The Daily Dialogue, Tuesday, 5/3/11

The 6 W’s: the … who, what, where, when, why and what of it…

 

Some of the drivers of the regenerative medicine – stem cell market today.  

US equities finished mostly lower in fairly uneventful trading on Tuesday. There did not seem to be a specific catalyst for the decline, though some of the deterioration in global risk appetite was attributed to tightening concerns. While worries about potential retaliation for the US killing of Osama bin Laden were cited as another headwind for stocks today, recall that there has also been talk about a lower global security risk premium. Fatigue/stretched valuations seemed to be another area of concern given the extent to which the market has rallied since S&P downgraded its long-term outlook on US debt from stable to negative. 

Osiris Therapeutics (NASDAQ: OSIR) will report its financial results on Monday, 5/9/11 at 9:00 am ET for Q1/11 ended March 31, 2011. C. Randal Mills, Ph.D., President and CEO, and Philip R. Jacoby, Jr., CFO, will provide a company update and discuss results via a webcast and conference call;

Biotech execs say Minnesota’s anti-cloning bill could stifle research. The bottom line, some biotech industry executives and researchers said a Minnesota bill that would ban human somatic cell nuclear transfer contains ambiguous language that would force companies and scientists to leave Minnesota for other states that offer a favorable environment for medical research;

Cytori Therapeutics (NASDAQ: CYTX) elected the Honorable Tommy G. Thompson, former Secretary of the US Department of Health & Human Services and Governor of Wisconsin, as an independent member of Board of Directors. In addition, the Board of Directors has elected Mr. Lloyd H. Dean to serve as Chairman of the Board. Past Chairman Ronald D. Henriksen will continue to serve as an independent member of the Board of Directors. Mr. Thompson held the position as Secretary of the US Department Health and Human Services from 2001 until 2005 and served as the Governor of the State of Wisconsin for 4 terms from 1987 to 2001. Mr. Dean is President/CEO of Catholic Healthcare West, the 5th largest healthcare system in the nation and the largest not-for-profit hospital provider in California. He is also a member of the Board of Directors of Wells Fargo & Company, and a member of the Board of Directors of Mercy Housing California. A strong advocate for healthcare reform, Mr. Dean has been actively engaged with the White House Cabinet on healthcare issues. The Board additions of Mr. Thompson and previously Mr. Dean -2 widely recognized leaders in the US healthcare industry will provide CYTX with strong healthcare expertise in the boardroom to help and broaden its application and use around the world and in particular in the US. The bottom line, CYTX’s future success in the US will be predicated in part by their ability to navigate an increasingly complex system of regulation, customers and payers;

NeoStem (AMEX:NBS) has filed to sell shares for existing holders and it has filed to raise cash. The first SEC filing is to allow existing shareholders to sell up to 19,072,245 shares of common stock from time to time.  This includes 3,842,001 shares of common stock and also includes an aggregate of 15,230,244 shares issuable upon the exercise of warrants, which if exercised for cash would result in gross proceeds of $36,584,227. A  2^nd filing is for the sale of any combination of common stock, preferred stock, debt securities, warrants and units, with a value of up to $75M. The bottom line, shares were down $0.14 or -7.22% to $1.80 on volume of 533,972 shares by the close.  The days trading range was $1.78 to $1.92 with a market cap of $141.42M. I believe these filings are the first stage of activities to sell some assets, acquire platform growth and call the existing warrants; BUY on the dips!

Teva Pharmaceutical (NASDAQ:TEVA) and Cephalon, Inc. (NASDAQ:CEPH) announced have unanimously approved a definitive agreement under which Teva will acquire all of the outstanding shares of CEPH for $81.50 per share in cash, or a total enterprise value of approximately $6.8B. The transaction is not conditioned on financing and is expected to be completed by Q3/11. The bottom line, by joining forces with Teva rather than Valeant Pharma (VRX), CEPH could benefit from Teva’s scale, worldwide reach and operational excellence, allowing shared goals of delivering new, innovative therapies to help patients around the world. Last and final comment, the purchase price of $81.50 per share represents a 39% premium to CEPH’s stock price on 3/29/11, the last closing price before the unsolicited proposal was announced; a premium of 44% to CEPH’s average closing stock price over the last 30 trading days prior to the unsolicited proposal; a 12% premium to the unsolicited proposal of $73 per share; and a premium of 6% to CEPH’s closing stock price on 4/29/11, the last trading day prior to today’s announcement. The transaction is expected to be immediately accretive to Teva’s non-GAAP earnings per share and accretive to Teva’s GAAP earnings within Q4/11.

BioTime (AMEX: BTX) Initiated a clinical development program for HyStem®-Rx as a Cell Delivery Device for Reconstructive Surgery and Other Cell-Based Therapies. BTX has elected to seek regulatory approval of HyStem^®-Rx ^ as an implantable cell delivery vehicle that can be used to significantly improve outcomes in reconstructive surgery and potentially a wide array of other cell-based therapies. Such applications may include numerous cell transplant procedures currently being developed in which a patient’s own adult stem cells are utilized. The bottom line, once newer cell replacement products derived from human embryonic stem (hES) cells and induced pluripotent stem (iPS) cells become available for medical use, HyStem^®-Rx may provide the best means of implanting those cells in patients. Filing for regulatory approval of HyStem^®-Rx ^ as a medical device in Europe may begin within approximately 14 months, which is the estimated time for completing non-clinical studies and performing manufacturing and assay validations. Regulatory approval may take as few as 2 years, after which the product may be sold for use in existing cell transplant therapies. HyStem^®-Rx is a biocompatible hydrogel that mimics the extracellular matrix in which cells reside. As an injectable product, HyStem^®-Rx may address an immediate need in cosmetic and reconstructive surgery and other procedures by improving the process of transplanting adipose (fat) cells or other adult stem cells; 

The aftermath; the federal government’s financing of embryonic stem cell research got a boost when an appeals court panel ruled that the work could go on while a lower-court judge ponders its legality. The bottom line, more uncertainty waits as opponents try to derail this research. Now the majority opinion from the US Court of Appeals for the District of Columbia Circuit has looked at the same evidence and found that the 2 scientists who raised the objections are “unlikely to prevail” because the language of the law is ambiguous and the NIH has reached a reasonable conclusion as to what it can support. It also concluded that a preliminary injunction would cause far more immediate harm to embryonic stem cell researchers whose work would be stopped than to the scientists who sued. Congress ought to resolve the issue with legislation making it unambiguous that the federal government can support research on stem cells derived from human embryos. That seems highly unlikely. So it is up to the courts. The case is now (back) with Judge Lamberth, who has already tipped his hat in the plaintiff’s direction.