Athersys (NASDAQ:ATHX) is an international biopharmaceutical company engaged in the discovery and development of therapies designed to extend and enhance the quality of human life. Athersys' lead product development programs utilize MultiStem®, a proprietary "off the shelf" stem cell product that has shown promise for treating indications in the inflammatory and immune, neurological, and cardiovascular disease areas, as well as certain other conditions.
Recently I got up close and personal with Athersys CEO Dr. Gil Van Bokkelen to discuss the exciting and potentially transformational treatments that ATHX is currently developing.
Since August 2000, Van Bokkelen has served as chief executive officer and chairman of ATHX , a company he co-founded in 1995. Until May 2006, he also served as the company's president. Van Bokkelen is also chairman of the board of governors for the National Center for Regenerative Medicine.
Q. Athersys may be one of the most misunderstood companies in the biotech sector, with institutional investors and others not fully grasping the data relevant to the company's treatment for ischemic stroke, one of the biggest areas of unmet need in clinical medicine today. What have investors missed?
In general, investors tend to avoid focusing on things they don't really understand. Regenerative medicine and cell therapy is still considered an emerging technology area, and a lot of people that heard all the early hype about the potential for stem cells became less enthusiastic when that didn't immediately pan out. Consequently, over the past several years many investors haven't really focused on the sector. As a result, many people have missed the substantial progress that we have made. Furthermore, stroke is regarded as a tricky area, because a lot of companies have tried to develop a novel therapy over the past 20 years, with little success. So a lot of people hear "stroke" or "cell therapy" and they just tune out. But that ignores how MultiStem, our off the shelf stem cell therapy, is fundamentally different from what people have tried to do in the past, and what we have accomplished.
In our view many investors have missed several important things.
First, the data from our Phase 2 clinical trial evaluating the treatment of stroke victims with MultiStem demonstrates a favorable safety profile and promising evidence of effectiveness across a range of important clinical metrics - the things that patients, their families, regulators and clinicians care most about. Second, in contrast to the current treatments available to patients, such as the drug tPA or surgical interventions, which may only be used within several hours after the stroke has occurred, the treatment approach with MultiStem is very simple and much more practical than current standard of care. In fact, the results of the trial suggest stroke patients can be effectively treated up to 36 hours after a stroke has occurred, which would be very practical from a clinical perspective. Third, we have a technology that is uniquely scalable. This is essential to meeting the demands of a large unmet medical need for an area like stroke, which affects millions of patients every year. Fourth, we have a deep understanding of how the therapy works, and how it is fundamentally different from things that people have tried previously that didn't work, which is critically important. Finally, we have established a clear and efficient regulatory path for obtaining approval.
Q. In April, 2015 investors were quick to react after ATHX missed its primary endpoint on its original phase 2 trial, which turned out to be a relatively simple issue to address. What did ATHX learn from the original phase 2 trial, specific perhaps to the optimum time to treat patients?
Essentially we learned that in order to achieve the desired therapeutic effect, we need to treat stroke patients with MultiStem within 36 hours of the stroke, which would represent a huge improvement over current treatments, which have to be used within several hours. However, the data also showed that when we treated patients beyond 36 hours, we missed the optimum treatment window, and patients didn't benefit nearly as much as when they were treated earlier.
But it's important to recognize that current treatments, tPA and surgical removal of the clot that caused the ischemic stroke, are used on less than 10% of all stroke victims based on the narrow treatment window and other limitations. In contrast, based on our clinical data, the treatment window with MultiStem, of up to 36 hours after the stroke has occurred, would be relevant to perhaps 90 - 95% of all stroke patients, because most stroke victims can get to the hospital in that time frame.
Q. So it sounds like establishing the appropriate time window for treatment is very important. Is this something that clinicians understand and agree with?
Absolutely. Physicians that treat stroke patients have recognized for a long time that "time is brain", and early treatment is essential - that's widely accepted and there really isn't much debate about that. In fact, the early clinical trials with tPA actually failed because they needed to define the appropriate treatment window, which has now been established as within 4.5 hours after the stroke has occurred. Unfortunately, the vast majority of stroke patients don't get to the hospital in that narrow time window, and so they can't be treated with tPA. Surgical removal of the clot, or thrombectomy, must be done within 6 hours, so a bit further out, but this approach also has limitations in terms of the size and location of the stroke, so it's not relevant to many patients. The combination of tPA and thrombectomy appears to be pretty effective, but once again, that will be limited to a small percentage of stroke patients - ultimately only a subset of those patients that get to the hospital fast enough after the stroke to be treated with tPA.
Q. So how was the time window for treatment with MultiStem established, and why is that important?
Our published preclinical data using animal models showed pretty clearly that we could treat with MultiStem 24 hours after the initial stroke event or even beyond that and see substantial recovery. The data also demonstrated earlier intervention is important to maximizing therapeutic benefit - reinforcing the longstanding clinical reality that time is an important factor. The multiple studies that were conducted also explained how the treatment was providing benefits, which occurs on several levels.
It's important to recognize that we originally designed the MASTERS-1 trial to treat stroke patients within a window of 24 - 36 hours post stroke - well beyond the limits of the currently available treatments.
The initial 24 hour window was used to identify patients that were exhibiting early substantial recovery, either because they experienced a Transient Ischemic Attack (or TIA), which is a temporary stroke, or because they had a small focal stroke and the body was able to compensate by upregulating blood flow in the surrounding blood vessels, or because the patient was successfully treated with tPA or surgical removal of the clot. The clinical team wanted to exclude those patients from participating in our study, to reduce the "background noise" in the placebo arm, which has been problematic in prior stroke studies. With other approaches people have tried, patients had to be enrolled immediately, and clinicians couldn't tell which patients may have had a TIA, or were likely to recover without treatment. We didn't want to have a lot of those patients in our study, because we really wanted to focus on the patients that aren't recovering or being helped by current standard of care - in other words those patients with meaningful, durable neurological and motor skill deficits after the stroke. Those are the patients that are likely to have substantial long term disability, and the ones that really need help.
In the MASTERS-1 trial we had to rely on the bone marrow and cell transplant processing centers to prepare our product, because we didn't have the "off the shelf" version ready to go quite yet. Unfortunately, most bone marrow and cell transplant processing centers only operate Monday through Friday, and are only open a few hours each day because the procedures are highly scheduled. But strokes can happen any day of the week, and at any time of day - they don't happen on a convenient schedule. So unfortunately, we saw that we were missing a huge percentage of eligible patients for our trial, because many stroke victims had the stroke at the wrong time of day, or on wrong day of the week, when nobody was around to prepare the product in their treatment window. As a result, they couldn't be enrolled in the trial.
So we either had to live with slow enrollment, or modify our treatment window. Ultimately, after discussing it with the clinical investigators at participating sites, we decided to extend the treatment window out to 48 hours in an effort to capture more of these patients. However, in the process, we learned an important lesson - we need to treat patients within 36 hours to achieve the desired therapeutic effect, and earlier treatment is better. In the upcoming studies where we have regulatory authorization and are now preparing for, we will be treating patients in a window of 18 - 36 hours after the stroke, which we and the independent clinical investigators feel is an optimal window for this trial, and also represents a very clinically practical time frame.
Q. So, in that sense, people looked primarily at an issue unrelated to the efficacy of MultiStem, not realizing that the data was caused by a logistical issue rather than efficacy of the MultiStem?
Exactly. A lot of people missed the main observations from the study, which included a good safety profile, and consistent evidence that treatment with MultiStem within 36 hours was associated with a substantial benefit. This was shown by the proportion of patients that achieved good or excellent recovery in each of the clinical evaluations conducted, lower rates of life threatening adverse events and mortality, and clear biomarker data that corroborates key aspects of the therapeutic hypothesis. Many people only heard "missed the endpoint", and reacted to that.
But based on a lot of feedback we have received from clinicians, regulators and others that have reviewed the data, it's clear that many people see it for what it is - a promising step forward that could ultimately redefine stroke care as we know it.
Q. Earlier this year the final results of the MASTERS-1 phase 2 trial were presented at the 2016 International Stroke Conference, which is the preeminent annual international clinical conference for the stroke field. That event seemed to have generated enthusiasm among clinicians and a more positive reaction among investors. Why is that?
The final one year data from the trial showed that patients treated with MultiStem were showing a much higher rate of "Excellent Outcome", which in practical terms means that these patients were achieving essentially complete recovery in each of the three clinical assessments that were conducted for each patient. This includes the NIH Stroke Scale, modified Rankin Scale, and Barthel Index of activities of daily living. Among all subjects enrolled in the trial, clinicians saw that at one year after the stroke, nearly three times as many patients achieved an excellent score in each assessment, reflecting full and durable recovery after treatment with MultiStem, and this was statistically significant with a p = 0.02.
Furthermore, when stroke victims were treated with MultiStem in accordance with the original trial protocol, more than five times as many patients achieved an Excellent Outcome compared to those that received standard of care and placebo. That was statistically significant with a p = 0.001.
Importantly, clinicians participating in the study saw that 67.7% of patients treated within 36 hours of the stroke achieved an excellent score in the Barthel Index of activities of daily living at one year, which was substantially higher that the control group, and also statistically significant (p = 0.03). The Barthel Index focuses on the activities that most patients and their families care about, including being able to walk, eat, get dressed, go the bathroom, shower or bath, and conduct other activities independently without the need for assistance. Study investigators also saw that when patients were treated with MultiStem they experienced meaningful reductions in acute hospitalization, time in the Intensive Care Unit, and other things that really resonated with clinicians. This included a meaningful reduction in life threatening adverse events, fewer secondary infections and other events that delay or impede patient recovery, and lower mortality. Importantly, the biomarker data from the study was consistent with (and we believe corroborates) key aspects of the therapeutic hypothesis, and essentially this indicates the therapy is working the way we thought it would.
Q. So how does MultiStem achieve all that? What exactly is the therapeutic rationale for how the treatment works?
Great question. A key difference between MultiStem and traditional drugs is that the cells that make up our product are capable of promoting healing and tissue repair in multiple ways. Essentially we think of them like living drugs that dynamically react to the needs of the body. Traditional pharmaceuticals or biotechnology treatments are almost always designed to do only one, very specific thing. Unless it's very quickly removing the clot that caused the stroke, we know that traditional single mode therapies are not really likely to help a stroke patient recover as much as they would like. A lot of prior studies provide evidence of that.
We have actually spent years working with outside independent experts in the field to develop a detailed understanding of how MultiStem behaves when it is administered in models of acute neurological injury, including stroke, traumatic brain injury, and other indications. The cells do multiple things in parallel, which we believe is critical to their effectiveness.
One of the key things that we and others independent labs have learned, is that our brain is essentially connected to another very important organ in our bodies, the spleen. We now understand that the spleen acts as an important immune reservoir, and contains cells that most of the time are not doing anything, other than quietly waiting for something bad to happen. However, following an injury to the brain, a powerful set of signals get sent to the spleen that causes hyperinflammation to occur - essentially because the immune system overreacts to the injury. Unfortunately, this results in a lot of additional damage to the brain, and that ultimately makes things much worse, and makes it much harder for the patient to recover.
Data from our published preclinical work has shown that if we administer MultiStem cell therapy in the appropriate time frame, which our clinical results demonstrate is within 36 hours, many of the cells actually home to the spleen, and they can neutralize that hyperinflammatory cascade before it creates a lot of permanent damage. Our research results also show that the cells stimulate important reparative pathways that we believe help patients get better over time.
Q. Based on these results, the FDA recently granted a Special Protocol Assessment, or SPA designation for a pivotal Phase 3 trial for the use of MultiStem to treat stroke patients. This puts an approval to treat Ischemic stroke right on the company's doorstep. What did the FDA see that the market has not yet appeared to have factored into the share price?
We have always tried to be very systematic and meticulous regarding our development approach, including our interactions with the FDA and other regulators. Some companies treat the FDA as a hurdle or a problem they need to overcome, and we don't see it that way. We believe the FDA and other regulators have a critically important role to help protect and ensure patient safety, and so our philosophy is to work with them in a collaborative and thoughtful manner. Anybody that has studied the history and origins of the agency should understand that a strong FDA is in the best interest of the public, because it helps to protect patient safety and well-being.
In contrast to what some people say, the FDA is also very supportive of the development of innovative medicines - but regulators want to make sure that those medicines are safe, well characterized, and meet appropriate standards. When the FDA sees something that they believe has the potential to address a serious area of unmet medical need, there are steps they can take to help expedite development. If you think about it, this makes perfect sense, because, just like everyone else, the people at the FDA want to see safer and more effective medicines developed to address areas of unmet medical need.
Following the completion of our Phase 2 trial, we presented our results to the FDA for their review and consideration. The FDA is very data centric - and we provided them with a lot of information regarding the safety and efficacy findings from the MASTERS-1 study. They then invited us to conduct a formal meeting, referred to as an "end of phase 2 meeting" to discuss the findings and the potential path forward. The review team was very thoughtful, supportive and encouraging. Ultimately from those discussions and the follow up activities, we were able to reach agreement with the FDA that was reflected in the SPA. The SPA is a written agreement that specifies that the study design, clinical endpoints, planned conduct and statistical analyses are acceptable to support a regulatory submission for approval of the MultiStem product for treating ischemic stroke patients if the study is successful. As defined in the SPA, we will run a 300 patient pivotal Phase 3 study that will evaluate administration of MultiStem to patients within 18 - 36 hours after a stroke has occurred, using well established clinical assessments. This study will be called the MASTERS-2 trial.
In essence, this lays out a clear path to achieving something that no company has ever been able to do - obtaining approval for a practical and scalable therapy for treating stroke that could provide benefit to a large proportion ischemic stroke victims. That would be a major achievement - for us, for patients and their families, and our shareholders.
Q. One of the concerns about cell therapy is that it is typically a complicated procedure that requires specialized facilities, or highly trained personnel to prepare the product. This can make the whole process challenging, especially for hospitals that don't have those types of facilities. How is MultiStem different?
We believe that in addition to scalability and other factors, simplicity and ease of use are critical to product adoption. If it's complicated, or requires a lot of specialized training or infrastructure, people will be less willing to use it.
In our case, we've created a very simple product format. We refer to MultiStem as an "off the shelf" therapy, and we have spent years refining and optimizing the product format, to make it very easy to use. The entire process essentially consists of four very straightforward steps. First, remove the product from the freezer where it is stored. Second, thaw the product. Third, transfer the product from the vial into an IV bag of saline. Four, administer the product to the patient.
As I said, the entire process for prepping the product is very simple, and can be done right in the hospital pharmacy, or in the hospital ward where patients are treated. It doesn't require specialized infrastructure or a lot of training. When you combine that simplicity with being able to treat patients in a clinically practical time frame, and what we believe is a compelling safety and efficacy profile, we are confident we've created a strong foundation for success.
Q. You've mentioned scalability as being important. Why is that such a big issue?
Historically one of the big things that has prevented cell therapy from becoming a widespread clinical reality is the lack of scalability. In practical terms, it may be easiest to appreciate this in the context of what happens with a traditional bone marrow transplant procedure. For every patient that needs a transplant, you need to find an appropriately matched donor, which can be challenging. Furthermore, only enough cells are obtained from the matched donor to treat one patient. In most instances the patient also has to be immunosuppressed, to reduce the risk of complications. So the process is complicated, and really not scalable - one well matched donor for every patient that needs help. As a result, a lot of patients can't get the treatments they need.
However in our case, because of the special and robust growth properties of the cells that make up MultiStem, we have demonstrated that we can produce the equivalent of millions of clinical doses using a modest amount of material from a single healthy, consenting donor. We've also demonstrated can also do this consistently across donors, so it's reproducible.
Perhaps just as importantly, we have also shown in multiple clinical studies that we can administer MultiStem just like type-O blood. There is no need for tissue matching or immune suppression, and the product has shown very good safety, which is very important from a clinical and regulatory perspective.
Ultimately, scalability translates to the ability to provide a consistent, well characterized, well validated product, which we believe is critical. Furthermore, it allows us to treat a lot of patients, which in the case of stroke and other indications we are pursuing, is essential.
Q. Switching gears for a moment, Japan is experiencing a serious problem caused by a rapidly expanding aging population, and given that the risk of stroke increases with age, it has created a substantial public health issue there. Earlier this year you announced a partnership with a company in Japan, and recently you announced PMDA authorization to run a clinical trial there with your partner, Healios. What can you tell us about that?
Most of the world is experiencing a substantial increase in the elderly segment of the population. This is a predictable consequence of the aging baby-boom segment of the population, meaning people born in the post-World War II years. But what a lot of people haven't really grasped is that this expansion of the elderly population has enormous consequences on healthcare systems around the world. That's because the elderly are more susceptible to a whole host of aging related diseases and conditions, and stroke is among the most serious and common.
A rapidly expanding aging population poses serious financial and operational challenges to the national healthcare system in Japan, and also represents a huge social problem. In recognition of this, three years ago the Ministry of Health and the PMDA, which is the equivalent of the FDA in Japan, announced a new initiative designed to promote the accelerated development of innovative medicines that could help address the problems they face.
One of the main initiatives created a new, accelerated regulatory path specifically designed for regenerative medicine and cell therapies. Specifically, this new system makes it possible to run a single, well designed study and if the trial demonstrates robust and consistent safety, and evidence of therapeutic benefit, it makes it possible to obtain either conditional or full approval, as well as full reimbursement.
As we did with the FDA, we presented the results of the MASTERS-1 trial to the PMDA, and worked with Healios to define an appropriate clinical trial design. In September we announced that PMDA accepted the plan for the proposed confirmatory trial, and Healios intends to begin that study in early 2017. Like the MASTERS-2 trial, it will focus on treating ischemic stroke patients within 18 - 36 hours after the stroke has occurred. So essentially, if the study is consistent with our prior findings, our partner Healios could obtain approval in Japan. We have seen a lot of interest and excitement in the study in the stroke clinical community there, which is encouraging. Healios' stock has appreciated pretty dramatically since we announced the partnership and the final results of the trial.
Q. So it sounds like the partnership and recent regulatory initiatives in Japan are pretty meaningful for both ATHX and Healios. Along those lines, does the recent announcement regarding the SPA impact your strategy outside of Japan? Are you looking to partner outside of Japan, and if so, do you think regulatory activities will help attract partnerships?
We are interested in partnering outside of Japan, and we are actively exploring opportunities. The regulatory environment does have an important impact on that, because a lot of potential partners fear the unknown, including what types of studies will have to be conducted in order to obtain approval. Historically, it's usually the case that regulators require two, large pivotal studies, and that can be expensive and time consuming, especially if they are big trials. However, in our case, we have established a clear path to potential approval with the FDA, and we are now looking to obtain the same type of guidance from the European Medicines Agency, or EMA, and Health Canada. We've already had initial interactions with regulators in Europe and Canada, and we are very confident that everyone will be in alignment.
That's important, because whether we do a broad international partnership, or a European only partnership, everyone needs to be clear on what the path to success looks like. Clearly establishing that we are one additional reasonably sized study away from being able to obtain approval is extremely valuable, and allows potential partners to map out what will be required from a development perspective. Obviously everyone recognizes that the market opportunity is enormous, and so the regulatory clarity helps define a very attractive risk benefit profile.
Q. To that effect, if ATHX simply kept North American rights, the market potential is enormous in and of itself. Again, talking price is premature, however, would it be appropriate to speculate that potential market could be worth billions of dollars per year?
I think that is very realistic, and perhaps even a bit conservative. We think of it this way - every year there are nearly 17 million people that suffer a stroke throughout the world, and roughly half of the survivors are left with substantial permanent disability. As I mentioned before, stroke is the leading cause of serious disability in the world. Some patients require full time institutional care, while others are dependent on family members to take care of them. In terms of quality of life and economic impact, it's a huge burden, and very costly. A treatment that could alleviate a lot of that burden would clearly be very, very valuable.
Another way to think about is this - every year in North America, Europe and Japan, more than 2.2 million people suffer a stroke for the first time, and with the rapid growth in the elderly population as a result of the aging baby boomer segment that number is expected to go up in the years ahead. We know that the 36 hour time frame for MultiStem treatment is potentially relevant to the vast majority of stroke victims. However, if we only reached a million patients a year, which I think could be conservative, that could easily translate into an opportunity worth tens of billions of dollars a year, and obviously the value in North America would be a big piece of that. Even if people discount things because it's stroke, or cell therapy, or for whatever reason, it's a huge opportunity, and I don't believe that value is reflected in our current stock price.
Q. From a financial standpoint, how much benefit is there in waiting for product approval instead of partnering prior to the study? Is there many millions in potential value lost by partnering too early?
Obviously, waiting to partner until after the pivotal study is successful would make the opportunity substantially more valuable, because it would essentially be completely de-risked at that point. However, we would then be responsible for covering the entire cost of the trial. In this case it's not a huge trial, so that's potentially doable, but there is a cost-benefit trade off. The concept of running a competitive partnering auction based on the successful phase 3 trial results is enticing, but we believe that partnering in advance of the trial could allow us to create a lot of value as well, so we are actively exploring that option, and although there are no guarantees, I'm optimistic.
Either way, partnering will create additional validation, and put us is a strong position. It's also important to recognize the stroke program is not our only asset, and we have multiple ways to establish value enhancing partnerships.
Q. So how does ATHX intend to capitalize it's way to success?
Good question. We have several ways to fund our core activities and key initiatives. First, as we have discussed, over the past couple of years in particular we have been successful at establishing partnerships that provide a meaningful amount of funding. As we announced on our recent earnings call, we have already generated more than $16 million in revenue from partnerships this year alone, and the vast majority of our programs are currently not partnered - so we have a lot of flexibility. Second, we have been very successful at obtaining grant funding to support our clinical and preclinical programs, including two of our ongoing clinical trials, and there are some interesting project financing initiatives that could be relevant as well. Third, we have an equity line in place with one of our institutional shareholders, which means that if we feel we need to obtain more modest amounts of capital, there is an easy and efficient way to do it. Finally, we have a shelf registration available, so we can always access the capital markets when we feel it's appropriate.
Q. You mentioned other clinical programs, which is interesting. ATHX is clearly not a "one trick pony" as they say. In this discussion we've focused mainly on MultiStem for ischemic stroke, however, ATHX is also developing novel treatments for cardiovascular and inflammatory and immune conditions. Why is that important, and where are those programs currently?
Having spent a lot of time around hockey rinks, I think of it as a "multiple shots on goal" strategy. In my view we have a highly unusual, if not unprecedented opportunity, to develop MultiStem for several significant areas of unmet medical need. Success in any of those areas will have a big impact and create a lot of value for our shareholders. We know that in hockey not all the shots will go in, but if you get enough high quality shots, a few usually go in, and that's how you win.
Currently we have two other active clinical programs, including an ongoing Phase 2 clinical trial for treating patients that have suffered a heart attack, and another study evaluating administration of MultiStem for patients suffering from Acute Respiratory Distress Syndrome, or ARDS. We expect data from both of those programs in 2017.
Previously we published our results from a Phase 1 trial evaluating MultiStem administration to heart attack patients, and those results were very promising in our view and a lot of other people have agreed with that. In fact, the NIH awarded us a $2.8 million grant to support the Phase 2 trial we are currently running, and that was a very competitive peer reviewed process. While substantial progress has been made in recent years, and thankfully people are more likely to survive a heart attack once it occurs, heart disease remains the leading cause of death. Many people that survive the initial heart attack are at risk of progressing to congestive heart failure, especially women. An increasingly obese and aging population isn't exactly helping things. The economic and quality of life impact is huge - the American Heart Association has projected that within a few years, heart disease will have a cost of more than $1 trillion annually in the U.S.
In the pulmonary area, in the past couple of year we and our collaborators published results from a couple of very encouraging studies evaluating the administration of MultiStem in models of acute lung inflammation, which is the fundamental cause of ARDS. This is another challenging area where there is no effective treatment, and it affects hundreds of thousands of people a year. Our prior work led to our obtaining funding from both Innovate U.K. and the NIH to support the clinical trial we are now running. So AMI and ARDS are both examples of using grant funding or project financing to support important clinical trials, and we have numerous other examples of that.
Q. So it sounds like the company is positioned to achieve success in multiple areas. If you had one worry, what would it be?
I think we are pretty well positioned, but there are always challenges. Externalities and the "what if's" can drive you nuts if you let them. My basic philosophy is that I try to keep the team focused on doing what we need to do to be successful, and not worry about things we can't control. Paraphrasing Matt Damon in the movie "The Martian" - you solve the first challenge, then the next, and then the next until you're home. There's a lot of wisdom in that philosophy.
We have an incredible group at Athersys, and we aren't afraid of big challenges. We are committed to establishing the company as an industry leader. I believe that success in any of the programs we are currently pursuing will enable us to achieve that.
Disclosure: I am/we are long ATHX.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.