"Among the companies I know, Pluristem Therapeutics Ltd. (Nasdaq:PSTI; DAX: PJT: PLTR) has done the most with the least clinical data," says an expert on stem cells and investor in the life sciences.
Pluristem, which is developing placental stem cells for a range of therapies, is a pioneer in its field. The field is new and full of uncertainty. To date, the company's products have undergone a single study with 27 patients, and with no control group. Instead the results were compared with a trial by Sanofi Aventis SA (Euronext: SAN; NYSE: SNY), and most companies would take the trial with caution.
Since announcing the results of the clinical trial, Pluristem has raised $75 million from the public: $41 million in early 2011 and $34 million in September 2012. The company's market cap of $190 million is usually reserved for company's farther along in the development of their products. The company could join the Tel Aviv 100 Index, which could further boost its share price. With 104 employees, Pluristem has become one of Israel's largest biotech companies.
"This is a marvelous company in how it manages its relations with the capital market," the investor added. "Does it have a real product that works? No one can say yet."
In July and August, it seemed that every announcement by Pluristem, no matter how immaterial, sent its share price sharply higher, and it doubled during this period. The best received announcements were about successful treatments on three cancer patients in Israel under compassionate care protocols, although its leading drug candidate is for the treatment of peripheral artery disease.
This drug candidate is a placental stem cell (PLX cell) for the regrowth of blood vessels, which is indicated for the treatment of three kinds of blockage of blood vessels in the limbs. The trial included 27 patients with critical limb ischemia (CLI). The company has begun recruiting 150 patients for a Phase II clinical trial of the therapy for intermittent claudication (IC), which is due to be completed by the end of 2014. The company is also due to begin a Phase II clinical trial for the treatment of Buergers Disease (progressive inflammation and thrombosis of small and medium arteries)
"Globes": If you were analysts, how would you build a pricing model for Pluristem?
Pluristem chairman CEO Zami Aberman: "Most analysts only assess the company's late-stage products. On the basis of our leading product's potential, they reach much higher prices than our current value, and they stop there. If you add just one more of our products to the pricing, the price would be so high as to seem unreasonable."
However, this potential should be based on probabilities, i.e. the chances of success in clinical trials, market adoption of the product, and a price that creates profits for the company. These probabilities are very hard to estimate, especially for a company like Pluristem.
You obtained approval for an advanced study for critical limb ischemia 18 months ago. Why the delay?
"The US Food and Drug Administration (FDA) demanded that we first build the plant for commercial production of the stem cells, and to use exactly these cells in the trial. Our subcontractor, Biopharmax Ltd., is due to finish the plant this year, so we'll be able to begin the three-year trial in 2013."
Pluristem CFO Yaki Yanai estimates the cost of the CLI clinical trial at $15-18 million, and the cost of the IC trial at $7 million.
Will doctors help to prescribe such an innovative therapy?
Aberman: "It's a question of how simple and cheap the product is. We're producing a product that is locally administered by injection to the muscle. Current treatment is exercise and massages. For many patients, amputation is the only option."
Is there a chance that one day, you'll announce that the product doesn’t work, as happened to Pharmos?
"Since the products are different from each other, and since they all succeeded in animal studies, I don’t believe that the success is coincidental. That is why I believe that the chances of failure in all the studies are negligible."
Pluristem also has the support of United Therapeutics Corporation (Nasdaq: UTHR), which is developing pulmonary blood pressure drugs, and paid Pluristem $7 million in advance to develop its stem cell therapy for its own field. The deal could ultimately be worth hundreds of millions of dollars.
"They chose us, after examining the production methods of all our competitors," says Aberman. "I think that since then, the market began to take us more seriously. Our production process has value in itself, it costs a tenth of the production processes of other companies in the field." He adds, "Our proprietary production process could also generate revenue, although it won't be as material as revenue from an independent process.
Pluristem has entered a new field to use its PLX cells to rehabilitate bone marrow in blood cancer patients. Following success in preclinical trials, the cells were successfully used to treat three patients under compassionate use protocols, without a clinical trial.
Not every public company announces compassionate use treatments. Why did you do so?
Yanai: "This is our approach toward the capital market. We chose to be transparent, and I think that investors like that."
Aberman: "What would have happened if we hadn’t made an announcement, and the story leaked?"
You recently announced the selection of a distributor for your stem cells to clinical trials centers. Some people were astonished by the announcement.
Aberman: "There's a logic to all of our announcements. We dispelled foreign concerns about all our stem cells being produced at one site."
A seven year-old girl who received a compassionate treatment died recently. If she were part of a clinical trial would this still have been considered a success?
"Immediately following the treatment, we measured whether her bone marrow had rejuvenated, and the answer was unequivocally positive. Studies by other companies in similar fields also measure how many patients survive 100 days after the treatment. This patient survived 180 days, which is an eternity for these patients."
Published by Globes [online], Israel business news - www.globes-online.com - on October 9, 2012
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