Sunday, 23 December 2012 13:27

Jason dines with prominent SC cardiologists


My mailbox has been overflowing off-late with messages of unhappy investors in the Cytori stock. A few days ago, however there was finally a message again with an attachment, that was very positive and worth sharing with the other folks. The report by Jason Kolbert of Maxim´s of his dinner meeting with some leading cardiologists in San Francisco was very interesting. As a fatman, I didnt like his joke very much, but than again- that is of no relevance. Key thing is, that Jason is making great strides in gaining knowledge on the Cell Therapy Industry. Only recently- in August 2012 he displayed his ignorance during the Cytori Conference Call, but has immensely accellerated his knowledge base. Well done Jason- good report- so here you go- just a teaser- if you want to read more of the 26 page report, call Jason at Maxim´s- 212-895-3516.



Regenerative Cell Therapy: A year of Inflection- Part II

A Review of our Cardiologists Dinner
We held a dinner with three of the most prominent cardiologists in the cell therapy space last week—Emerson Perin, MD, Kenneth M. Borow, MD, and Warren Sherman, MD, FACC, Director, Stem Cell Research and Regenerative Medicine, Center for Interventional Vascular Therapy, Columbia University Medical Center. Last week, Dr. Sherman held a conference ( in which thought leaders from all over the world met at NYPH/Columbia University Medical Center to review the latest developments in the cell therapy- cardiology space. 
A few thoughts about the dinner: 
1. Ejection fraction is not a good, and definitely not an approvable endpoint in a cardiac trial. Rather, the FDA and EU will focus on measures that assess total cardiac health. This means composite endpoints, which will likely include cardiac MACE. MVO2 was also discussed as a valid endpoint for certain ischemic disease states such as is present in CMI (Chronic Myocardial Ischemia). 
2. Our expects found the high-dose arm of the Mesoblast P2 data to be profound in that: 
a. All cardiac measures pointed to real improvements in cardiac health and function. 
b. Cardiac MACE was striking between the high-dose and control arms, with zero cardiac MACE rates in the high-dose group. 
c. MVO2 is a valid measure when done properly, as it has been used in the Cytori CMI trial. 
d. There exists a critical mass, a critical-dose threshold that must be achieved, above which additional cells don’t matter (and in fact, additional cells may result in crowding and a loss of effect, so finding the right dose is critical). 
e. The Mesoblast P3 at n=1700 is powered for a “cardiac” meaningful QOL difference, and the assumptions are conservative. 
3. One doctor discussed Baxter and NeoStem, saying that the trials are very difficult in terms of enrolling patients. His ;hospital has not yet been able to enroll a single patient in the NeoStem STEMI trial, (We did check with NeoStem management who implied that the trial is close to reaching its half way mark), and he has had patients fall out of the Baxter CMI trial. Our physician said administering GcSF to patients (Baxter trial) creates a host of unwanted adverse events. As such, he does not believe if a Mesoblast or Cytori trial shows equivalent data that the Baxter cell therapy will be viable. This may explain our other channel checks that have shown that Baxter has been shopping its cell therapy division to buyers, looking for a strategic exit. 
4. Our cardiologists were positive on Cytori. They all agreed that liposuction is no big deal and that patients are actually excited to have it done. Get a love handle busted in the process of having your heart fixed. Liposuction was viewed as “patient friendly” versus an extensive bone marrow harvest (NeoStem) or GcSF apheresis cell collection (Baxter). 
5. One doctor stated that the key difference (in his opinion) between Mesoblast’s approach and Cytori’s is the homogeneous cell population associated with Revascor versus Cytori’s heterogeneous population. He remarked that the difference in results will need to be shown clinically. Cytori argued that retreatment (should it be needed) is safer with autologous therapy. 
6. Cell aging—synesis. We enjoyed a discussion on autologous versus allogeneic therapies and the impacts of synesis. One of our experts remarked that adipose tissue may be somewhat insulated from the effects of synesis versus marrow-derived sources. This would clearly be positive for Cytori and negative for autologous-marrow-derived companies (Baxter, NeoStem, and Aastrom). With that said, the discussion turned to passage-induced cell aging and a discussion on how old, even healthy donor-sourced cells truly are, given the number of cycles the cells have seen as a result of their expansion. 
7. All doctors agreed that therapies that are off-the-shelf ready (or virtually so, like Cytori), have a significant advantage if they are equivalent to processed therapies in terms of efficacy. So highly processed cell therapies that takes days to make likely won’t be successful in the future, unless they have a real definable efficacy advantage (which our panelists seemed to believe is unlikely). In addition, cost of good will be relevant. If an autologous therapy and an allogeneic therapy are equivalent, COGS become a critical factor. We know that in the case of Cytori, COGS may actually be lower than allogeneic. In the case of Aastrom, we believe COGS may be in line to slightly higher. Other highly processed autologous therapies are suggested to have very high COGS (much lower margins). The extreme example of this is Dendreon’s Provenge. 
8. Dose is key. We had some discussion on dosing and manufacturing. The ability to treat local disease (heart disease) allows relatively low doses (20-200 million cells). These yields are feasible with the majority of manufacturing processes in place today. However, as our discussion migrated towards treating more systemic disease, our panelists agree that higher doses will be needed. This means manufacturing will be a critical success factor for our companies. 

Other comments from our dinner: 

1. Our cardiologists expressed great excitement about bio-absorbable stents, particularly the Abbott stent. They seem to all agree that a bio-absorbable stent would make a metal stent obsolete in the future. 
2. Doctors also said in the future, defibrillator use is likely to go down as cell therapy rises. One doctor said: “Would you want a metal can with wires in your chest”? 
3. Cell therapy is real. The next forefront will be our ability to move beyond trophic effects of cells and to our ability to rebuild tissue. We are not there yet, but that is clearly where the research is heading. 
4. Cell therapy works. We have no doubt. We have seen some patients rebound in astonishing ways. However, it’s been hard to predict who will benefit maximally versus minimally. More consistent manufactured therapies in larger, better controlled studies should yield the answers. We are excited by the work that Baxter, Cytori, NeoStem, and others are doing. 
5. Regulators understand what we are doing more and more. Ejection fraction is not the endpoint; it’s cardiac health. Fears over allogeneic (immune rejection) are becoming less, as regulators see data that’s shows that cells trigger changes, in other resident cells, that drive the long term benefits. 
maxim2Conclusion: Our doctors were very positive for Cytori and Mesoblast trials in CMI and CHF, respectively. They were not positive for the Baxter (CMI) trial based on the use of GcSF and the cumbersome collection process. All of our experts agreed and were very excited for Abbott’s bio-absorbable stent, and believe we will see a rapid conversion once it’s introduced, making the use of metals stents obsolete. 
Our fundamental question around cell therapy is: Is it real? Is there a product that can be successfully commercialized? Can cell therapy really go beyond what’s possible with traditional medicine? Can disease that is untreatable today be treated, and can unmet medical needs be met? We believe the answer is yes. Our doctor panelists agreed. The uniformly positive answer is based on our and their review of mountains of human trial data, and these clinicians’ independent, individualized case experiences, where patients who were expected to die resumed normal active lives. 

In fact, we believe the question “is cell therapy real?” is the wrong one to ask.

Smart investors can review the data from hundreds of trials, most of which have been ad-hoc investigator-led studies that have all suggested positive trends. However, what the industry had previously lacked was well designed, controlled studies. That has now changed. Studies like Aastrom’s Phase III trial in CLI, Baxter’s Phase III trial in CMI, Cytori’s Phase III trial in STEMI (and Phase II Pilot study in CMI), Pluristem’s Phase II/III CLI study, Athersys’ Phase II ulcerative colitis study (and now a Phase II stroke study), and, of course, Mesoblast’s 1,700-patient Phase III study in CHF (sponsored by Teva) are just a few of the current, well designed trials that are likely to lead to new breakthrough treatments for large medically untreated conditions today. Just imagine if Athersys is successful is bringing to life the first treatment for stroke victims that minimizes the secondary damage and aids in the recovery. What is the value creation to society? 
It’s not just on the regenerative medicine side. We must also include oncology and immunology. In fact, we would argue that Athersys’ MultiStem in the settings of stroke, ulcerative colitis, and GvHD is acting on the immunological side of the body. We are admittedly fascinated with Immunocellular’s third-generation cell therapy for the treatment of glioblastoma (fatal brain cancer). The Phase II trial is fully enrolled and data is expected by year end. The treatment has few (if any) side effects, and we believe it has the potential to dramatically alter treatment outcomes (survival). While Dendreon’s Provenge represents a milestone in the industry, it is a first-generation therapy—that is, in our opinion, not ideal. Its efficacy is not dramatic versus the standard of care, it is expensive, and the treatment is cumbersome. By comparison, Immunocellular’s third-generation dendritic vaccine has several critical advances that include targeting multiple antigens (six in total), the ability to manufacture multiple doses in one setting and cryopreserve them (which cuts the cost per dose to a fraction of Provenge’s), and the product ICT-107 using “Super DCs,” which secrete IL12; IL12 is critical for T cell killing. Thinking beyond Immunocellular and ICT-107 is the plasmid-based technology behind companies like Inovio. Inovio is developing synthetic vaccines focused on cancers and infectious diseases based on the company’s SynCon technology. The technology enables the design of an ex-vivo plasmid like (engineered) construct that can produce T-cell responses once introduced into the body (no harvesting of immune system cells needed). 
So what is it going to take for valuations to reflect our enthusiasm? First, clinical data. As we mentioned previously, we believe investors will take notice of clinical data, and we are on the precipice of a lot of data: Data from Immunocellular’s phase II trial in glioblastoma, data from Cytori’s Phase II pilot study in CMI, Phase II data from Athersys’ (and its partner Pfizer) global ulcerative colitis study and stroke trial, progress in Aastrom’s pivotal CLI trial, progress in NeoStem’s Phase II STEMI trial, progress in Baxter's phase III CMI trial, the start of Mesoblast’s (and Teva’s) Phase III CHF trial, and many, many others. But just as it has taken time and capital for these companies to advance their clinical programs (clinical trials to mature and the data to emerge; while not every trial will produce stunning results, for those that do, it should represent significant advances and will have been worth the wait, in our opinion), it is also taking time for our second point: stakeholder awareness. While smart institutions follow the data, companies have yet to engage stakeholders. What we mean by stakeholders comes down to a combination of not just those in the medical community (doctors and key opinion leaders, or KOLs), but also patients themselves. The media has been so focused over the controversies involved in embryonic research that it has been slow to understand the impact that cell therapy can have on chronic disease. 
We believe cell therapy represents a pathway towards easing the burdens of chronic diseases like heart failure, creating sharp pharmaco-economic value and improved quality-of-life outcomes. 
Companies themselves have not directly targeted stakeholders, who tend to be savvy and research the latest trials and treatments. We believe the combination of clinical data and stakeholder awareness sets the stage for a rebound in valuation in the sector. 
On the regenerative side, there is a focus in cardiology. As discussed, we see 2013 as a year where we will begin to see results from multiple late-stage trials underway. These trials are evaluating the use of stem cells as a therapeutic to either arrest the progression of heart disease or to even reverse the disease state itself. The largest heart cell therapy trial ever undertaken is the endeavor of an EU consortium funded public trial, known as BAMI, a 3,000 person trial that will use bone marrow cells (autologous) injected into the heart five days post infarct. While BAMI is exciting, it is doubtful that this trial will be completed in a timely manner, in our opinion, and it’s not clear how a therapy will be developed from the trial. The trial, however, is intended to prove that stem cells can repair and arrest the progression that typically follows severe heart attacks. The more interesting commercial trial we would focus upon is the Mesoblast (partnered with Teva) 1,700-patient global trial in CHF. Teva’s new CEO Dr. Jeremy Levin has now openly stated Teva’s support and intention to move forward with this trial. Some of the other advanced trials include Baxter’s phase III trial evaluating the use of GcSF-derived stem cells that are harvested from the patient via apheresis. Other trials use a bone marrow harvest; for one company, this is small at 50cc (Aastrom), while another company’s is large (NeoStem) at > 300 cc of tissue. More recently, the use of adipose tissue (fat) has come into focus as a rich source of cells that can be harvested via liposuction (Cytori). These methods are all autologous—your own cells. Generally speaking, autologous methods are expensive as they involve offsite processing of the cells—in some cases, in cultures (expanded), and in other cases, enriched for a specific cell type. In the case of adipose stem cells, they are processed “while you wait” (on site in an hour or less), and at a very low cost of goods (Cytori). All of these methods have pros and cons and will also have to compete against the cells in a bottle, or allogeneic sources. In this case, the cells are initially developed from a donor source, processed at a cGMP factor, fully tested for potency and safety, and cryopreserved so that they can be Fatmanadministered to the patient when needed, especially true in an acute setting. The product is controlled for quality and may be homogeneous (all one cell type) or heterogeneous (many cells types), but within a set of release criteria. These cells are in effect an active biological therapeutic—an off-the-shelf-ready product. The cost of goods of a mass-produced, allogeneic product is likely to be the lowest in the industry versus a custom-produced, offsite-manufactured product, which will likely have the highest cost of goods. 

This thinking points us to a series of questions: 

1. Should cell therapy be used in the acute setting—and if so, does it have to be off-the-shelf-ready (allogeneic) or adipose-derived (virtually off the shelf) ready? 
2. The Battle between autologous versus allogeneic. Can patients be retreated with an allogeneic therapy? Do allogeneic therapies (expanded) induce artificial cell synesis (aging). Are aging and co-morbidities the Achilles heel of autologous therapy? Is adipose-derived cell therapy advantageous over bone marrow as a source ? 
3. As cell therapy is shown to “work,” will it work for some indications and not others? 
4. Will one cell therapy product work better than another? 
5. Will COGS matter and, if so, when? 
6. How important is patient convenience and fitting into the existing treatment paradigm? 
7. Will cell therapy raise the costs of treating disease or lower it? 
8. When will cell therapy be available? 

sofar the report by Jason- hope you enjoyed it- YOUR FATMAN




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