Ray Dirks'  Instablog

Pluristem (PSTI) just announced a new Phase I trial to check safety and evaluate effectiveness of its PLX-PAD cells in chronic tendonitis often leading to rotator cuff disorders, common in tennis players and golfers, where there are roughly 200,000 rotator cuff surgeries done each year in the US alone. Major insurers put the overall cost of rotator cuff operations at $6,700 each, with a lucrative $1,700 in doctor fees, draining our health care system of over $1.3 billion.

Although Cell Therapy is not commonly associated with sports medicine procedures, I think it's time something new is tried to take down costs of these pricey procedures, something that does not involve dangerous devices or daily pill-popping.

Stem cell treatments are usually associated with serious diseases like cancer and chronic heart conditions, but have recently taken on the glamour of a potential quick-fix in the world of sports, causing celebrity athletes like Jason Kidd of the NY Knicks or NBA All-Star Allan Houston to seek them out in hopes of fast recoveries and better performance. Ethical considerations were bypassed when it became possible to use adult stem cells from fat, bone marrow or, even better, the birth placenta, rather than the embryo of an unborn child. The Catholics breathed easier.

In the past, academic institutions produced only spotty research for using cell therapy in sports and there have been no meaningful clinical trials targeting the human stem cell to treat sports medicine injuries. Dr. Jason Dragoo, top orthopedic surgery professor at the Stanford School of Medicine spoke out last year to Sports Illustrated about the false hopes given to athletes by stem cell charlatans responding to pressure from owners, coaches and team sponsors.

He did not have an answer then, but Pluristem may have one Now.

Like all of the company's studies, the one for rotator cuff injuries is small and efficient, just 30 patients with only a six-month follow-up. If successful, I imagine third-party payors will be thrilled to recommend Pluristem's procedure over the expensive alternative.

Fixing damaged rotator cuffs with cell therapy is a great addition to Pluristem's growing niche in orthopedic medicine, blending well with ground-breaking clinical trials in hip replacement that I wrote about last August. The global market for artificial hips runs around $5 billion with no end in sight for growth as the world population ages and puts on weight. Companies that make devices for hip repair continue to prosper but the flip side is the heavy litigation of the industry - watch late-night cable and you can't miss an ad for plaintiffs wanting to sue DePuy, a Johnson & Johnson (JNJ:NYSE) company, where it was recently reported the number of lawsuits are over 4,000.

As I also observed back in August, Pluristem's platform technology in just that one indication could open up more opportunities within the huge $2.2 billion sports medicine market. In less than a year, that promise looks to become a reality.

A check with my orthopedic physician contacts revealed that hopes for stem cell therapy in sports medicine was originally pinned on repairing and restoring injured cartilage, particularly because such a treatment would have far-reaching medical promise for arthritis. Then came monoclonal antibodies, like the now widely-used Humira by Abbott Laboratories (NYSE:ABT), and for a time stem cells in orthopedics was forgotten. Pluristem's new trials in shoulders, along with hips, target two major joints in the human anatomy that take on a lot of strain in active individuals, and should grab much attention as results from the studies are publicized.

All told, a great call for Pluristem. Medically, they are going after high-cost, high growth markets where orthopedic doctors are considered the tinkerers of hands-on surgeons. These practitioners love to experiment and their own hospital departments are usually second only to cardiology in pulling in big numbers. From a global marketing standpoint, the choice of branching out into sports medicine is brilliant. Pluristem has demographics in their favor and with healthcare economics in a never-ending downward spiral, a new and less invasive treatment with PLX-PAD cells offering reduced post-operative downtime will be the way healthcare insurers (and patients) want to go.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The FDA endured another terrible blunder when Affymax Inc. (AFFY) and Takeda Pharmaceutical (TKPHF) recalled Omontys late last month, after approving the ill-fated and dangerous anemia drug not 12 months earlier. Once hailed as a fierce contender for Amgen's (AMGN) Epogen monopoly in the $20 Billion dialysis market, the once-monthly injectable Omontys was being tested by giant Fresenius Medical (FMS) in its clinics, and the future looked rosy until five patients died of a severe allergic reaction known as anaphylactic shock. In other words, a drug that was supposed to make more red blood cells in people that were so depleted they had to spend up to four hours a day, three times per week hooked up to tubes to keep them alive killed them within 30 minutes.

I find it particularly morbid that Affymax chose to put a less-pessimistic percentage, 0.02%, on the number of fatalities. They hid behind arithmetic instead of facing the fact they made a bad drug. Not that the old standards Epogen and Procrit are any better. Epogen has an FDA black box warning, causes blood clots, and Amgen closed down manufacturing in a plant last year due to low sales. Procrit, sold by Johnson & Johnson (JNJ) has undergone multiple safety reviews since its market release years ago. Now Affymax is closing shop, using remaining cash to pay for investigations of a drug that should have been recognized in clinical trials as faulty.

With the biopump EPODURE in Phase II studies, Medgenics, Inc. (MDGN) is well on its way to delivering an effective substitute to the hazardous anemia drugs now being prescribed. Because the internally-placed "biopumps" are made of the patient's own erythropoietin-producing tissue, safety issues are minimized and Phase I trials already show it works by maintaining hemoglobin in the target range while also keeping serum EPO levels in their normal range, instead of overdose spikes inEPO levels which accompany injections of Epogen and Procrit. The multiple injections needed with those drugs are not necessary with EPODURE.

Medgenics has been delivering on its strategic plan on other fronts. Clinical trials for INFRADURE to treat the hepatitis virus are making good progress and would also treat a disease where the alternatives leave something to be desired. Last year the company beefed up its board of directors with two veterans from the financial services and biotechnology industry, added key patents in the US and Japan, and trimmed operating expenses by 21%. A public stock offering completed in February 2013 offered up $29.4 million in gross proceeds with an additional $2.3 million gross from the exercise of the over-allotment. With cash on hand and a modest yearly burn rate, Medgenics is in a good position to run its business and fund clinical trials at the same time.

I believe the FDA will be more careful when approving anemia drugs in the future, and the agency should welcome an alternative that uses the patient's own tissue to produce EPO like their kidneys used to, particularly where patients aren't at risk of getting too big a dose either because of medical incompetence or, more likely, because prescribing bigger doses means more money from the drug's spread, the difference between the price doctors and hospitals pay for the drug and the price charged to patients. This is a common problem with anemia drugs that carry a profit of as much as $300 per administration in an astounding $8 billion dollar market.

Affymax argued long and hard for Omontys, challenging clinical trial reports of a high rate of cardiovascular problems by claiming that those patients were different from patients receiving dialysis, and won approval in a 15 to 1 vote. America's premier drug and device watchdog floundered once again, continuing a terrible record for recommending drugs that hurt people.

At the end of the day, today's anemia drugs are flawed to the point of causing blood clots, heart attack, stroke and now allergic shock and death. When Medgenics finally comes through clinical trials with a safe, non-new drug method of treating the anemia from unbearable condition of chronic kidney disease, not only the FDA but doctors around the world will breathe a sigh of relief, finally able to offer patients something that isn't likely to kill them.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Oramed Pharmaceuticals' (ORMP) oral insulin drug could be the answer to Novo Nordisk's Dream.

ORMP received attention recently when it was mentioned in an articledescribing how Novo Nordisk (NVO) is determined to find an alternative to painful and inconvenient needle injections to control blood sugar levels in Type 2 diabetics.

Novo Nordisk, a world leader in diabetes care, has been seeking a pill for diabetes since 2006 and has a prototype in Phase I. Billions of dollars have been spent on this effort but for the large drug maker, it could represent up to $10 billion in sales, making it the greatest revenue producer in Big Pharma's history. The trick is to get the pill past the stomach, where it could be destroyed by gastrointestinal acid.

As we've written in the past, ORMP is working on a similar project and is further along, suggesting that its technology is better. ORMD-0801 is in Phase II trials with good results, which is why we think that sooner or later, Novo Nordisk will come calling.

According to the American Diabetes Association, 25.8 million people in the US, or 12% of the population have diabetes, with 2 million new cases found each year. The cost of treating diabetes in the US was $264 billion last year meaning that treatment, considering just insulin vials and needles alone, runs about $10,000 per person. Worldwide, diabetes affects 366 million adults and children. In 2011, all UN member states made a pledge to seek better treatments for diabetes with targeted goals that will be examined frequently.

These enormous figures account for the strength of Novo Nordisk's financials. Worldwide sales of nearly $7 billion last year increased 11% over 2010. Over 24 million people now use their products. The company stated in its annual report that they are making a strong commitment to research and development, coming at a time when other large drug companies are scaling back. Such is the power of a growing market that is still protected by patents.

And at a sum of $2 billion, Novo Nordisk has the cash to spend. Earlier this month, the company signed a $100 million deal with tiny Caisson Biotech for its unique drug delivery technology that would help its pipeline diabetes injectables last longer in the body.

The farthest any firm has gotten in developing an oral treatment for diabetes has been Diasome Pharmaceuticals, Inc. The Pennsylvania-based clinical stage company was experimenting with a nano-technology based pill for diabetes, but the drug failed in later clinical trials. There is no record of them since 2009, and their website has been taken down.

We'd like to draw our readers' attention to another of ORMP' innovative products for Type 2 diabetes - ORMD-0901, an oral GLP-1 receptor agonist in early stage clinical trials. GLP-1 therapies are becoming a major class of drugs because they lower glucose while significantly reducing the risk of triggering hypoglycemia, and, for most people with diabetes, they also prevent weight gain. Amylin Pharmaceuticals (AMLN) released BYETTA, a novel GLP-1 agonist in 2009. Sales were $667 million that year.

The race to find better treatments for diabetics is on and sales are big. In addition to Amylin, Sanofi (SNY) showed revenue last year of its latest product for Type 2 diabetes, Lantus, of $4.9 billion, up 15% from 2010. Sanofi is also pursuing a GLP-1 agonist with trials now ongoing.

Analysts have projected that another unique compound for diabetes, an injectable made by Isis Pharmaceuticals (ISIS) now in Phase II, could generate over $600 million in its second year of sales. On this basis, ORMP's oral insulin drug, expected to reach FDA approval in 2015 (a full year ahead of ISIS) would be well on its way to blockbuster status. Because patients would prefer a pill to a needle, ORMD-0801 would stand a better chance of getting on a health plan's formulary because it will most likely be less expensive.

The treatment clearly preferred by diabetics everywhere would be an oral medication. Competitors in diabetes like Eli Lilly (LLY) and GlaxoSmithKline (GSK) are not seeking to develop pills for diabetes, so we think it's only a matter of time before Novo Nordisk takes an interest in ORMP.

We see tremendous upside for ORMP at these levels. This stock is trading nealry 30% from its 52-Wk High ($ 0.44 ) and its $20 million market cap appears very much undervalued.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.