|Pluristem's New Indication for Pulmonary and Lung disorders Expands Blockbuster Pipeline|
|By Ray Dirks of Ray Dirks Research|
|Tuesday, 31 July 2012 07:23|
PSTI’s latest data shows that mice treated with PLX cell therapy had a significant drop in the amount of collagen in the lungs, which shows up when the body senses damage and the inflammation process starts. Mice also had an increase in lung capacity so breathing was easier and gain in weight.
These results build on PSTI’s valuable platform technology. Other medical areas the company is studying – peripheral artery disease (PAD), bone marrow transplants, and life-threatening heart conditions – all seem to operate on stopping the inflammation response before it causes more harm than good. We expect studies in all of PSTI’s areas of research, including pulmonary fibrosis, will follow in the near future.
Like with PAD, the company is taking a smart approach with the FDA. PSTI’s approval strategy is to target interstitial lung disease (ILD), which includes pulmonary fibrosis and another hundred or so chronic lung problems. We expect that when they get approval, doctors will use PLX cells for any number of lung disorders that don’t have proper medication available.
Companies have tried and failed to create a drug for this horrible lung disorder. The most recent is Intermune (NASDAQ:ITMN) who tried for approval of Esbriet in May of 2010, only to be declined when the FDA asked for another clinical trial. The trial is still underway, but the company found approval overseas, only with dismal results.
Last week, in their quarterly conference call, ITMN’s CEO tried to defend Esbriet’s weak showing in Europe, particularly Germany where, we say, if you can’t sell a new drug there, go home. Turns out that only 25% of doctors see it as the treatment of choice. The CEO admits that there are a “ton of patients” in the German market that could be using Esbriet. Could be, but aren’t and won’t. If Esbriet hasn’t gotten big in the year-plus it’s been sold in Europe, more expensive sales muscle probably won’t help.
Esbriet is ITMN’s only drug, yet this company is trading at a $586 million market cap, almost 4 times that of PSTI, who has a much fuller pipeline with potential treatments going into multi-billion dollar markets.
Just to prove how huge a market for lung disease is, last year Bristol Myers Squibb (NYSE:BMY) paid $325 million, including another $150 million for milestones, for Almira Pharmaceuticals which is working on a drug for pulmonary fibrosis. The only other player in the field is Gilead Sciences (NASDAQ:GILD), with a monoclonal antibody in Phase I.
So now we have a fourth big market for PSTI’s cell therapy, with major pharmaceutical companies and investors telling us that they put significant value on not only the disease, but also on the prospect of a treatment that works
As we said in our previous articles, there is always risk in any stock. Share price could linger or lose steam if the management team fails to execute their game plan and reach announced milestones in a timely manner. As with any biotech, regulatory risk is present. Still, these possible risks are minimal compared to the upside realities and we are not alone in our enthusiasm. Furthermore, we believe the cost-effectiveness of PSTI's products all point to significant future shares in multiple sizeable markets. The company is well-funded with approximately $42 million in cash and equivalents reported in their most recent filings, so it does not have the financing risk that we see in a lot of small biotech companies. We always urge investors to do their own due diligence.
Pluristem has a market capitalization of $149 million up from our previous report. Pluristem is targeting important disease targets that number in the billions of dollars. I stand by my belief that Pluristem is in for a move to $8 over the next few months and could increase in value by 5 to7 times within one year.