Athersys (NASDAQ:ATHX) is a clinical stage biotech company focused primarily on its proprietary "Off-the-Shelf" stem cell product called Multistem. In a previous article I took a comprehensive look at Athersys and provided more of a "big picture" look at the company. If one has not read that article, or is not familiar with Athersys, I suggest doing so; the article can be found here. In this current piece I will examine the science behind Multistem, and apply those findings to analyze two crucial events for the company. Athersys currently has two ongoing Phase ll trials evaluating the safety and efficacy of the use of Multistem in the treatment of Ulcerative Colitis and Ischemic Stroke, and results are expected early second quarter and roughly the middle of the year respectively. As anyone who has previously invested in the biotech sector knows, the results of these two trials are extremely important in the future valuation of Athersys.
Multistem is a regenerative medicine therapy composed of MAPCs (Multipotent Adult Progenitor Cells). As a non-hematopoietic stem cell it shares many of the same qualities as other stem cells, but also has distinct differences that separate it into its own specific class of cell, and potentially offers Athersys many advantages over its competitors. MAPCs can be harvested from one single consenting adult bone marrow donor and can be cultivated into millions of doses using Athersys' award winning approach in manufacturing. Current research has shown that MAPCs can reduce inflammation, protect damaged or injured tissue, and enhance the formation of new blood vessels in regions of ischemic injury. A distinct advantage for Athersys in regard to its Multistem platform is that these cells are allogeneic and do not require the need for tissue matching. The allogeneic aspect of these cells establishes that they can be given to anyone and have the same consistent safety profile and affects. This is much different than many other stem cell therapies where the cells are harvested from the patient, processed, and then put back into the patient. That autologous approach can require several days to complete, and is another reason why the "Off-the-Shelf" aspect of Multistem is so practical-it allows patients to be given the product right away, thus combating the disease as early as possible. The following description was taken from Athersys' website and sums up the characteristics of Multistem quite well:
Though MAPC's have the potential to differentiate into a variety of cell types, the primary mechanisms of action of MultiStem appear to be achieved through the production of a physiologically relevant and complex set of therapeutic molecules in response to the local environment. In the initial indications Athersys is pursuing, the cells appear to minimize the inflammatory reaction that occurs in response to ischemic events (such as myocardial infarction or stroke) or the anti-host immune reaction seen in graft vs. host disease (GvHD), and promote healing and recovery in other ways. Unlike traditional pharmaceuticals, MultiStem cells are dynamically regulated, and have the potential to respond to signals of inflammation or tissue damage in multiple ways. Potential mechanisms of benefit include protection of damaged or injured cells, reduction of inflammation, stimulation of new blood vessels, and the recruitment of other cell types to promote tissue repair and healing.
In comparison to Mesenchymal stem cells (MSCs) specifically, MAPCs have been found to be a more primitive cell type, which is a positive with stem cells, as they are less differentiated. In a 2012 attempt to caterorgize the differences between the two types of cells, it was observed that both cells can differentiate into mesenchymal cells types like adipocytes (fat cells), osteoblasts (bone cells), chondrocytes (cartilage cells) and smooth muscle cells, but that MAPCs can differentiate into endolithial cells as well. In a previous study done looking at the replicative qualities of mesenchymal stem cells, researchers also reported that MAPCs appear to proliferate without senescence, unlike MSCs. Additionally, researchers in a different study had previously observed that MAPCs have active telomerase whereas MSCs do not. Another notable scientific finding is that human MAPCs can be expanded in vitro for greater than 70 population doublings whereas human MSCs can only be expanded in vitro for 20-25 population doublings. In summary, both cell types have incredible therapeutic potential; however, the more primitive state of MAPCs, the presence of active telomerase, and the ability to proliferate without senescence gives MAPCs a distinct advantage over MSCs in my opinion. For more specific scientific differences between the two cells I recommend looking at this chart comparing the two stem cells.
Validation for the Multistem platform: Multistem has been successfully used in two Phase l trials to date. First being an acute myocardial infarction trial that had results presented on September 23rd 2010 and a second for the prevention of Graft-versus-Host Disease, with results presented on February 1st 2012. Highlights of the three cohort based acute myocardial infarction trial included improvements in mean left ventricular ejection fraction in all three of the treatment cohorts, and among patients with more severe heart attacks - as measured by baseline LVEFs less than or equal to 45% - the 50 and 100 million dose groups each demonstrated better than a 25% improvement in mean LVEF at 4 months post treatment over baseline. A key highlight from the GvHD trial was the finding that a substantial reduction in acute GvHD incidence in those patients receiving a high single dose of MultiStem, relative to historical experience (11% grade II-IV GvHD, and 0% grade III-IV GvHD) was found, and that in addition to that, there was a dose response relationship observed in the trial. This meant that the patients who were administered a higher dose of Multistem proceeded through the trial with better results. To summarize, in both trials statistically significant findings occurred, all while a clean safety profile was observed. Both of these indications are being explored for progression into Phase ll/Phase lll studies, and there have been talks about finding a partner for either one, or both of them. Not only has Multistem been dubbed as safe in all of its clinical trials to date, but it has also been sucessfully used by Athersys' collaborator RTI Surgical (NASDAQ:RTIX). With its use of licensed MAPCs from Athersys, RTI has used the stem cells in their Map3 cellular allogeneic bone graft process. This work is further validation of the safety, tolerability, and future potential that the MAPC based Multistem product has. When asked about the Map3 process in their most recent conference call, the Executive Vice President, North American Sales and Marketing, Roger Rose, had the following to say; "As we continue to put inventory on the shelf, they'll continue to put it into hospitals, and our expectation is every month it's going to grow and it's going to be a big benefit to the company long term." Though Multistem is not yet marketed for use on its own, it is my belief that it has a substantial list of positive attributes, and the work that has been done so far is pointing in a successful direction.
Multistem for the treatment of Ulcerative Colitis
Background: On December 21st 2009, Athersys announced that it had entered into a global agreement with Pfizer to market and develop Multistem for the treatment of Ulcerative Colitis. This caused an extreme spike in the share price, as it should have, because it added further validation to the science and provided Athersys with a new revenue source among other things. The trial officially started in February 2011, and Athersys just recently announced the completion of patient enrollment. Ulcerative Colitis is a form of inflammatory bowel Disease, more commonly referred to as IBD. Inflammatory bowel diseases primarily affect the colon and small intestine, and can be extremely painful and inconvenient for the person who has the disease. Existing measures of treatment are scarce, and do not combat the disease all that well. The two most common forms of IBD, Ulcerative Colitis and Chron's Disease, affect an estimated four million people in the United States, Europe, and Japan. Overall, the total drug revenues for IBD are estimated to reach 9.7 billion dollars in 2017, representing a very lucrative market for Athersys. Athersys and Pfizer decided to evaluate Multistem in the treatment for Ulcerative Colitis specifically because UC tends to be more homogeneous than Chron's disease, and there is a more efficient and effective way to assess the condition of a patient-an endoscopic evaluation.
My Analysis: My belief, based on the scientific aspects and characteristics of MAPCs, is that Athersys will publish positive results. I find increased faith in this by the fact that the study is partnered with Pfizer, a global healthcare giant who obviously did their homework before choosing to partner with this indication. Another, perhaps more reassuring fact is that Osiris Therapeutics (NASDAQ:OSIR) achieved positive Phase ll results for the treatment of Chron's disease using their stem cell therapy PROCHYMAL, a MSC based therapy. As I have previously mentioned, I believe that MAPCs are better stem cells than MSCs, and I feel that if positive IBD results can be achieved from MSCs, that it is likely that they will also be achieved using a "better" type of stem cell, the MAPCs. Primary endpoints for the trial are 90 days after completion, and Athersys will likely take a month or so before they publish the results, leading me to conclude that the general public will have results in early 2nd quarter 2014. Osiris had a substantial gain when they released positive data, and though my view is still speculative and should be approached with caution, I believe that the same is soon to come for Athersys.
Multistem for the treatment of Ischemic Stroke
Background: After a great deal of positive preclinical work, Athersys announced that it started a Phase ll double blind, placebo controlled study to analyze the safety and efficacy of Multistem for the treatment of ischemic stroke in October of 2011. Stroke is the third leading cause of death in America, and one the overall global leaders is causes for mortality as well. An ischemic stroke occurs when there is blockage in a blood vessel in the brain, and accounts for 87 percent of all strokes. It is predicted that the potential market for a new therapy could be 15 to 20 billion dollars annually, and with an aging population that number is poised to rise. The current method of treatment for stroke is an anti-clotting factor called tPA. It is the only FDA approved method of stroke treatment, but it is far from ideal. One of the biggest problems with tPA is that it has to be administered within 3-4 hours of a person having had a stroke. That is an extremely small time window for a person to have a stroke, get to a hospital, be thoroughly examined and correctly diagnosed with a stroke, and then receive treatment, and because of that, it is estimated that less than five percent of stroke patients receive tPA. Athersys is approaching stroke in a new and more suitable manner. In the current Phase ll trial Athersys is having Multistem be administered to a patient within one to two days following the stroke. This represents a practical timeframe for the entire processes of having a stroke and getting treatment, and should prove to be applicable for most stroke patients. Results are heavily anticipated, and are expected sometime around the middle of the year 2014.
My analysis: My belief, based on my research into the science and characteristics of MAPCs, is that Athersys will publish positive results for the stroke study as well. I note, however, that there is still plenty of uncertainty about the application of Multistem, but I feel this way because of the factors listed below:
- The therapeutic properties of MAPCs that I have written about above. I personally believe that the "protection of damaged or injured cells, reduction of inflammation, stimulation of new blood vessels" will be especially evident in the case of an ischemic stroke.
- Stemedica Cell Technologies, Inc. is a privately held company based in San Diego, California and is currently conducting a Phase l/ll trial for the treatment of ischemic stroke using their therapy STEMEDYNE-MSC, a MSC based stem cell product. They just recently moved into Phase ll trial after initially treating 15 patients. The primary reasons that I am optimistic about this trial are the comments that were made in a recent press release regarding the patients. Michael Levy, MD, PhD, FACS, the Principle Investigator and John Crawford, MD, Co-Investigator at the University of California, San Diego (UCSD) clinical site stated "We are optimistic that we will continue to see efficacy in Phase II based on improvements in levels of alertness and functional speech we have observed, especially in those patients with significant injuries." Another very optimistic quote was made by Nabil Dib, MD, MSc, FACC, the Co-Investigator at the Mercy Gilbert Medical Center, Chandler Regional Medical Center in Gilbert, "We are extremely excited about the Data Safety Monitoring Board's report on the first 15 patients treated and are encouraged by our preliminary observations of the improvements of the patients' clinical symptoms." I believe that though Athersys has no relations with Stemedica, this trial and the results so far are important to Athersys investors, because Stemedica is observing improvement in patients by using what I believe to be an inferior type of stem cell product. Stemedica is also seeing positive initial results using a very different treatment approach. They are administering STEMEDYNE-MSC to patients six months after they have had a stroke. I believe that Athersys' one to two days after stroke approach is more practical and will prove to be more therapeutically beneficial. To sum up Stemedica, they are seeing positive signs on initial studies using an inferior stem cell type, and also what I believe to be an inferior approach to treating strokes. It is exciting to think about what MAPCs administered one to two days after a stroke will do if MSCs being administered six months after the fact are providing therapeutic benefits.
Investing in biotech stocks can be a very risky game for investors, however when people perform due diligence in investing I believe that risk can be greatly cut. A key aspect to small biotech companies is their clinical trial results. The results are contingent to getting a therapy FDA approved, and in turn, key for a company to start marketing and making money on that product. Whether or not one believes that the trial results will be positive is up to debate, but one cannot negate the fact that they will both be very big movers in the share price this coming year. No one knows for sure, but It is for the reasons that I have listed above, scientific and relative analysis, that I believe Athersys will release positive ulcerative colitis and ischemic stroke results. Athersys has a special type of science, an extremely smart and honest management team, and is set to succeed when comparing the company relatively to its competitors. Thank you for your time and consideration in reading this article, and please refer to my previous article found here for more information regarding Athersys as a whole.
Disclosure: I am long ATHX.
Business relationship disclosure: Business relationship disclosure: JDT Investments is a team of three brothers who specialize in the biotechnology sector. This article was written by Jacob, Joel, and John Damerow, all investment analysts at JDT.