Pluristem’s Immunotherapy Breakthrough Could Fast-Track GvHD Studies under Japanese Legislation Print
By Sharon di Stefano   
Friday, 02 January 2015 16:20

With data in hand that shows evidence its PLX cell therapy produces an immune response, Pluristem Therapeutics (PSTI:NASDAQ) enters the exploding area of immunotherapy, or treating disease via manipulation of the human immune system, and joins the ranks of its larger pharmaceutical counterparts in an industry estimated at $35 billion with fast growth expected in the next seven to eight years.

Immunotherapy has become the focus of multinational giants like Bristol-Myers Squibb (BMY:NYSE), Merck & Co. (MRK:NYSE) and Roche Holding AG (RHHBY:OTC) who all vigorously seek this new panacea for disease.

A look at the science – in May 2013, Pluristem discovered PLX cells improved grafts of hematopoietic stem cells in failed bone marrow transplant (BMT)due in theory to modulation of the immune system through secretion of cytokines and other proteins to stimulate the production of all blood cell types, a necessary function for recovery after BMT. Of the 25,000 allogenic (from donor) BMT’s done worldwide, roughly 15% fail to the great physical detriment of patients already suffering with sickness.

June of that year, Gaberman, E. published data using PLX cells on irradiated mice; results were positive with nearly all of animals rescued and healthy. Microscopic study after sacrifice revealed a startling discovery responsible for the therapy’s success – the stimulation and secretion of Interleukin-10 (IL-10) whose job is to stop cytokines from causing harmful inflammation via T cell proliferation, just the way immunosuppressant drugs like cyclosporine work but without leading to infections stemming from compromised immune systems. When PLX cells were treated with lipopolysaccharide (LPS), an organic compound composed of fatty acid and sugars, efficacy was further increased at a statistically significant P-value of less than 0.01, meaning the results are not due to chance. Independent research has determined that LPS does indeed facilitate production of IL-10.

Four months later, mice treated with PLX cell therapy after BMT showed a statistically significant drop in symptoms associated with graft-versus-host disease (GvHD), a dangerous condition common after BMT where the body rejects implanted tissue from a donor and mediated by T-cell/cytokine response that may lead to liver failure; blistering skin; intestinal hemorrhage; and scarring of the lungs. Mice did not exhibit these symptoms, and overall improvement in survival 42 days after treatment was observed. Efficacy was achieved regardless of whether cells were given intravenously or intramuscularly, lending the therapy freedom of choice for future patients. More recently, Pluristem presented good preclinical results using PLX cells for complications from GvHD at the 2nd UK-Israel Regenerative Medicine Conference (BIRAX) at Technion, Israel’s heart of cell therapy research.

These results came on the heels of compassionate use of PLX cells several years ago for three patients who failed BMT, restoring health with no local or systemic side effects and a significant increase in red blood, white blood, and platelet cell count as therapy stimulated hematopoietic stem cell recovery.

To uphold and expand the role PLX cells play in immunotherapy, international journal Biochimica et Biophysica Acta (BBA) - Molecular Cell Research recently published a study using Pluristem’s cells in stroke that showed secretion of another immunogenic agent – IL-6, in addition to vascular endothelial growth factor (VEGF), a protein that promotes angiogenesis or the production of blood cells to restore oxygen supply to damaged tissue.


Drawn by the therapy’s promise, traditionalist pharma company Pfizer, Inc. (PFE:NYSE) plans to further its race toward immunotherapy by working with German-based Merck KGaA (MKGAY:OTC). Bristol-Myers Squibb Company (BMY:NYSE) and Celgene Corporation (CELG:NASDAQ) are joint-sponsoring clinical trials combining Bristol’s immunotherapy compound with Celgene’s anti-cancer treatment. Novartis AG (NVS:NYSE) has data on new immunotherapy initiatives following its February 2014 acquisition of CoStim, intended to vault Novartis outside its areas of eye care, antibiotics, and animal health. Very recently, Amgen (AMGN:NASDAQ) received the FDA’s widely coveted Breakthrough Designation, shaving off five months of approval waiting time, for the first drug in its class of immunotherapies where T-cell manipulation alters the way the body responds to disease.

Despite efforts, several have stumbled: Last spring, AstraZeneca PLC (AZN:NYSE) lost an FDA panel vote for its drug designed to modulate T cell response that had been rejected three years earlier. Bone marrow suppression and risk of acute myeloid leukemia were cited. GlaxoSmithKline Plc’s (GSK:NYSE) immunotherapy effort flopped in late stage studies, where immune response was not evident. A small immunotherapy study conducted by Novartis revealed 100% of patients showed cytokine release syndrome, an all-body inflammatory response causing in 27% high fever, excessive tremors, and life-threatening build-up of fluid in the lungs.

In comes Japan, long supportive of regenerative medicine and about to play a major role in its future: the country passed a revision of its Pharmaceutical Affairs Law that allows marketing approval as soon as safety and efficacy in cell therapy clinical trials are proven, as soon as Phase II. This way, products will reach patients faster while industry players get an early chance at profitability. The new law could shorten approval time by as much as two years. Japan’s move was prompted by demographics; as the 2nd largest healthcare market in the world, its over-65 population is expected to double in the next 10-20 years. Resources will be strained, so regenerative medicine is attractive as an alternative to traditional medicine that has less impact on diseases common to aging and unable to address unmet medical needs that puts economic pressure on Japanese society.


Competition between Pluristem and its closest rival Mesoblast Limited (MEOBF:OTC) in Japan is cooking. Last September, Mesoblast, with its Japanese partner JCR Pharmaceuticals, filed in Japan for approval of its compound for GvHD. Enter Pluristem, weighing partnerships in Japan with the help of healthcare transaction strategist Sage Group and Japanese healthcare expert Waterfield HealthCom, two highly-respected organizations. Both are vying for a GvHD approval, and should make for an interesting contest. Both have sufficient funds – Mesoblast with $4.8 million in cash as of September 30, 2014 and approximately $160 million in unrestricted deposits at call (an interest-bearing account with penalty-free withdrawals) and Pluristem with roughly $51 million in cash and strong ties to Wall Street funding. Annual burn rate for Mesoblast, however, is much higher than Pluristem’s – $99 million versus $27 million. Cephalon, now part of Teva Pharmaceuticals (TEVA:NYSE) with a 19.9% equity ownership of Mesoblast may consider Japanese GvHD studies payable from its $1.7 billion milestone package to Mesoblast, or not, and terms of the original deal four years ago may alter in light of Teva’s desire to off-load assets to concentrate on core products.

Investors may recall that the first cell therapy approved for GvHD in 2012, was Prochymal, an allogenic treatment derived from adult bone marrow and discovered by Osiris Therapeutics (OSIR:NASDAQ) which gained little footing within the FDA and was eventually sold to Mesoblast for a pittance. Puzzling to me is that Mesoblast inherited approvals in Canada and New Zealand but still conducts late-stage studies there, aiming for market release sometime in 2016. Given that Sanofi (SNY:NYSE), originally in partnership with Osiris to develop Prochymal in 2008 had abandoned interest in the project on the heels of two failed late-stage clinical trials in GvHD, I wish them luck.

Mesoblast and Pluristem both use similar processed cells as therapy but with key differences. Foremost is the ease of acquisition: Mesoblast takes bone marrow from donors, an invasive, costly practice, where Pluristem harvests cells free of charge from the placentas of healthy Cesarean-section birth mothers. Pluristem owns outright a 3-D manufacturing facility with multi-country approvals to culture its cells and Mesoblast outsources to Lonza Group Ltd (LZAGF:OTC) although technique has not progressed past the 2-D use of petri dish and beaker. Most important, Pluristem’s cultured cells do not differentiate into bone, fat or cartilage like Mesoblast’s, avoiding the possibility that transplanted cells turn into the wrong tissue, a common fear among early adopters of cell therapy


Mesoblast’s Phase II/III clinical results on GvHD done by more than a dozen Japanese medical institutions and presented at the American Society of Hematology ((ASH)) early this month should give investors pause. There are claims for safety and efficacy but with no statistical significance attached in the form of P-values. Side effects similar to chemotherapy occurred in 84% of subjects, and virtually all had some kind of adverse response, including death in 40% of the 25-patient trial where Mesoblast explicitly states that fault of the drug cannot be ruled out in 16%. Not too promising.


Given the prospects of both companies, my money is on Pluristem.


Broad risks to an investment in Pluristem include future funding needs and the success of investigated compounds without burden from regulatory roadblocks. Specifically related to its Japanese effort, there are competitive forces from Mesoblast in GvHD who is farther along in clinical trials although results so far carry heavy side effects. In Japan, Abenomics has been criticized as the economy falls into recession while choosing between monetary stimulus and fiscal austerity. On December 1, 2014, Moody’s downgraded Japan’s credit rating, citing disapproval of Prime Minister Abe’s tax delay and doubt whether growth policies would work in the intermediate term. This could negatively impact Japan’s healthcare system with a reduction in medical procedures and, particularly, a cut in reimbursement – central to the new law and a prime draw for regenerative medicine companies looking to conduct human studies there.

I view Pluristem as a quickly-evolving cell therapy company which has exploited its manufacturing prowess to expand into defined product lines. Executives have become active within the Alliance for Regenerative Medicine (ARM), made of 80 advocacy groups lobbying for streamlined regulations in cell-based drug approval. Pluristem’s goal is clear – to offer pioneering treatment for human ailments that need something new and better, and I predict its elegant process of conditioning cells to do therapeutic bidding will count highly in this next generation of medicine.

In sum, Pluristem should not be grouped with publicly-traded stem cell peers who often languish in misguided clinical trials with bootstrap funding, but instead be ranked among Big Pharma contemporaries who make spotty progress in immunotherapy yet reap glory from press attention, and gain in market capitalization.

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