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$54 Billion Boost In U.S. Defense Budget Comes As Pluristem's Radiation Antidote Nears FDA Approval

|Includes: AMGN, Pluristem Therapeutics, Inc. (PSTI)

The largest increase in defense spending in history was proposed by the Trump administration last month. The budget increases military and defense spending by $54 billion. "This budget will be a public safety and national security budget…" Trump stated. If we take the President at his word, that public safety and national security will be a priority, then a major boost in spending to stockpile radiation antidotes may be in the future.

As Pluristem Therapeutics (NASDAQ:PSTI), a cell therapy company, moves its acute radiation syndrome (ARS) antidote towards U.S. FDA approval, the proposed increase in defense spending is very favorable timing for Pluristem and potentially, for the U.S. population.

The U.S. already has a $600 billion annual defense budget, the largest in the world by far. Increasing this by $54 billion and making public safety a priority must mean spending on protecting Americans at home against a potential nuclear or dirty bomb attack, or a nuclear meltdown akin to Fukushima, resulting from earthquakes or other natural phenomena.

Deadly ARS is caused by exposure to high doses of radiation to the entire body in a very short period of time. This results in a depletion of immature parenchymal stem cells in specific tissues. Bone marrow can be damaged or destroyed, leading to the inability to produce blood cells and fight infection. PLX-R18 is potentially the perfect antidote because it is a stem cell therapy product that boosts production of platelets, red blood cells and white blood cells.

A 100% recovery rate was shown in animals exposed to radiation when they were treated with PLX-R18. This compares with the placebo group in which only 30% recovered. Bone marrow blood cell production returned to normal within just 48 hours of injecting PLX-R18.

Data is expected in the first half of 2017 from the U.S. National Institutes of Health's (NIH) National Institute of Allergy and Infectious Diseases (NIAID) dose finding study of PLX-R18 in large animals. The NIAID is expected to complete the study any day now, if it hasn't already. The aim of the study is to determine the proper dosage for PLX-R18 in humans. Due to ethical reasons, PLX-R18 studies for ARS cannot be conducted in humans. FDA approval for PLX-R18 as an ARS antidote therefore falls under the Animal Rule, which can lead to FDA approval without testing in humans. Exposure to radiation is the concern. The FDA has already cleared PLX-R18 for a Phase I clinical trial in humans for the treatment of hematopoietic recovery following bone marrow transplants, an indication to treat the side effects of radiation and chemotherapy. That study is expected to commence enrolling patients soon.

The NIAID has indicated that once optimum dosage has been established, it plans to move into the pivotal and final trial, under the Animal Rule, for full FDA approval of PLX-R18 as an ARS antidote for use in humans. It appears the costs these ARS studies are covered by the NIH, leaving Pluristem more room in its budget to move several other indications forward on its own dime.

By 2018, Pluristem may have an FDA approved ARS antidote. Amgen's (NASDAQ:AMGN) blockbuster cancer drug Neupogen® became the first FDA drug approved for the indication of radiation induced myelosuppression, following a nuclear incident, the hematopoietic syndrome of ARS. The FDA granted Amgen this approval under the Animal Rule.

A$157.5 million contract was granted to Amgen for Neupogen by the U.S. Department of Health and Human Services' Biomedical Advanced Research and Development Authority's (BARDA) Project BioShield.

BARDA made two more purchases in 2016 to add to its stockpile. $37.7 million worth of Neulasta was purchased from Amgen and $37.6 million worth of Leukine was bought from Sanofi. These are both leukocyte growth factor products but not specifically FDA approved for ARS.

Assuming BARDA gets a major boost in its budget, based on a $54 billion increase in defense spending, PLX-R18 may be next on BARDA's shopping list. As an off-the-shelf cell therapy product, with a long shelf life and no tissue matching required, PLX-R18 is ideally suited for defense stockpiles. One hopes that there is a miniscule chance that the American homeland will ever face a nuclear bomb incident or a Fukushima like event. However, by definition, defense spending should mean defending U.S. citizens. The U.S. government should invest in protecting its people from radiation threats. Pluristem should reap the benefits of its work in developing cell therapies that can save lives.

RAY DIRKS Research suggests that Readers/Investors place no more than 1% of the funds they devote to common stocks in any one issue. It's best to diversify.

Disclosure: I am/we are long PSTI.