Excellent point not yet made. I viewed Chugai's partnership decision in the context of PMDA. I was concerned at the last CC that nobody asked Athersys management if they thought they had enough data to support going to market under the new PMDA rules.
I think they do and I think Chugai will be the great influence to help us get there. However, when the CC discussion when neutral on whether or not Chugai was even on board, I got quite nervous. I am now in "show me" mode, looking for some type of positive sign.
I would expect to hear some type of statement from Chugai that they believe they have enough Athersys data support to move forward with PMDA approval or additional clinical testing.
I do not know if Athersys has the chops to get PMDA pproval on their own without the influence of an experienced Japanese partner. So, both PMDA approval and the Chugai partnership support seem to be closely tied together.
True. I never expected Pfizer to continue unless we had excellent P2 on stroke. Our sweet spot is traumatic injuries with auto-immune response. UC does not fit in that category.
Gil said it right yesterday when he described a partner prototype. We need someone who wants Athersys to be the primary regeneration pipeline and not one of many competing therapies.
Chugai is the 800 lb gorilla in the room. If they follow up on the partnership agreement that is terrific confirmation. If they renegotiate or break the agreement then Athersys faces a number of capital calls to fund trials.
Athersys will be batting late in the game with two outs and a two strike count.
Nice analysis. To me, it is all about Chugai. If they think Athersys and Multi-stem is a good further investment than so do I. They are in the best position to judge so all eyes will be on them.
I agree with you that until that lukewarm description at the end of the questions, I was feeling very good about where they were at. After that, I became concerned. If Chugai bails along with Pfizer then I see no further value here. Who is going to partner with a twice jilted company?
Clearly Athersys is moving forward. But that is what they have to do. They have no choice. Gil is optimistic but he has no choice. If they have to do this without a partner it is going to be very expensive and a long wait before we get trial confirmation that Multi-stem works. This is going to take some time to play out and many of the next moves are expensive and time-consuming. We could be 2-3 years before we get clinical confirmation that Multi-stem works. CMI P2 is probably going to give us information before additional stroke studies.
I am still holding but I reduced my position this morning. There will be ample time over the next three months to rebuild a position if desired.
Positive if Chugai invests in a Japan centric study.
Neutral if Chugai only picks up the Japan portion of a global P3 study.
Negative if they wait it out. Partner in name only.
Deadly if they drop out.
Positive: They are clearly positive about where they are at and are exploring the next phase of stroke tests. Could be a Japan centric test which would likely be a P2-B or a worldwide clinical which would likely be a P3. Either event confirms that the recent P2 results on time frame are good enough to move forward.
Positive: I am sure informal Japan discussions would include the possibility of moving directly to market on the the accelerated Japan legislation and conduct follow up studies.
Positive: The safety profile, encouraging benefit signal within 36 hours and the possibility of extending current standard of care out to 95% of the stroke populations will be very enticing to worldwide agencies.
Positive: Good cash position for now. Low burn rate. Full docket of trials mostly funded by others. We will need to raise some financial resources for continued stroke studies.
Negative: I was hoping to hear more positive news about the Chugai relationship. They were pretty neutral. If Athersys has to go global P3 by themselves it will mean a series of stock dilutions and lots of pain before we get to results. Perhaps three years out. It is likely that the P2 heart trial results will be the next indicator of Multi-stem effectiveness. Maybe two years out.
Negative: Pfizer dropped out. We get the data and probably some insights into the mechanism of action. Clearly, Pfizer has no current interest in Multi-stem and will not be a potential suitor if a sale were approached.
Our next real catalyst is Chugai's decision to move forward in the partnership or not. 3-4 months from now. We really need some objective confirmation of the P2 stroke data.
It wont be earnings or the $10 million. Low expectations for earnings since they have little sales. The $10 million is a one time thing that is well known. It will be some positive indicator from the Chugai meetings in Japan that took place last week.
The low PPS is the belief by many investors that Athersys has failed P2. It clearly failed its test targets but many of us believe they have made substantial progress and are now zeroed in on time frame and dosage. We have debated that for several weeks now. Only time and additional trials will decide who is right.
I have written before that the low PPS puts a cap on partnerships because at some point it becomes cheaper to buy controlling interest in the company vs pay a large extended partnership/royalty fee.
You raise a very valid point. Your assumption that $6 would do it is your estimate. I have no clue on valuation.
Successful investing is about finding value before the rest of the investor community. At this point I believe we have found an investing opportunity but we must also face realities as objectively as we can. Chugai's response to the data will be critically important to Athersys and to investors.
If Chugai continues the partnership or if they (or any other company) make an offer for the company, it would provide immense support for our thesis that Athersys has found success in stroke.
This is a repeat performance. The "new" shareholders sell their shares as soon as possible and hold the warrants for free. This effectively creates a drag on the share price for some time. No reason to convert the warrants any time soon.
I would be thrilled to have an early announcement but Chugai will make decisions at the pace that makes sense for them.
This week's meeting is about Athersys sharing conclusions and insights about the trial data. I am sure there will be some discussion about next steps. However, Chugai will likely take the 3-4 months to verify data, interview analysts and medical field personnel and draw their own conclusions about the future opportunity for Multi-stem.
Also, Chugai/Roche will need to decide the value of continuing to invest in the partnership vs the cost for buying Athersys. At this low market cap, Athersys has an upper limit to the value for partnerships when it becomes cheaper to buy the whole thing.
All this will take time to play out.
I think you are correct. I expect they will be cautious and methodical. Quite honestly, they represent our most thorough and independent evaluation of the data, the anticipated chances of medical success and the Japanese government acceptance.
I agree. I like it when Gil is excited but we have heard his enthusiasm before and it is his job to be optimistic. So, while I appreciate optimism, I heavily discount it. I really liked the enthusiasm from the doctors. These are leaders in their industry on stroke. They have seen it all including being involved in the original tPA studies. When they get excited, I get excited. They see reason to believe Athersys is on the right track and working on something they want to be a part.
What is their motivation? They want to see continued research dollars flowing their way and they want to see success. I can partially discount their motivation to be positive when looking for research dollars but I cannot discount the doctors' desire to be a part of something that has breakthrough potential.
The Athersys data lines up in a meaningful way that makes sense to them.
We should know more when Chugai makes their decisions. Maybe we get some insights after the Japan meetings this week. We have an earnings call coming up.
I agree. Before the P2 results were issued we put down our expected success criteria. I stated that any positive data that moves us forward to Japan or P3 with a partner would be deemed a success. Everything above that is extra benefit.
I believe we have accomplished enough to move forward on both fronts. . If it was easy there would be stroke remedies by now. It really depends on Chugai. If they believe there is enough data to invest further than we will have confirmation that we are on the right track.
I go back to key data.
1) The doctors said that most ED's can determine the likelihood of spontaneous recovery within 18 hours. We have eliminated them from the test and will eliminate them in future tests.
2) We have significant medical benefit with treatment given within 36 hours.
3) We have a clean slope of declining health benefit based for each delay of six hours of treatment. We have a clear timeline trend with several data points.
4) Extending the stroke treatment time period by offering something that is safe and easy to administer is a big, big deal.
Just because we had not learned enough in prior studies to power this test for time does not make the finding any less valuable or believable. This is an important learning step and I believe that Chugai, Japan and the FDA will see this as positive progress.
I agree. I also appreciated that the two doctors commented only from a medical point of view. They were only speaking from their area of expertise and not acting as analysts.
Think about it.
1) The P2 results showed that for the very first time there could be a treatment option for stroke within 36 hours which allows almost every stroke patient to reach care where no care currently exists. Only 4% of current patients are able to qualify for tPA or clot extraction.
2) There is Biological Plausibility for why Multi-stem works with data showing statistically significant benefits. Our two expert doctors see enough results to warrant medical community enthusiasm for future testing.
3) It is safe to use which means that most doctors will feel secure in using this treatment.
4) It is easy to administer without additional surgical equipment and within the expertise of every doctor and hospital in the world.
THIS IS A BIG DEAL.
I learned that the two expert doctors viewed the M/S P2 results as highly encouraging for three very important reasons. First, the P2 results extend the time for stroke treatment out far enough (36 hours) for most patients to reach treatment. Second, the Multi-stem treatment solution is the safest of all available treatment options (first, do no harm). Third, the Multi-stem treatment solution can be easily administered (via IV) without needing specialized experts or equipment.
These P2 results suggest that Multi-stem could be a viable treatment option for stroke patients reaching any hospital in America--or beyond.
This is a BIG MEDICAL DEAL and why many medical clinics and personnel will want to participate in the next trials.
Yes. Biological Plausibility means there is a medical reason that makes sense for something to occur. The two doctors cited several non-Athersys clinical studies involving other potential stroke treatments including the original tPA tests where time was of the essence and there was a definite cut off point for benefit.
They even talked about the difference between spleen response in animal tests and human tests. It appears that humans seem to have a much faster spleen response than large animals making a timing response ever more important in stroke response.
The P2 results showed declining medical benefit for each 8 hours delayed response time. This made perfect sense to the two expert doctors who expressed that the sum total of all available information supports the contention that faster response for stroke treatment is better than slower response.
Despite similar P2 timing setbacks, tPA was able to learn enough from their P2 to move to P3 and ultimate FDA approval
Our Multi-stem P2 findings are tracking with the tPA P2 findings without any of the side effects.
Help me with my thinking.
1) It appears to me that Multi-stem is terrific at assisting the body's auto-immune response when there is a shock to the body (stroke, probably cardiac and transplants, maybe sever concussions, perhaps chemo treatments, maybe injuries like gunshot wounds or burns, maybe amputations). Think military applications.
2) We have also learned that the benefits are time sensitive.
3) Late applications of Multi-stem are not harmful just ineffective. This is a great safety element unlike Tpa.
These are all huge markets with unmet health needs. Athersys could be immensely successful focused here.
4) It does not appear to me that Multi-stem works to repair damaged organs or tissues as we once discussed. Think chronic or degenerative conditions like UC, MS, ALS, cancers or injuries and surgeries that have existed for long periods of time.
5) Maybe these conditions could be helped with multiple doses. But at this point, I think this is unlikely. Athersys is probably wasting time and energy exploring these types of applications.
I would appreciate your thoughts.
Yes. Post hoc analysis is always more suspect than A priori testing. However, the test sample is the same and the test success criteria are the same. Applying the same success criteria to a subset defined by only a time variable is completely acceptable. This is especially true when time really was a prior hypothesis.
Where it gets dangerous is drawing conclusions for the exact cut point of time when analysts are able to look at the data and pick the most favorable time cut point. That is why a follow up study will be needed.
P3 studies are designed for dosage and timing. I believe that this P2 study found enough evidence to warrant the P3 or at least an extended P2.