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Ray Dirks has been a respected analyst on Wall Street for decades. Ray has written two books,” The Great Wall Street Scandal” and “Heads You Win, Tails You Win”, published by McGraw-Hill and Bantam Books respectively. Dirks opened his own securities analysis firm after gaining much attention in... More
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  • Pluristem's PLX Cell Therapy For Muscle And Tendon Regeneration Will Revolutionize Sports Medicine

    With football season underway, my thoughts run to player injury and how it keeps good athletes off the field with few options for recovery except the stale advice and medicine doctors offer. Rotator cuff damage is a good example. Surgery is invasive and has serious consequences. Rest and recovery takes months. Whether or not talent will be restored is always a question. Enter the questionable treatments: Regenexx, is a privately-held company pandering to sports superstars with promises of stem cell therapy that can't be substantiated. However, there is an answer - Pluristem (NASDAQ:PSTI), a leader in cell therapy, will soon conduct Phase I clinical trials for rotator cuff muscle and tendon regeneration that could bring sports medicine, already a $21 billion industry growing faster than the US GNP, into a new era. Pluristem's cell therapy has already shown efficacy in orthopedic medicine. In a successfully completed Phase I/II trial conducted at Germany's Charite University in Berlin under the auspices of Germany's Paul-Ehrlich Institut, the German equivalent of the FDA, Pluristem's PLX cells showed a 500% improvement over placebo in healing gluteal muscle injury.

    The background to Pluristem's human clinicals in orthopedic medicine is impressive. Preclinicals for rotator cuff injury were done by Dr. Scott Rodeo of New York's Hospital of Special Surgery, who is also physician to the New York Giants and US Olympic Swimming Team. Results were successful enough for him to announce that PLX cells have a very good chance of accelerating tendon healing. Pluristem has assembled a very impressive Scientific Advisory Board comprised of Orthopedic Key Opinion Leaders, Doctors who are at the top of their field from institutions including the University of Oxford, Charite Hospital in Berlin, Boston University and Cornell University.

    Almost 2 million Americans need surgery each year to repair rotator cuffs, the most common damage to the shoulder in active people. About one-third of patients are dissatisfied with results. Rotator cuff operations aren't cheap and normal activity cannot be resumed for four to six months. Surgery on large tears often cause muscle atrophy that is many times irreversible. Because of these drawbacks, professional athletes, regular recipients of rotator cuff injury, are leading the search for better options.

    Stem cells appeal to sports luminaries because they penetrate the swollen wound of a torn muscle or ligament and their anti-inflammatory properties promote faster healing of injuries that keep them out of the game. However, FDA regulations condone only the use of autologous (from the individual) cells with strict procedural limitations, forcing most athletes to seek treatment overseas, where rules are more lax.

    Los Angeles Angel Bartolo Colón received one of professional baseball's top honors, the Cy Young Award in 2005, but due to rips in the ligaments of his shoulder nearly quit in 2009, driving him to the Dominican Republic for a stem cell procedure. A few months later Colon was pitching at the top of his game for the New York Yankees with a 93-mile-per-hour fastball. Other professionals have followed his lead, reasoning that even if the treatment didn't work any health risks would be small because the cells involved are autologous.

    Kobe Bryant, one of the NBA's best players and Olympian, sought stem cell treatment in Germany for a torn knee. Rehabilitation was quick, and Bryant went on to play a stellar 2012 season praising the power of cell therapy.

    Bart Oates, center for the New York Giants during their Super Bowl XXI and XXV wins, sought stem cell treatment in Mexico, as did Peyton Manning, one of the greatest quarterbacks in football history, and Terrell Owens. Oates stated that many players leave the gridiron with lingering injuries that plague them for life, looking desperately for medical treatment that improves joint mobility. Stem cell therapy seemed like a good answer. However, US-based orthopedic surgeons have no control over the quality of stem cells given in other countries and worry about the legality of the clinics.

    Whether injected stem cells rejuvenated Colon's arm or restored joint flexibility to others is an open question. Science takes a different view, citing FDA warnings that unapproved autologous stem cell treatment given to athletes could form tumors as the cells multiply and roam to other parts of the body. Animal studies show regenerated tissue from the body's own source is not durable. Scar tissue could develop and cause tendons or ligaments to stick to skin, pulling an even bigger tear in an already serious wound. There is a strong call for more clinical research.

    Stem cell charlatans give false hope to professional athletes who respond to pressure from owners, coaches and team sponsors demanding top performance. Ignored is the importance of a thorough review process for safety and effectiveness, and proof that manufacturing is in line with regulations. In 2011 three men were arrested in the US and charged with 15 counts of criminal activity related to making, selling and using stem cells without FDA approval. The three defendants allegedly received more than $1.5 million from patients seeking treatment. Scandals like this only support Pluristem's integrity to follow proper regulatory channels.

    Dozens of orthopedic stem cell institutes are sprouting up across the country and more orthopedic doctors are embracing cell therapy, treating hundreds of major sports figures. Believing in the healing properties of stem cells, the Jets' Chris Johnson earlier this year visited the Andrews Institute in Gulf Breeze, FL for treatment to help rebuild a torn meniscus. Bone marrow was extracted but because the FDA forbids any additional processing of cells they were immediately injected into the knee, limiting the number of stem cells to maybe 100,000 - far lower than the amount Pluristem could deliver - and apt to produce poorer results.

    Pluristem's allogenic cells are an off-the-shelf treatment derived from human placentas. This means patients don't have to go through the painful process of extracting stem cells from their bones. What makes Pluristem's cells unique is that because they are from the placenta they are immuno-privileged. The placenta is designed by nature to not create an immune reaction in the mother. Therefore, it also does not trigger an unwanted immune response in the patient receiving the cells. When approved, Pluristem's PLX cells should make an already flourishing sports medicine industry skyrocket.

    PLX cells from a world-class, multi-country approved manufacturing facility would be easy to get, store, and use. Injections are done intramuscularly so pain and inconvenience is minimized. Clinical data backing up claims and the simplicity of the procedure would grab the attention of every orthopedic surgeon answering requests from their athlete patients. The fear of sketchy treatment will be eliminated. Best yet, players would not have to undergo painful bone marrow extraction, avoiding a procedure that has a lot in common with treating leukemia.

    For a $210 million market cap company on track to enter a multi-billion dollar market with explosive growth, Pluristem is a steal. This is in addition to the many other indications addressed by their vast pipeline, also targeting big medical money. PLX cell therapy is far superior to what top athletes now have at their disposal to fix sports injuries; further, players would reap the benefits of fast, durable healing without fear of unpleasant after-effects. Valuation is ridiculously low. By my estimates, shares should be trading between $20-$25 with a present-day market cap of up to $1.7 billion, still far below peers who sport thinner pipelines and lots of 'me-too' drugs that adds nothing to medicine's progress. In light of this, it is my opinion to aggressively accumulate Pluristem shares.

    Oct 16 3:30 PM | Link | 3 Comments
  • Blue Sphere Gets Equal Ownership Stake In Waste-To-Energy Projects Financed By Caterpillar

    Companies in the global waste-to-energy market earned revenues of $18 billion in 2012 and research firm Frost & Sullivan estimates revenues in the sector will skyrocket to $29 billion by 2016. Driven by the demand for renewable sources of energy and growing mounds of trash in the industrialized world, this is clearly a growth market. Private venture capital and clean tech funds, as well as billion dollar giants like Caterpillar (CAT) are investing. The World Energy Council reported that between 2011 and 2012, the increase of venture capital and private equity investment into the waste-to-energy sector increased by 186% to a total investment of $1 billion. Blue chip players and large VC and hedge fund typically have access to ground floor investment opportunities that would not be available to public investors.

    Blue Sphere (BLSP) an Israel-based energy company builds facilities that turn organic waste into electricity and it offers public investors a rare opportunity to invest in and co-own property with the Caterpillars and private funds of the world. Blue Sphere has just entered the U.S. waste-to-energy market. In 2014 the company will break ground on it first 5.2 megawatt waste-to-energy facility in North Carolina.

    Deep pocked investors are funding the build out of the facility, which already has guaranteed long-term revenue contracts. Caterpillar is providing $17.8 million in project financing. A leading green tech fund is investing an additional $6 million in project financing. This $23.8 million is non-dilutive funding for the public investors of Blue Sphere because the funding comes in the form of project financing that goes directly into the facility build out. It is not money in exchange for Blue Sphere stock.

    Blue Sphere itself does not invest millions into the facility like Caterpillar and the clean tech fund. However, it earned a 36% ownership stake in this first facility in exchange for the world-class expertise it brings to the table as project manager. This North Carolina facility is a model for how Blue Sphere will build out a large portfolio of waste-to-energy facilities across the U.S., all funded by others, with Blue Sphere keeping a growing equity stake in each one. Blue Sphere is already developing its second U.S. facility in Rhode Island and the company reports that by 2018 they plan to have 11 facilities built with 6 more under construction and development.

    This presents a very unique public company situation. Companies typically go public to raise money from public investors in exchange for stock, and then reinvest this money into growing their business, which hopefully increases the value of the company for public investors. Blue Sphere is getting its growth capital not from public investors, but from the likes of Caterpillar and private investment funds. Public investors who become Blue Sphere shareholders in effect become co-owners of the facilities alongside Caterpillar.

    North Carolina is just one project and Blue Sphere is looking to build many more. Building them becomes easier when you have guaranteed long term revenues contracts from some of the largest utility companies in the world. Major utilities including Duke Energy (NYSE:DUK) and National Grid (NGG) have both signed 15 year contracts to purchase electricity produced by Blue Sphere. In building out the rest of its portfolio of facilities, Blue Sphere plans to have similar financing and contracts from companies of similar caliber.

    The U.S. market is ripe with opportunity now for waste-to-energy. Blue Sphere's focus on converting food waste into energy is a $6 billion global market and one of the fastest growing segments in renewable energy and waste-to-energy. There are only 202 anaerobic facilities where organic waste is turned into electricity in the entire U.S., whereas there are 7,000 in Germany alone. U.S. states are mandating that organic waste no longer be disposed of in landfills and that electric utilities buy a certain percentage of their electricity from renewable generated sources.

    This is an opportunity for investors looking to take a position in the booming waste-to-energy market. Looking at other public companies that are active in the space, Waste Management (WM), the waste industry giant, reports it is engaged in some waste-to-energy projects. However, that only accounts for a small portion of its revenues. Covanta (CVA) has a $2.3 billion market cap and specializes in the conversion of waste to energy. However, Covanta is primarily engaged in solid waste like metal and plastic, not organic food waste. Covanta recently announced in October that through a partnership, it will start to offer organics to waste services in response to demand from municipalities.

    Blue Sphere, with its $2 million market cap has a great opportunity to grow into a $2 billion market cap like Covanta. It is a rare occasion when public investors can participate in this kind of potential upside, starting at the ground level alongside billion dollar players that are providing non-dilutive growth capital.

    Caterpillar, Duke, and National Grid have very likely done extensive due diligence into Blue Sphere before signing these high-value, long term contracts with the company. The fact that Blue Sphere locks in revenues with the largest utilities like Duke and National Grid through long-term power purchase agreements, even before the waste-to-energy facility has broken ground, creates low risk, high return projects, and the enables fast growth of Blue Sphere's portfolio.

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

    Jan 27 11:27 PM | Link | Comment!
  • Pluristem's New Data Proves Potency For Its Clinical Platform

    Readers of journalism, dependent on a daily diet of current news expect objectivity, clarity and at least some degree of intelligence. This did not happen in a recent piece printed in Globes, an Israeli news outlet. The Globes author, Gali Weinreb, made the mistake of trying to interpret upcoming clinical trial information surrounding one of the hottest biotech firms in her nation - Pluristem Therapeutics (PSTI) - who just recently revealed astounding news of efficacy in muscle injury after hip surgery, with their PLX-PAD cells showing 500% improvement over placebo in the change of maximal contraction force of the gluteal muscle.

    From an article posted last Sunday, Ms. Weinreb failed to grasp the important fact that no one in the cell therapy industry but Pluristem can manufacture product at such low cost while keeping up quality and securing regulatory blessing. This will go a long way toward future commercialization. An uncomplimentary comparison between Pluristem and its Australian competitor Mesoblast, Ltd. is not warranted, as Ms. Weinreb likes to think, because in reality the acquisition of stem cells by both companies vastly differs, favoring Pluristem. Their patents for harvesting cells, younger and more vigorous and granted in Mesoblast's own backyard, should result in proof that Pluristem technology is superior.

    Ms. Weinreb then makes the point that Pluristem's early phase muscle injury studies showing non-toxicity are not so critical when in reality they are. And yes, they are "interesting", and then some. Regulators view safety data very carefully. It is essential to continuing along a clinical path.

    Volatility in biotech shares is not a reason to point fingers. Nor is the fact that companies may want to reach out to the public with results of a clinical study. This is what they do. Why Ms. Weinreb cannot grasp that is beyond logic, if she indeed covers her journalistic subjects with any degree of diligence and professional concern.

    Pluristem's CEO, Zami Aberman, had the courage to state that if results of the muscle injury study went south, so would other trials. This did not happen. Efficacy was shown and millions of people will benefit. Contrary to Ms. Weinreb's misguided musings, Pluristem will give to the world not just interesting but also valuable work that has the ability to change the course of medicine.

    Disclosure: I am long PSTI, .

    Jan 21 11:53 PM | Link | Comment!
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