United Therapeutics Points to Pluristem's PLX-PAD as its Most Transformative Product Print
By Sharon di Stefano   
Wednesday, 17 September 2014 04:37
icon_HeatingUpPulmonary arterial hypertension (PAH), a progressive and life threatening illness that regrettably takes a back seat to cardiovascular disease where research is concerned, is incurable and fatal. Characterized by high blood pressure in the arteries of the lungs, the heart becomes overworked, leading to its failure. Only a handful of drugs have been developed for PAH despite its huge market size. Among these, Pluristem Therapeutics, Inc. (PSTI:NASDAQ) offers the first and only cellular therapy for PAH, and recently made a significant move forward in clinical trials with its pharmaceutical partner, United Therapeutics Corp. (UTHR:NASDAQ). 

Pluristem’s relationship with United Therapeutics began in 2011 as a licensing agreement where the latter would develop and, upon approval, market Pluristem’s PLX-PAD cells for PAH. In recent news cited above, United Therapeutics finished dosing the first of several groups of patients in a Phase I study for PAH in Australia, which has more than 50 clinical trial networks, coordinating centers, and registries, with local researchers recognized as among the world’s most influential.

The Data and Safety Monitoring Board ((DSMB)), an independent collection of experts that advise for government regulatory agencies, had given its seal of approval for United Therapeutics to continue with a second group of PAH patients. The decision, within the Board’s policy, was based on evidence of no adverse, study-related events in the first group. This is a watershed moment for Pluristem, as numerous drugs have not made it through a DSMB first pass.

The second group of PAH patients will receive a higher dose of PLX-PAD cells per body weight; the third group, double that, with evaluation at three months, then one year. The primary endpoint of both upcoming studies is safety; given the DSMB’s original blessing, I am confident this goal will be met. 
The ability to exercise, measured by the ‘six-minute’ walk distance test in addition to other cardiodynamic parameters, will also be evaluated – standard in all PAH drug assessments. United Therapeutics and Pluristem target preliminary results in all three groups available by next year.

Milestones due to Pluristem are substantial: $55 million upon achievement of clinical goals and commercialization. After that, United Therapeutics agrees to buy PLX-PAD cells at a set price over cost, with royalties pegged at a percentage of gross profits, although exact terms have not been released by either company.

Although considered an orphan drug, with annual incidence and
prevalence of under 200,000 people in the US and perhaps twice that worldwide, PAH represents big dollars: the estimated global PAH therapeutics market was $3.3 billion in 2011, with a compounded yearly growth rate of almost 40% from 2002.  Growth is due to drug development, following on the heels of improvements in diagnosis of PAH. High medical reimbursement rates have also contributed. The quickness of PAH in causing death, with patients surviving only three to four years after diagnosis has lead pharmaceutical companies to seek drugs to slow down progression of the disease. 

These drugs come with cautions. GlaxoSmithKline plc’s (NYSE:GSK) treatment for PAH has been associated with blood infections; Actelion Ltd.’s (ALIOF:OTC) Opsumit and

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its predecessor Tracleer,  have risks of liver toxicity and
bleeding. Gilead Sciences (GILD:NASDAQ) failed with cicletanine in Phase II for lack of efficacy on an endpoint of exercise. 

United Therapeutics appears excited about PLX-PAD cell therapy for PAH. In a recent conference call, its CEO called Pluristem’s offering the “most transformative” of its products in Phase I. Good thing for United Therapeutics, since oral Remodulin suffered several FDA rejections last year after failing the walk test with little effect on halting PAH’s debilitation.

This partner’s attraction to Pluristem was based on preclinical studies done in animals, looking specifically at effects PLX-PAD cells have on reducing right ventricular systolic pressure of the heart, which, after treatment with cell therapy, yielded a positive effect in pulmonary hypertension, seen in the accompanying chart (PLX-PAD cells’ effect are represented in blue). 

United Therapeutics has been touting its prowess in transplantable organs. 

Following this scientific endeavor, they would understandably need Pluristem’s stem cell expertise that does not cause organ rejection. Not surprising, given the fact Pluristem developed a world-class manufacturing facility for stem cell production validated by several countries, including the US. Cell therapy research is at the head of medical innovation, for indications ranging from orthopedics to bone marrow transplant, with Pluristem leading the race due to its technology platform, featuring a proprietary, fully-automated bioreactor that creates homogenous, high-grade PLX cells that do not require tissue-matching. This should be an easy draw for pharmaceutical firms looking to out- license their own cell therapies, a strong trend among Big Pharma.

In other company news, Pluristem recently cancelled a stock sales agreement for a significant money raise, a deal that had been put in place in December 2012. This suggests to me that another pharmaceutical partnership may be imminent. United Therapeutics’s long-standing relationship with Pluristem, its cash position of over $250 million, a 52-week high market cap of $6 billion recently reached, coupled with its desire to pursue more intense cell therapy development, makes a purchase of Pluristem plausible.
An investment in Pluristem has risks – there are no marketable products with associated revenues. Larger clinical trials may not reveal the same good results as smaller ones, and could be slow to recruit. Money may run out (there is approximately $64 million in cash with a $25 million per annum burn rate), and the company might not meet its milestones with United Therapeutics, forcing it to reach out to the capital markets at prices that are not attractive. But Pluristem continues to move ahead, with a strong pharmaceutical partner at its back, and possibly more to come.

Analysts have put an intermediate-term target price for Pluristem at $8.00 per share. I think that’s low. Even capturing 1% of the PAH market upon approval, only one of their indications, would bring in $30 million. Assuming this occurs within the next three years, discounting to the present, the shares should be worth $25. It’may be time to buy.



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