Since embryonic stem cells were first isolated 18 years ago, the prospect of medical breakthroughs using stem cells has excited the medical world hugely.
Stem cells are unspecialised cells – think of them as “blank” cells – that are capable of becoming another more differentiated cell type in the body, for example a skin cell, a muscle cell, or a nerve cell. Stem cells serve as a repair system for the body: the great potential of stem cells is that they can be induced to become specific cells with special functions.
In particular, stem cells could possibly be grown to become new tissue for use in transplant and regenerative medicine: stem cells can be guided into becoming specific cells that can be used to regenerate and repair diseased or damaged tissue.
Stem cells can be broadly categorised into two major groupings: pluripotent and adult stem cells.
Pluripotent stem cells are the most versatile cells of all, being able to reproduce themselves indefinitely, and also differentiate into any other type of cell in the body. The first kinds of pluripotent stem cells were embryonic stem cells (ESCs), but ethical concerns naturally arose about the extraction of cells from human embryos. Researchers have solved this problem with induced pluripotent stem cells (iPSCs), which are a man-made version of ESCs, derived from adult cells, and which have very similar characteristics to ESCs. iPSCs are typically derived from fully differentiated adult cells that have been ‘reprogrammed’ back to a pluripotent state.
Adult stem cells are found in most adult tissues, such as bone marrow or fat. At first it was thought that adult stem cells could create only similar types of cells, but emerging evidence suggests that adult stem cells may be able to create unrelated types of cells. The most widely studied type of adult stem cells is mesenchymal stem (or stromal) cells, or simply MSCs.
Found in a wide range of human tissues, including bone marrow, adipose tissue (fat), placenta and umbilical cord blood, MSCs have great potential as therapeutic products. They appear to modulate the human immune system and have an anti-inflammatory function, and enhance tissue regeneration by protecting cells from damage and promoting healing – for example, by stimulating new blood vessel formation. They also secrete bio-active molecules such as cytokines, chemokines and growth factors: this secretion can be effectively harnessed to “direct” the healing process. MSCs exert their effects and are then eliminated within a short period of time.
MSCs can be either autologous (a patient is treated with their own cells) or allogeneic (cells from a donor are used to treat other people). Allogeneic MSCs have not been shown to cause immune reactions in other people, so they can be used in an “off the shelf” way – the donor doesn’t have to match the recipient. This has important commercial advantages, so biotechnology companies have mostly focused on allogeneic rather than autologous MSCs.
The therapeutic use of MSCs is currently being investigated in more than 200 clinical trials around the world in a diverse range of illnesses, including immune disorders, heart disease, stroke, arthritis, fractures, degenerative disc disease, diabetes, lung disorders and eye disease.
Australian researchers are doing some world-class work in this field – but these companies are subject to the highly speculative nature of biotech investment. The technology may be wonderful, but the companies do not yet make money, and investors rely on the flow of good news from clinical trials, partnerships with larger biotech firms and milestone payments. That caveat being understood, there are some very interesting listed representatives of the stem cell research sector. Let’s take a look:
Cynata Therapeutics (CYP, 71 cents)
Market capitalisation: $52 million
Share price start 2016: 35.5 cents
Analysts’ consensus target price (Thomson Reuters): $1.00
Cynata Therapeutics has developed a proprietary technology called Cymerus to manufacture MSCs at unlimited scale. Where other methods require a continuous supply of new tissue donations – and are thus limited by the availability of individual donors – the Cymerus process uses an effectively limitless starting material, a bank of induced pluripotent stem cells (iPSCs), and a patent-protected process to derive MSCs for commercial use.
Because the Cymerus process uses iSPCs as starting material, Cynata is the only company in the world with technology for the manufacture of therapeutic allogeneic MSCs without reliance upon multiple stem cell donors. This represents cost-effective, scalable production of stem cells, essential for the future of stem cell medicine.
In February last year, the Cymerus cell manufacturing process was successfully validated through extensive trials at Waisman Biomanufacturing in Madison, Wisconsin. (The technology was developed at the University of Wisconsin-Madison.) The trial confirmed that the manufacturing process was capable of producing MSCs for therapeutic application, consistently, efficiently and economically, at industrial scale, under the Good Manufacturing Practice (GMP) protocol.
In June, Cynata struck a licence option agreement with Apceth, a German company developing a range of stem cell technologies to treat cancer and other devastating diseases – this attracted an immediate upfront cash payment.
In September, Cynata’s lead product, CYP-001, was cleared to proceed into a Phase 1 clinical trial in patients with steroid-resistant graft-versus-host disease (GvHD), a potentially fatal complication that can occur after a bone marrow transplant in cancer patients. GvHD occurs when newly transplanted donor cells attack the recipient’s body.
Also in September, the company signed a term sheet with Fujifilm of Japan, to develop and commercialise some of Cynata’s stem cell technology. The deal anticipates a definitive agreement under which Fuji will have the exclusive worldwide licence to manufacture, market and sell CYP-001 for prevention and treatment of GvHD, as well as gain certain rights to the Cymerus technology platform for the prevention and treatment of other diseases.
Earlier this month, Cynata announced that it had received “compelling” data from a proof-of-concept study of its Cymerus MSCs in an experimental model, conducted at Melbourne’s Monash University, investigating the use of the technology as a potential alternate treatment for asthma sufferers.
Cynata has great potential, but like many Australian biotechs, does not make a profit. The shares have doubled in price this year, but analysts see good scope for further price rises: independent US-based equity research firm SeeThruEquity is the most positive, with a price target on Cynata of $1.55.
Orthocell (OCC, 43.5 cents)
Market capitalisation: $36 million
Share price start 2016: 37.5 cents
Analysts’ consensus target price (Thomson Reuters): N/A
Founded in 2006 and listed in August 2014, Orthocell is commercialising a non-invasive stem cell therapy aimed at the regeneration of tendon, cartilage and the repair of soft tissue injuries. The therapy for the regeneration of tendon tissue is a world-leading approach to damaged and degenerative tendon tissue that cannot heal itself.
The procedure involves injecting a patient’s own cells, which have been harvested from a healthy tendon, back into the problem area. It is a simple procedure that can be done in a doctor’s rooms – there is no operation or admission to hospital. It has already been trialled across Australia to treat the Achilles tendon, patellar tendon, gluteal tendons, tennis elbow and rotator cuff (Ortho-ATI), and it is also being trialled for cartilage regeneration (Ortho-ACI).
Both treatments are autologous. The Ortho-ATI procedure sees tendon cells harvested from the patient’s own healthy tendon, and following expansion in Orthocell’s Therapeutic Goods Administration (TGA)-licensed facility, injected back into the damaged tendon.
Similarly, the Ortho-ACI procedure involves healthy articular cartilage harvested from the knee joint, sent to the Orthocell lab where the building blocks of the cartilage, the chondroctye cells, are isolated and grown to a clinically significant number, then implanted back into the problem joint five weeks later.
Orthocell is also poised to gain regulatory approval for a collagen-based scaffold device, CelGro, which is aimed at speeding up tissue repair. Using an animal protein they have created a collagen-based scaffold device for soft tissue reconstruction. It is in clinical trials for regeneration of human bone tissue in the jaw and the rotator cuff tendon in the shoulder, and as an augment to cartilage repair within the hip joint. Earlier this month, Orthocell received ethics approval for a study at St John of God Hospital Group Subiaco, Perth, of CelGro for the repair of nerve injuries.
Orthocell has submitted CelGro for first regulatory approval in Europe and expects to receive notice of approval of its CE Mark application by the end of the year. This approval will enable sales of CelGro to begin in Europe, which will be the basis for applications for regulatory approvals in the United States, Australia and Japan in 2017.
Orthocell is even more speculative than most biotechs because analyst coverage is hard to find.
Regeneus Limited (RGS, 15.5 cents)
Market capitalisation: $31 million
Share price start 2016: 9.4 cents
Analysts’ consensus target price (Thomson Reuters): 70 cents
Founded in August 2007 and listed in December 2013, Regeneus is a regenerative medicine company developing proprietary stem cell and immuno-therapy technologies, focusing firstly on osteoarthritis and other musculo-skeletal disorders, and cancer in both humans and animals.
The company’s lead product is Progenza, an allogeneic stem cell product for the treatment of knee osteoarthritis. Progenza is currently in a Phase 1 clinical trial for the treatment of knee osteoarthritis, at Sydney Sportsmed Specialists in Sydney.
Progenza differs from other MSC therapies because it includes secretions from cells that improve the functionality of the MSCs: the MSCs secrete cytokines and growth factors, which reduce inflammation and pain and promote healing and repair of the damaged or diseased tissue
The product is made from MSCs from adipose (fat) tissue from a healthy donor who has been extensively screened. The MSCs are expanded through the company’s proprietary and scalable manufacturing process: Regeneus can produce millions of therapeutic doses of Progenza from a single donor.
The second product, known as RGSH4K, is an autologous personalised tumour vaccine – in other words, a vaccine manufactured from a patient’s own cancer cells. The vaccine activates the immune system against the cancer cells to effectively fight them. RGSH4K is currently being assessed in a Phase 1 clinical trial at the Northern Cancer Institute in Sydney.
In August, the European Patent Office granted Regeneus a patent covering the use of its stem cell secretions technology for the topical treatment of acne. In May, Regeneus won an Australian Research Council (ARC) grant to work with researchers from Macquarie University and the University of Adelaide to gain a better understanding of chronic pain and how stem cells specially selected for their cytokine profiles can be used to relieve chronic pain in animals, and help lay the foundations for future human therapies.
Regeneus also has a veterinary arm: it has a stem cell therapy product called CryoShot in a clinical trial in the US for the treatment of musculo-skeletal conditions in dogs, and the treatment is also aimed at horses. It also has an animal stem cell cancer vaccine called Kvax, which is being evaluated in a clinical trial at the Small Animal Specialist Hospital (SASH) in Sydney, for the treatment of canine lymphoma.
Analysts certainly like the potential of Regeneus’ portfolio: if the stock reached the Thomson Reuters analysts’ consensus target price, investors buying the stock now would make 4.5 times their money.
Mesoblast Limited (MSB, $1.16)
Market capitalisation: $443 million
Market capitalisation: $36 million
Share price start 2016: $1.825
Analysts’ consensus target price (Thomson Reuters): $3.01
Regenerative medicine company Mesoblast has developed a technology platform based on specialised cells called mesenchymal lineage adult stem cells (MLCs): these cells can be sourced from the bone marrow of young healthy adult donors and administered to thousands of patients, without any material immune response.
Mesoblast has several priority “Tier 1” therapy candidates developed from this program in active Phase 3 clinical trials, including Revascor (MPC-150-IM) for chronic heart failure, MPC-06-ID for chronic lower back pain due to disc degeneration and MSC-100-IV for acute graft-versus-host disease (aGVHD). Important results are expected in all three programs in the current financial year.
The company also has an allogenic stem cell therapy, MPC-300-IV, in a Phase 2 clinical trial for refractory rheumatoid arthritis. In August, Mesoblast reported positive results from the trial, revealing that a single intravenous infusion of MPC-300-IV was well tolerated (that is, safe) and improved the patients’ clinical symptoms, physical function, and disease activity compared to the placebo.
Mesoblast’s stem cells act by both releasing anti-inflammatory factors and by secreting two proteins that act on cells within inflamed joints. The treatment could relieve the pain suffered by the almost one-third of rheumatoid arthritis patients for whom new biologic drugs have failed.
Mesoblast estimates the global market for treatment of rheumatoid arthritis is more than US$15 billion, growing to more than US$18 billion by 2024. About one-third of patients do not respond to currently available treatments, which gives Mesoblast a potentially lucrative addressable market.
Mesoblast’s licencee in Japan, JCR Pharmaceuticals, has received full approval for the first allogeneic cell-based product in Japan based on its MLC technology, TEMCELL, to treat aGVHD in children and adults in Japan. Mesoblast also believes it is well positioned to have the first industrially manufactured allogeneic cell-based product approved in the United States.
Mesoblast’s “Tier 2” therapy candidates include MSC-100-IV for Crohn’s Disease, MPC-25-IC for acute cardiac ischemia, MPC-25-Osteo for spinal fusion and MSC-75-IA for knee osteoarthritis
The company’s stem cell technology is very promising, and all of its therapy candidates are aimed at multi-billion-dollar market opportunities, but Mesoblast is a living example of the risk of biotechnology investing: its shares were $8 five years ago, and it has been downhill ever since. Most recently, in June, Israeli pharmaceutical company Teva Pharmaceutical, which, since a 2010 deal, had been funding Mesoblast’s most important treatment, Revascor, for chronic heart failure, walked away from its commitment to fund the final clinical trials (although Teva still owns 14.6% of Mesoblast.)
But the analysts who follow Mesoblast see plenty of scope for the share price to rise as the data flows from its clinical trials. At the upper extreme, Edison Research values the stock at $3.84 – which would represent a 230% gain from the current price.
Source: Yahoo!7
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