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Of 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.
From a partnering perspective, both big pharma [including the likes of Johnson & Johnson (NYSE:JNJ) and Shire Plc (NASDAQ:SHPG)] and big biotech [Amgen Inc. (NASDAQ:AMGN) and Celgene Corp. (NASDAQ:CELG), 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. (OTCPK:MEOBF) and StemCells Inc. (STEM) are but a couple of names well known to investors.
TLSR: We have seen a flurry of merger and acquisition activity lately. Are you expecting more in 2014?
RB: Biotech acquisitions will likely continue to increase in 2014. Some companies like Astex Pharmaceuticals Inc. [acquired by Otsuka Holdings Co. Ltd. (OTCPK:OTSKF)] and Santarus Inc. [acquired by Salix Pharmaceuticals Inc. (NASDAQ:SLXP)], have been acquired for 6 to 10 times their 2014 projected revenues.
TLSR: Thank you for your time.
This interview was conducted by JT Long of The Life Sciences Report.
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.
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.
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3) Reni Benjamin: I or my family own 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. My company has a financial relationship with the following companies mentioned in this interview: None. 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.
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