Seeking Alpha

Life Sciences R...'s  Instablog

Life Sciences Report
Send Message
The Life Sciences Report features leading investment coverage of the life sciences sector, including biotechnology, pharmaceuticals, tools & diagnostics, and medical devices. A Streetwise Reports publication. www.TheLifeSciencesReport.com
My company:
The Life Sciences Report
My blog:
TheLifeSciencesReport.com
My book:
The Life Sciences Report Newsletter
  • Regenerative Medicine Finally Gets Some Respect: Reni Benjamin 0 comments
    Feb 12, 2014 12:23 PM | about stocks: SPPI, KOOL

    Source: JT Long of The Life Sciences Report (2/11/14)

    http://www.thelifesciencesreport.com/pub/na/regenerative-medicine-finally-gets-some-respect-reni-benjamin

    Reni BenjaminOf the many themes that propelled the biotech sector to record returns in 2013, regenerative medicine and therapeutics targeting cancer were front and center. In this interview with The Life Sciences Report, Reni Benjamin, managing director and equity research analyst at H.C. Wainwright & Co., talks about two companies with impending catalysts that play on these themes, and offers his take on the prospects for the regenerative medicine sector going forward.

    The Life Sciences Report: You have been following the regenerative medicine space for more than 10 years, during which time it has had a series of successes and setbacks. Have investors, the U.S. Food and Drug Administration (FDA) and big pharma finally developed a level of confidence with small cell therapy companies such that they feel comfortable working with these biotechs to develop and fund new products?

    Reni Benjamin: I believe we have turned the corner regarding increased confidence, both on a regulatory level as well as on a partnership and investor level.

    From a regulatory perspective, over the last decade, the number of clinical trials evaluating a variety of stem cells in a myriad of indications has never been higher. A quick search of clinicaltrials.gov demonstrates that more than 1,500 clinical trials are currently underway in the space, suggesting that a number of companies have been able to convince regulators of the safety of the cells under investigation.

    "ThermoGenesis Corp. has the potential to make a significant mark in the regenerative medicine space."

    From a partnering perspective, both big pharma (including the likes of Johnson & Johnson [JNJ:NYSE]and Shire Plc [SHPGY:NASDAQ; SHP:LSE]) and big biotech (Amgen Inc. [AMGN:NASDAQ] and Celgene Corp. [CELG:NASDAQ], to name a few) continue to invest in internal regenerative medicine programs as well as to increase the number of acquisitions in the space. And finally, investors have stepped in and committed hundreds of millions of dollars toward the advancement of these therapeutics through clinical development. In short, what was once thought of as an early-stage space is now composed of marketed products generating revenues, as well as products in advanced stages of development (in randomized, controlled phase 3 and phase 2 trials). In our view, the coming decade will showcase the power and potential of the regenerative medicine field and its profound impact on the healthcare system.

    TLSR: How can regenerative medicine companies be more successful in securing funding/partnerships in the future?

    RB: We are firm believers that it is all about the data! In our opinion, the cell therapy space has been plagued by one-arm studies and the use of historical controls as comparisons. Going forward, I believe companies looking to secure partner and investor interest will need to conduct more randomized phase 2 trials to demonstrate the true potential of their therapies. Of course, as part of this clinical development, a keen understanding of the mechanism of action, a reproducible and scalable manufacturing process, and rigorous treatment protocols that have vetted the dose and delivery of the therapeutic cells are musts, in our opinion.

    TLSR: Which companies are coming to maturity in the space?

    RB: There are plenty of companies in advanced stages of clinical development. Mesoblast Ltd. (MSB:ASE; MBLTY:OTCPK), Athersys Inc. (ATHX:NASDAQ), NeoStem Inc. (NBS:NASDAQ), StemCells Inc. (STEM:NASDAQ), and Neuralstem Inc. (CUR:NYSE.MKT) are but a handful of names well known to investors.

    However, I would like to highlight ThermoGenesis Corp. (KOOL:NASDAQ), a company that may not be on the radar screens of a lot of investors, but that has the potential to make a significant mark in the regenerative medicine space. Upon completion of a merger with TotiPotentRX (private)-the company will then be known as Cesca Therapeutics-what was a small, device-oriented company will be transformed into a fully integrated biotechnology company focused on developing novel cell therapies in the regenerative medicine space.

    "The coming decade will showcase the power and potential of the regenerative medicine field, and its profound impact on the healthcare system."

    In our opinion, while the company will always have a base business of selling medical devices-primarily in the cord blood markets, with some sales into the bone marrow processing markets as well-the new focus will be integrating cellular therapies for a wide variety of indications. By way of background, investors should realize that the company's devices have been used to isolate very specific cells in 10 studies to date, eight by TotiPotentRX, one by SpineSmith LP (private) and one in collaboration with the University of Naples. Six of these studies have been presented in peer-reviewed platforms, including studies in critical limb ischemia (NYSE:CLI), two studies in nonunion fractures, one safety study using bone marrow cells in 35 patients as presented by TotiPotentRX at the 2011 International Society for Cellular Technology annual meeting, and an acute myocardial infarction study.

    Regarding its pipeline, we believe the company has six indications that they would like to move forward in clinical trials. Of interest to us is the phase 1b trial in acute myocardial infarction and phase 2 trials in CLI, to be initiated after the merger is completed. We believe the initiation of these two trials should drive significant value for shareholders and attract attention from potential partners.

    TLSR: What catalysts do you see ahead that will move ThermoGenesis to the next milestone?

    RB: The next major milestone for the company is shareholder approval of the merger to form Cesca Therapeutics, set for Feb. 13, 2014. In our opinion, long-term shareholders of both companies should approve the merger. Following an approved merger, we believe the company will be well positioned and strategically aligned to penetrate the regenerative medicine markets and unlock significant shareholder value going forward.

    TLSR: Is there another company with upcoming catalysts you'd like to mention?

    RB: Spectrum Pharmaceuticals Inc. (SPPI:NASDAQ) is an oncology company that could soon be generating revenue from five products: Fusilev (levoleucovorin; advanced metastatic colorectal cancer), Zevalin (ibritumomab tiuxetan; non-Hodgkin's lymphoma), Folotyn (pralatrexate injection; peripheral T-cell lymphoma), Marqibo (vinCRIStine sulfate liposome injection; Philadelphia chromosome-negative acute lymphoblastic leukemia), and belinostat (PXD 101; an HDAC inhibitor targeting solid tumors and hematological malignancies). If successful, combined annual revenues should reach $178 million ($178M) in 2014. We believe Spectrum represents an undervalued player with significant upside potential for the long-term investor.

    TLSR: Spectrum was granted priority review by the FDA last week for the belinostat new drug application for peripheral T-cell lymphoma, with a Prescription Drug User Fee Act (PDUFA) date of Aug. 9, 2014. What could this mean for the company?

    RB: We view this announcement as great news for investors, given that the space has several therapeutic options. Even with a crowded competitive landscape, the fact that the FDA still granted a faster review cycle highlights the potential for belinostat to fill an unmet need. This announcement could also mean that sales could begin a quarter earlier than we had expected. If successful, we expect peak sales of $50M by 2020.

    TLSR: We have seen a flurry of merger and acquisition activity lately. Are you expecting more in 2014? Could any of the companies you have mentioned be acquisition targets, and at what values?

    RB: Biotech acquisitions will likely continue to increase in 2014. Companies comparable to Spectrum, including Astex Pharmaceuticals Inc. (acquired by Otsuka Holdings Co. Ltd. [OTSKF:OTCPK]) and Santarus Inc. (acquired by Salix Pharmaceuticals Inc. [SLXP:NYSE]), have been acquired for 6 to 10 times their 2014 projected revenues. Applying the low end of this valuation metric, we believe Spectrum's acquisition value would be less than $1 billion.

    TLSR: Thank you for your time.

    Dr. Reni Benjamin is a managing director and equity research analyst at H.C. Wainwright & Co. His expertise and coverage focuses on companies in the oncology and stem cell sectors. Benjamin has been ranked among the top analysts for recommendation performance and earnings accuracy by StarMine, has been cited in a variety of sources including The Wall Street Journal, Bloomberg Businessweek, Financial Times and Smart Money, and has made appearances on Bloomberg television/radio and CNBC. He authored a chapter in "The Delivery of Regenerative Medicines and Their Impact on Healthcare," has presented at various regional and international conferences, and has been published in peer-reviewed journals. He currently serves on the UAB School of Health Professions' Deans Advisory Board. Prior to joining H.C. Wainwright, Benjamin was a managing director and senior biotechnology analyst at both Burrill Securities and Rodman & Renshaw. He was also an associate analyst at Needham and Company. Benjamin earned his doctorate from the University of Alabama at Birmingham in biochemistry and molecular genetics by discovering and characterizing a novel gene implicated in germ cell development. He earned a bachelor's degree in biology from Allegheny College.

    Read what other experts are saying about:

    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 Streetwise Interviews page.

    DISCLOSURE:
    1) JT Long conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an employee. She or her family own shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of The Life Sciences Report:ThermoGenesis Corp., Athersys Inc., NeoStem Inc., Neuralstem Inc. Mesoblast Ltd. is not affiliated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
    3) Reni Benjamin: I or my family own shares of the following companies mentioned in this interview: ThermoGenesis Corp. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: ThermoGenesis Corp. and Spectrum Pharmaceuticals Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. 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 and may make purchases and/or sales of those securities in the open market or otherwise.

    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 (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

Back To Life Sciences Report's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • $AGHEF Announces Closing of $425K Private Placement. Read More: http://ow.ly/GoW3i
    2 days ago
  • " $THLD's TH-302 is a platform in a single drug"-George Zavoico. Read More: http://ow.ly/GoVEe
    2 days ago
  • " $INO's platform technology has demonstrated measurable T-cell responses"-Jason Kolbert. Read More: http://ow.ly/GoUQE
    2 days ago
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.