Great Timing For Athersys, Other Stem Cell Companies Amidst Improving Regulatory Landscape
WHITEFISH, MT / ACCESSWIRE / April 13, 2015 / The field of regenerative medicine holds great promise for developing new treatments for notoriously difficult-to-treat diseases and conditions where small molecules, immunotherapies and other disciplines still haven't been able to deliver a safe and efficacious impact. For instance, Athersys, Inc. (ATHX) is now less than two weeks away from top-line data from a Phase 2 international trial on patients suffering an ischemic stoke, an often devastating condition where there are no FDA-approved treatments beyond a four hour treatment window from time of occurrence. Mesoblast Ltd. (OTC:MBLTY)(ASX:MSB) has five product candidates based on specialized cells called mesenchymal lineage adult stem cells in, or ready for, late-stage trials targeting difficult conditions, including congestive heart failure. In a blitz of biotech deals in the waning days of March, stem cells hit the headlines with Fujifilm agreeing to acquire Cellular Dynamics International (NASDAQ:ICEL) for $307 million, a heavy 108% premium to the prior day's closing price of ICEL, to gain control of one of the aspiring leaders in the stem cell research business. This follows on the announcement in early March of the new Athersys-Chugai partnership.
The young industry of cell-based therapies hasn't advanced at the warp speed that some early prognosticators expected, but it is slowly and steadily evolving with a handful of products now making it to market and dozens more in the clinical stage. Against this developmental backdrop, regulators worldwide seem to be putting some wind in the sails of cell therapies in a bid to take a more proactive stance in fighting disease for both humanitarian and economic reasons, making it a good time for investors to look closer at stem cell and regenerative medicine companies. To understand the opportunity, some color needs to be added to the changing regulatory pathways that favor and encourage development of regenerative medicine products that are focused on areas of serious medical conditions where current standard of care is lacking.
Robust Regulatory Change Supports Stem Cell Therapies
There are a number of motivating factors to encourage regulatory change, but maybe none bigger than the dramatic expansion of aging populations around the world. Leading developed countries are faced with healthcare challenges related to people living longer and baby boomers reaching retirement age that is setting the stage for a serious strain on governments' budgets. Below are some of the regulatory activities being put in place to address the need for new treatments.
Japan's parliament, the Diet, took an aggressive approach toward regenerative medicine, earmarking US $1 billion for stem cell research over 10 years and enacting new policy late in 2013 (made effective in November 2014), which revised the country's Pharmaceutical Affairs Law, now referred to as the Pharmaceuticals and Medical Devices Law (PMDL), with specific provisions for accelerating development of regenerative medicine products.
The changes provide for the Minister of the Ministry of the Health, Labor, and Wealth (MHLW) to give "conditional approval" of regenerative medicine products after a Phase 2 clinical trial, provided that therapies are confirmed as safe. As a condition of the approval, a product can be manufactured and sold in certain markets, but the law mandates conducting and submitting data to the MHLW on clinical results in accordance with the regulations of good post-marketing surveillance practices for up to seven years.
In Europe, the United Kingdom is also taking steps to overcome a burdensome developmental pathway to "establish itself as a pre-eminent hub for regenerative medicine." Action has been taken to provide easier access to guidance, including the development of the UK Stem Cell Tool Kit. Further, the Regenerative Medicine Expert Group, who was tasked to develop a NHS regenerative medicine strategy, in December released a report detailing measures that need to be taken to further streamline the development process.
Europe made history in February when the European Commission granted conditional marketing authorization of the continent's first stem cell product to Chiesi's Holoclar(R), an autologous (i.e. derived from the person requiring treatment) stem cell therapy capable of restoring the eyesight of patients with severe cornea damage.
In the broader picture, in 2014 the European Medicines Agency (EMA) unveiled its "adaptive regulatory pathways" initiative to approve new drugs for restricted patient populations based on small initial clinical trials. According to Reuters, the EMA wouldn't specify which companies are candidates to have their experimental treatments move on the stage to of the program, but the agency recently held its first stage II meeting on April 7 to discuss "an advanced therapy product, meaning it is a medicine based on genes, cells or tissue engineering."
In the United States, the Food and Drug Administration already had in place several accelerated pathways (Fast Track, Accelerated Approval, Priority Review) and increased its efforts with the Breakthrough Therapy designation added to the books in late 2013 to further incentivize innovation. Moreover, bi-partisan support is being demonstrated towards the Speeding Access to Already Approved Pharmaceutical Act, which is meant to harmonize approvals and address the so-called "drug lag," the time difference between a drug receiving marketing approval between countries.
Companies Positioned to Capitalize on Japan-Led Global Stem Cell Efforts
Little was mentioned in the news about Tokyo-based conglomerate Fujifilm's acquisition of Cellular Dynamics, a company founded by stem cell pioneer James Thomson, with respect to Japan's regenerative medicine efforts, but it is certainly worth noting. Fujifilm, which is best known for its name in the camera business, has been diversifying its portfolio for decades, including going into the pharmaceutical industry with a 2008 acquisition of Toyama Chemical, the maker of the influenza treatment Avigan that was approved in Japan last year. Fujifilm has been expanding its healthcare and cell-based pipeline, including acquiring a major stake in Japan Tissue Engineering late in 2014, and has a $3.5 billion war chest for more acquisitions.
The acquisition gives Cellular Dynamics, or CDI as it's often called, the ability to be more aggressive in the development of its therapies. The company is already involved in stem cell banking and a leader at automating the process of making human cells at industrial scale for scientists globally to use in testing experimental drugs. CDI's technology is based on induced pluripotent stem cells (iPSCs), which involves taking a tissue sample, essentially rewinding the cells to an embryonic-type state and then reprogramming them to become any one of a variety of types of cells, including heart, liver and neural cells. Combining the experiences and IP of Japan Tissue Engineering and Cellular Dynamics opens the door to a great many possibilities for advanced treatments that can be developed more rapidly through Japan's new regulatory framework.
Australia-based Mesoblast is widely recognized as a global leader in stem cell research with its broad portfolio of late-stage product candidates. The company has partnered with Teva Pharmaceuticals (NYSE:TEVA) for development and commercialization of its Mesenchymal Precursor Cell (MPC) products for various indications, including an Teva currently conducting a 1,700-patient Phase 3 trial for chronic congestive heart failure.
In Japan, Mesoblast has partnered with Japan's JCR Pharmaceuticals Co. Ltd. and recently announced the allowance of a Japanese patent covering the use of the its proprietary adult MPCs derived from bone marrow, adipose tissue and dental pulp for the formation and repair of blood vessels in ischemic tissues. In November, JCR filed with the Japanese Pharmaceuticals and Medical Devices Agency (PMDA) to receive approval for manufacturing, marketing, and product registration of the MSC product JR-031 for the treatment of acute graft versus host disease (GvHD) in children and adults. Developed under an Orphan Drug designation, the application is subject to a priority review as Mesoblast seeks to win the first PMDA approval for an allogeneic (donor derived) stem cell product in the country.
Ohio-based Athersys has also established a leadership position globally in the regenerative medicine space with its proprietary allogeneic stem cell platform MultiStem(R) targeting neurological, cardiovascular, inflammatory and immune indications. The product has some unique features in that after isolation from a single donor, MultiStem can be expanded into millions of doses and stored frozen until needed. The MultiStem cells have been shown to demonstrate a range of therapeutic benefits, including reducing inflammation, protecting damaged or injured tissue and promoting angiogenesis in areas of ischemic injury.
Athersys is focusing development on MultiStem on areas of high unmet medical need, including stroke, the leading cause of disability in the world today with only one FDA approved therapy, the clot-buster tPA (tissue Plasminogen Activator). As discussed in this video, the major issue with tPA is it extremely limited time window for treatment, which requires that patients be diagnosed and administered the drug within several hours. As a result, less than 10% of all people suffering a stroke (and one happens about every 2 seconds worldwide) are treated with tPA, leaving most patients with few options at that point.
Athersys' most advanced study is a Phase 2 trial of MultiStem for patients suffering an ischemic stroke. In the trial, Athersys is treating stroke patients with a single intravenous infusion of MultiStem 24 - 48 hours after the stroke happens, a potentially game-changing breakthrough in stroke therapy should the trial demonstrate efficacy and safety.
The last patient in the trial was treated late in December and the company will be presenting top-line data from the trial at The European Stroke Organization Conference 2015 in Glasgow, Scotland from April 17-19. Until shortly before the conference, Athersys and the trial's Principal Investigator will remain blinded to the data, setting the stage for a potentially a catalytic moment once the data is announced.
Athersys has other programs that are advancing as well, with a multi-site Phase 2 study of MultiStem for the treatment of patients suffering an acute myocardial infarction (heart attack) being supported by a SBIR Fast Track grant from the National Heart, Lung, and Blood Institute, part of the National Institutes of Health. In the United Kingdom, Innovate UK awarded Athersys a grant up to £2 million (US ~$3 million) to support Phase 2a study evaluating administration of MultiStem therapy to patients with Acute Respiratory Distress Syndrome (ARDS), a life-threatening lung condition that prevents enough oxygen from getting to the lungs and into the blood. The company also has been granted Orphan Drug designations from the FDA and EMA and a Fast Track designation from the FDA for MultiStem as a prophylaxis therapy for GvHD following hematopoietic stem cell transplantations and intends to initiate a Phase 2/3 trial in the future.
In Japan, Athersys planted its flag in the regenerative medicine space with a partnering and licensing agreement last month with Chugai Pharmaceutical Co., Ltd., a company that is majority-owned by the Roche Group (OTCQX:RHHBY), to exclusively develop and commercialize MultiStem for ischemic stroke in Japan. In the deal, Athersys receives $10 million upfront from Chugai, $7 million more attached to the results of the Phase 2 trial, $45 million in milestone payments upon certain development and regulatory milestones being met and up to $150 million upon sales milestones being reached, bringing the total potential payments in excess of $200 million. Athersys will also receive double-digit tiered royalty payments of sales of MultiStem in Japan should the product reach commercialization and revenue from product sales to Chugai. Chugai also shoulders all the costs related to the development of MultiStem for ischemic stroke in Japan with development direction dictated by a joint steering committee.
The next steps for Athersys are clearly going to be dependent upon analysis of the data from the trial in the upcoming weeks and months. If the trial is successful, there are several options available, including going headlong after the Japanese accelerated pathway via a small bridging study in Japan with the goal of rapid commercialization under the new PMDL. As aforementioned, downstream follow-up studies are required with this direction, which could be avoided by conducting a larger study and opting for a traditional approval under previously established accelerated programs, which saves on the backend. There is also the option of some type of a combination study, meaning a bridging study while preparing for a registrational study. For Athersys, independent of Chugai, there are logistics to be explored in the U.S. and Europe to expedite the development process as well.
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Leverage Regulatory Trends
A closer look at the state of healthcare innovation business on the whole, shows countries making tangible moves - some 100% specific to regenerative medicine - to increase efficiency with the goal of bringing new treatments to market. The efforts are worldwide with Japan taking the helm and others actively making changes as well. It's clear that companies like Fujifilm, Chugai, Mesoblast and Athersys are recognizing and leveraging very real regulatory trends to benefit patients and grow corporate value. Those are events investors should be paying close attention to.
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