstrating an economic impact. Job creation is what our legislators and constituents want to see. The state health advisor is supportive of our efforts and hopeful that our work will continue. Succeeding is, more or less, just a matter of being available, transparent and positive. Staying positive, even though it's a struggle.

    TLSR: In the afterword of your book, Roman mentioned helping pass a research law in Australia. Are there plans for a federal research law in the U.S.?

    TW: Once Roman and I accomplish our near-term goals for AIM and its spinoff companies, then certainly we would hope to be in position to launch a more national effort, and to partner with others who have that same goal.

    TLSR: Thank you, Tory.

    This interview was conducted by Gail Dutton of The Life Sciences Report and can be read in its entirety here.

    Tory Williams is a passionate stem cell advocate, author and cofounder of the Alabama Institute of Medicine [AIM], a nonprofit dedicated to funding regenerative research in the state of Alabama. She is also vice president and managing director of Sacred Cells Research Partners, a private company formed in 2013 to develop innovative treatments for chronic disease and injury through breakthrough cellular technologies and medical devices. Her nonfiction bookInevitable Collision puts a spotlight on the growing conversation surrounding stem cell research and regenerative medicine, and its implications for finding cures to debilitating conditions such as paralysis, diabetes, cancer, ALS and Parkinson's disease.

    Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    Top of Form

    Bottom of Form

    DISCLOSURE:
    1) Gail Dutton conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and he provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Tory Williams: I own, or my family owns, shares of the following companies mentioned in this interview: Sacred Cells Research Partners LLC, VivoStem, LLC and WellPace Medical LLC . I personally am, or my family is, paid by the following companies mentioned in this interview: Sacred Cells Research Partners LLC, VivoStem LLC, and WellPace Medical LLC . My company has a financial relationship with the following companies mentioned in this interview: Sacred Cells Research Partners LLC, VivoStem LLC, and WellPace Medical LLC. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (NYSE:I) only in whole (and always including this disclaimer), but (ii) never in part..

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Life Sciences Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8204
    Fax: (707) 981-8998

    Email: jluther@streetwisereports.com

    Apr 29 5:01 PM | Link | Comment!
  • How To Grow A Regenerative Medicine Industry In Canada: Michael May Of CCRM

    There's a new kind of incubator in town. The Centre for Commercialization of Regenerative Medicine [CCRM] is a Canadian nonprofit that fosters hands-on association between academia, government, industry and investors to grow stem cell and regenerative medicine companies from the ground up. In this interview with The Life Sciences Report, CCRM President and CEO Michael May guides us through the process that brings ideas out of academia and adds the essential nurturing elements to get startups off the ground and into commercial development. Along the way, he mentions a few names that may interest investors.

    The Life Sciences Report: You are the president and CEO of Centre for Commercialization of Regenerative Medicine [CCRM], a Canadian not-for-profit organization supporting development of technologies that will hopefully hasten the journey of stem cell and related therapeutics through regulatory pathways and to the market. How does it work?

    Michael May: CCRM was founded through a unique government program called the Networks of Centres of Excellence. It was built around the concept of creating the right kind of ecosystem and network to drive commercialization. The government of Canada invests in three types of networks: academic; commercialization, which is where CCRM fits in; and what is called business-led networks-consortia of established companies that work together in an open innovation model.

    CCRM actually followed on an academic network that was around for 14 years. That network had built a very strong culture of collaboration among the stem cell and regenerative medicine scientists in Canada, and prepared them to commercialize their technologies. CCRM was established to integrate elements over and above the discovery phase-access to industry, company creation and access to investors. And now CCRM has built an industry consortium of more than 40 companies from around the world. You could almost envision CCRM spinning off a business-led network one day to take full advantage of the government's strategy for building the right kind of ecosystem for commercialization.

    TLSR: Does CCRM recruit innovators to Canada?

    MM: Our model is to build a global network and to be a not-for-profit, neutral, safe place to bring together the right resources, elements and leaders, including innovators, to drive technologies forward. We, of course, need to look at a benefit for Canada, but we don't see a benefit to Canada as being mutually exclusive from the benefit to any investor or innovator or stakeholder around the world.

    TLSR: How does CCRM differ from other industry advocacy organizations-for instance, from the Alliance for Regenerative Medicine [ARM] which was formed in the U.S. in 2009. I recently spoke with ARM Chairman Edward Lanphier about ARM. Are you familiar with that organization?

    MM: Indeed I am. I'm on the executive committee for ARM.

    CCRM is not just an advocacy group. It's actually built around tangible facilities and infrastructure that can drive not only technology development for out-licensing to our industry partners, but can also enable company creation in a very different way than has been done here in the past.

    We have a tie-in to a network of academics and in-house facilities that develop technologies the way a startup company would. With our founding academic network of Canadian institutions and scientists, we have access to global innovators. We have been able to negotiate access to their intellectual property [IP]. When we find IP, and after doing due diligence on it and bundling it with other IP, we can bring that technology into our own facility, where we have a staff of 35 people, including about 20 scientists, who can conduct wet diligence and product development. We fill a gap-we are doing work that academics typically don't like to do or don't always do very well. By bringing together all these capabilities, along with some specialized platforms, like cellular reprogramming, gene editing, cell manufacturing and biomaterial synthesis, we can complement what a standard academic network would bring to the table.

    We are also driven by a government mandate to be sustainable, so when we invest in promising technologies or bundles of technologies, we expect to take some equity, or some position, in those opportunities. That way, over time, we can grow and sustain an industry around our network.

    TLSR: Regenerative medicine appears to have been left behind in terms of development, compared to other biotechnologies. Why do you think these powerful breakthrough technologies have languished on the lab bench?

    MM: The bottom line is that regenerative medicine is complicated. It's an expensive process to take on from start to finish.

    Our model at CCRM is built around a couple of assumptions. One is that you have to do more with less these days, and so you need capital efficiency, especially at the very early stages, where investors really have abandoned projects. Although today they say there's a lot of investment in early-stage development, that typically means venture capitalists providing follow-on investment to their current companies. New startups are still having trouble getting financed. Regenerative medicine is also a new industry, so I think this "left-behind" feeling is symptomatic of that fact.

    TLSR: You just used an important term: capital efficiency. How do you get around, or solve, this problem of doing more with less?

    MM: I think it can be solved through collaborative vehicles. CCRM started with an academic network that was building collaboration and getting access to IP. We then leveraged the reputation of our academic network to attract industry. Then, of course, industry brought its ever-important validation and marketing savvy to the table, which represents expertise that is largely absent in the academic environment.

    After three years of operation, with significant deal flow and two networks in place, CCRM is now at a stage where it's building the third key element of its model: an investor network. The system was primed with a very modest amount of money, but now we want to fuel our model with risk capital. Global networks, access to deal flow, sufficient funding and coordination of specialized infrastructure/expertise are all key elements of CCRM's model for filling the gap between discovery and the market.

    Investors are looking for good investments. If we can get companies over some of the early hurdles with unique resources, I think we will demonstrate accelerated commercialization.

    TLSR: Michael, is it hard to get investors to invest in science projects? They really need to see the path to commercialization, don't they?

    MM: Absolutely. Financiers don't like to take scientific risks. They are more comfortable with commercial risk. Despite what people think, scientists are also risk takers, but they don't like to take financial risk. The role of an entrepreneur is to sit in the middle and manage everyone's comfort or discomfort with different risks. That's an important role for an organization like CCRM and the entrepreneurs that it brings to bear.

    TLSR: You have said that Japan and Canada would lead the way in regenerative medicine. Does that imply that the U.S. has lagged?

    MM: I would never discount the ability of the U.S. to muster resources and drive innovation in any field. There are strengths in regenerative medicine across the U.S., but regenerative medicine has a unique status in Canada. Stem cells were actually discovered in Canada prior to the bone marrow transplants of the 1960s. Of course, Japan's Shinya Yamanaka received the 2012 Nobel Prize in Physiology or Medicine for discovering that mature cells could be reprogrammed to become "pluripotent." There is a nationalistic element to regenerative medicine in both Canada and Japan. That's one difference.

    Japan has taken it one step further. It has taken a novel approach in its regulatory policy by acknowledging that cell-based products may require a different regulatory pathway than drugs or devices. In November 2013, the Japanese Diet [parliament] approved new legislation, the Regenerative Medicine Law, to provide for conditional approvals of cell-based products that demonstrate very strong safety data. These products can go to the market and be sold. Once enough patients have been treated to demonstrate proof of efficacy, then they get full approval. This is a very different model. In fact, if you think about it, if a company can sell its product after Phase 2 development with proof of safety, it changes the return on investment (NYSE:ROI) model entirely for early-stage programs.

    Canada has been the first to approve regenerative medicine products. It was the first country to approve the early skin substitutes from Organogenesis [private] and Advanced Tissue Sciences [Chapter 11 liquidation under bankruptcy in March 2009]. Canada was also the first to approve Osiris Therapeutics Inc.'s [OSIR:NASDAQ] $OSIR Prochymal [remestemcel-L]. Where Canada needs to be innovative now is with reimbursement. None of those products has been reimbursed in Canada.

    TLSR: Is CCRM working with regulators on reimbursement?

    MM: Yes, it's one of the areas of focus for CCRM. Who is going to pay for a therapy is typically the last question people ask in the development process. We are working with government agencies in Canada so that the reimbursement issue gets addressed early in development. That would put Japan and Canada at the leading edge of innovation in the commercialization of these products.

    TLSR: You have referenced Japan's new regulatory legislation. Does Canada propose to do anything like that, so that companies could effectively get a drug on the market with strong Phase 2 safety data?

    MM: Canada is not proposing legislation like that-at least that I'm aware of. What the Canadian regulatory authority, Health Canada, has demonstrated in the past is that it will approve cell-based products on a conditional basis, just like Japan. Health Canada is focusing more on risk/benefit, and is therefore flexible. It has also demonstrated that it will approve cell-based products much faster than other jurisdictions. So although Canada doesn't appear to be going down the same regulatory route as Japan in creating a formal Phase 2 approval policy, it is being very clear about its willingness to be open-minded and to be both a cost-and time-effective regulator of these new therapies.

    TLSR: Risk/benefit implies efficacy, not just safety.

    MM: It does. It also implies that if patients have no other option, then having an experimental therapy available quickly fits into the risk/benefit equation. That's part of the flexibility embedded in the Canadian system. About six months ago Health Canada produced a guidance document for cell-based clinical trials to try to provide not only flexibility in its regulation but also some clarity on what it's expecting in terms of clinical data.

    TLSR: Tell me about some of the interesting companies developing regenerative medicine technologies in Canada?

    MM: One of our leading company creations [private] concerns the expansion of hematopoietic stem cells from cord blood. Getting the levels of stem cells to treat leukemias in adults, versus children, has been a clinical development goal for some time. We have brought together a couple of technologies from different institutions, along with some bioreactor technology from one of our industry consortium partners, to deliver best-in-class hematopoietic stem cell expansion, gene therapy and potentially the ability to produce mature blood products.

    Another area where Canadian researchers have been leading is in cancer stem cells and the thesis that cancer is actually driven by a stem cell that's gone awry. If you can find and target that cancer stem cell, you can target the cancer. One of the companies that CCRM has funded in the past year is Actium Research [private], which is raising money now. Its technology is based on the work of Dr. Mick Bhatia, a senior scientist at McMaster University in Hamilton, Ontario. Actium has created a unique platform to screen molecules that will attack cancer stem cells as opposed to normal stem cells.

    TLSR: Is Actium's technology about identifying cell membrane antigens that might be exclusive to a cancer stem cell?

    MM: That could be part of it. The company is identifying ways to attack a cancer stem cell versus a normal cell. For instance, if you can push a stem cell to differentiate, you can kill it with standard treatments. Because a stem cell is in a pluripotent state, it's more resistant to drug therapy. There are a number of different mechanisms there, but Actium is a good example of a very young Canadian company that is focused on the country's strength in stem cell research.

    TLSR: Thanks for your insights, Michael.

    This interview was conducted by George S. Mack of The Life Sciences Report and can be read in its entirety here.

    Michael May is president and chief executive officer of the Centre for the Commercialization of Regenerative Medicine [CCRM]. Prior to CCRM, he was president, chief operating officer and cofounder of Rimon Therapeutics Ltd., a Toronto-based regenerative medicine company developing novel medical polymers that possess druglike activity. May completed his Ph.D. in chemical engineering at the University of Toronto in 1998 as a NSERC [Natural Sciences and Engineering Research Council of Canada] Scholar, and was awarded the Martin Walmsley Fellowship for Technological Entrepreneurship. May sits on a number of boards and advisory committees, including MaRS Innovation, the Alliance for Regenerative Medicine, 20/20 Vision and the Department of Chemical Engineering and Applied Chemistry at the University of Toronto.

    Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

    Bottom of Form

    DISCLOSURE:
    1) George S. Mack conducted this interview for Streetwise Reports LLC, publisher ofThe Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and he provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Michael May: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. CCRM is a shareholder of Actium Research. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (NYSE:I) only in whole (and always including this disclaimer), but (ii) never in part..

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Life Sciences Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8204
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    Apr 23 2:17 PM | Link | Comment!
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