A number of new and innovative medical paradigms are being explored by companies in the life sciences sector, with one of the front-runners being cell therapy - a disruptive technology that has, in the past few years, progressed out of preclinical studies and into clinical development. To learn more about the transformative promise of regenerative medicine, and what investors might expect from companies working in the sector in 2015, The Life Sciences Report asked analysts Jason Kolbert of Maxim Group and Dr. Christopher James of Brinson Patrick to discuss the advances that could generate robust returns on investment in coming years.
Cell Therapy in a Nutshell
Cell therapies have been gaining momentum in the life sciences for more than half a century. The first cell therapies, bone marrow transplants, were performed in the 1960s, and since then the idea of using healthy cells to replace or regenerate diseased cells has expanded into a number of indications, from cancer to cardiac disease to cosmetic therapy. Today, a number of companies are engaged in both clinical and preclinical trials, and there is some consensus that cell therapies will be "mainstream" in the near future.
The new year could prove a bellwether for regenerative medicine. The sheer volume of companies, universities and financial institutions conducting or backing research and development in the field attests to its potential: The Alliance for Regenerative Medicine [ARM], an advocacy group working with legislators, the investment community and regulatory agencies to promote development of cell therapy technologies, has more than 170 members working in the field.
On the horizon: Australian cell-therapy company Mesoblast Ltd. (OTCPK:MEOBF) [MSB:ASE; MBLTY:OTCPK] is positioning itself for expedited approval of several of its allogeneic [derived from the same species] cell therapy products in Japan in 2015, following passage of legislation in that country that expedites approval.
To get a handle on what investors can expect, and an idea of which companies to keep an eye on, The Life Sciences Report turned to Dr. Christopher James, managing director and senior equity research analyst with Brinson Patrick Securities Corp. and Jason Kolbert, managing director, senior biotechnology analyst and head of healthcare research with Maxim Group. Here's what they had to say about what 2015 might bring in both the sector and for certain companies working in the space.
Asked which specific indications could be most responsive to cell therapies, and about companies working in those therapy areas, Kolbert provided several names.
The next "major event" in the sector will be results in a Phase 2 trial in ischemic stroke being conducted by Athersys Inc. (NASDAQ:ATHX), with results expected in Q1/2015, the analyst said. A number of other trials are also slated to start in 2015, including NeoStem, Inc.'s (NBS) Phase 3 trial in acute myocardial infarction and Cesca Therapeutics Inc.'s (NASDAQ:KOOL) pivotal trial in critical limb ischemia.
Kolbert is also looking forward to two trials involving Mesoblast's own stem cell product, as well as results from Prochymal [remestemcel-L, human mesenchymal stem cells for intravenous infusion, acquired from Osiris Therapeutics Inc. (NASDAQ:OSIR)]. The Mesoblast product is expected to enter a pivotal trial in back pain, and the company is currently enrolling a global trial in congestive heart failure with partner Teva Pharmaceutical Industries Ltd. (NYSE:TEVA). The Osiris product is expected to be redeveloped in the U.S. for graft-versus-host disease [GvHD]. Prochymal has been conditionally approved in Canada and New Zealand for GvHD in children. In addition, Mesoblast is expected to release data in a Phase 3 Prochymal trial in Crohn's disease.
James believes the area where cell therapy - cell regeneration - could have the biggest impact is also one of the riskiest - in the central nervous system [CNS], treating disorders or injury of the brain or spinal cord. James sees applications in multiple sclerosis [MS] and spinal cord injury, to regenerate neuronal function, and in Parkinson's disease, to address the death of dopaminergic cells. He also likes ocular applications, for treatment of such conditions as age-related macular degeneration [AMD].
The Bigger Picture
Kolbert is enthusiastic about the prospects for cell therapies in 2015, and doesn't see much in the way of headwinds. "Cell therapy ultimately lowers the cost of treating disease, and at a time when there is an outcry over high-priced therapies, cell therapy offers promise to lower the cost of treating disease. In terms of politics, the cell therapies we are focusing on are typically not controversial [using adult stem cells, not cells from embryos]. As such, we don't see any controversy. The big change in the landscape now is the acceptance that cell therapy is 'safe.'"
On the plus side of the spectrum is oncology. Using cell therapy in cancer immunotherapy "holds great promise," Kolbert continued. "The ability to rev up the immune system with checkpoint inhibitors, and couple that with therapeutics, like the therapies being developed by Agenus Inc. (NASDAQ:AGEN) targeting glioblastoma, and the work that Inovio Pharmaceuticals Inc. (NYSEMKT:INO) and NeoStem are doing in melanoma, is exciting."
James and Kolbert agree that recent elections, in which Republicans gained control of both houses of Congress, shouldn't affect ongoing work in the cell therapy field. "They have bigger issues to deal with," James commented.
Another concern for investors, according to James, is the question of whether cell therapy companies can manufacture their products on a commercial scale. But the analyst believes that concern can be addressed.
This interview was conducted by Tracy Salcedo-Chourré of The Life Sciences Report and can be read in its entirety here.
Christopher James, M.D., is a managing director and senior equity research analyst focusing on life sciences companies with strong growth potential and developing novel agents for serious diseases including cancer and infectious, neurological, inflammatory, metabolic and cardiovascular diseases. He was previously a senior equity research analyst at Rodman & Renshaw and MLV & Co. Prior to joining Brinson Patrick, Dr. James was chief medical officer and senior vice president of medical affairs at Retrophin, a biotechnology company focused on developing therapeutics for rare and devastating diseases. While at Retrophin, he played a pivotal role in the study design and subsequent acceptance of an investigational new drug application with the cardiorenal division of the FDA to initiate a Phase 2 clinical study in a rare kidney disease called focal segmental glomerulosclerosis. Dr. James has prior buyside experience working at Trivium Capital Management and MSMB Capital Management. Dr. James trained in neurological surgery at Cornell-New York Hospital and Memorial Sloan Kettering Cancer Center. He obtained a medical degree from Yale University School of Medicine and a bachelor of science in biology from Cornell University.
Jason Kolbert has worked extensively in the healthcare sector as product manager for a leading pharmaceutical company, as a fund manager and as an equity analyst. Prior to joining Maxim Group, where he is head of healthcare research, senior managing director and biotechnology analyst, Kolbert spent seven years at Susquehanna International Group, where he managed a healthcare fund and founded SIG's biotechnology team. Previously, Kolbert served as the healthcare strategist for Salomon Smith Barney. He is often quoted in the media and is a sought-out expert in the biotechnology field. Prior to beginning his Wall Street career, Kolbert served as a product manager for Schering-Plough in Osaka, Japan. He received a bachelor's degree in chemistry from State University of New York, New Paltz, and a master's degree in business administration from the University of New Haven.
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1) Tracy Salcedo-Chourre compiled this article for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: NeoStem Inc., Athersys Inc., Inovio Pharmaceuticals Inc. Mesoblast Ltd. is not affiliated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Christopher James: I own, or my family owns, 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 determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. 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) Jason Kolbert: I own, or my family owns, 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 determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. 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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