Going for leadership in cellular therapy

NeoStem acquires California Stem Cell and moves forward with Phase 3 trial for melanoma

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NEW YORK—NeoStem Inc. has positioned itself as a leader in the emerging cellular therapy industry, and opened the door toward launching a critical Phase 3 trial for melanoma, with the acquisition of biotech California Stem Cell (CSC), based in Irvine, Calif.
As a result of this acquisition, “NeoStem plans to initiate, before the end of 2014, a pivotal Phase 3 trial of Melapuldencel-T, an autologous, melanoma initiating (stem) cell immune-based therapy intended to eliminate the tumor cells capable of causing disease recurrence,” said Dr. Robin Smith, chairman and CEO of NeoStem Inc.
Melapuldencel-T was developed by CSC and is now NeoStem’s most advanced product candidate and the foundation for its Targeted Immunotherapy Program in oncology, which is a late-stage novel proprietary cancer cell therapy—it has been approved to enter this trial with a Special Protocol Assessment from the U.S. Food and Drug Administration (FDA) and has received Fast Track designation for metastatic melanoma, as well as Orphan Drug designation, she said.
Pursuant to the terms of the CSC merger agreement on May 8, NeoStem issued 5.33 million shares of NeoStem common stock, restricted and subject to certain holding periods, in exchange for all of CSC's equity interests, Smith said. CSC shareholders will be eligible for milestone and royalty payments of up to $90 million, which may be payable in cash or shares of NeoStem common stock at NeoStem's discretion.
“NeoStem is committed to maximizing shareholder value by leveraging its development and manufacturing expertise across multiple internal programs, which, in addition to the Phase 3 Intus study for Melapuldencel-T, includes its Phase 2 PreSERVE study for AMR-001, the company’s lead product candidate in its CD34 Cell Program, which is expected to announce data later this year,” she said.
Smith said that CSC is now called NeoStem Oncology LLC and is a wholly owned subsidiary of NeoStem.
The NeoStem Oncology facility (R&D and offices) will be leveraged by NeoStem for its capacity, both infrastructural and human, to do additional manufacturing and/or development work to advance NeoStem’s platform technology, she said.
“NeoStem has been built upon a series of strategic acquisitions that include both technologies and manufacturing capabilities,” Smith said. “The CSC acquisition is entirely in keeping with the opportunistic growth strategy the company has followed for years.”
Progenitor Cell Therapy (PCT) is NeoStem’s wholly owned contract manufacturing and development organization, with a global reputation in contract development and manufacturing for the cell therapy industry.
In 2011, NeoStem “acquired PCT,” Smith said. “With that acquisition, NeoStem could clearly differentiate itself from other development-stage cell therapy companies through ownership of a subsidiary which could not only produce revenues from its support of the cell therapy industry, but create an engine for the efficient development of its own cell therapies.”
“This engine has grown stronger with acquisition of CSC,” she said. “When the opportunity arose to apply NeoStem’s specific and extensive expertise to a technology platform for the treatment of cancer … management knew it was an opportunity that the company should not miss.”
“The company hopes that the Phase 3 Intus study will deliver positive results, and if so, would move the product forward to commercialization alone or in partnership,” Smith added. “The company is also exploring other indications for its Targeted Immunotherapy Program, including a licensing deal in Asia to develop a therapeutic for hepatocellular carcinoma.”
Statistics show there are 120,000 new cases of melanoma per year in the United States, and that melanoma kills an estimated 8,790 in the country annually, she noted.
According to the World Health Organization, the incidence of both non-melanoma and melanoma skin cancers has been increasing over the past decades. Currently, between 2 million and 3 million non-melanoma skin cancers and 132,000 melanoma skin cancers occur globally each year.
One in every three cancers diagnosed is a skin cancer and, according to Skin Cancer Foundation statistics, one in every five Americans will develop skin cancer in their lifetime.
A report from the Decision Resources Group forecasts robust annual growth of 11.2 percent in the market for malignant melanoma therapies—from nearly $950 million in 2012 to $2.75 billion in 2022, Smith said.
In other news, NeoStem announced its first quarter 2014 report, showing a 61-percent revenue increase compared to the first quarter 2013, mostly due to the PCT clinical services revenues, the largest component of company revenues, which increased 88 percent over the earlier period.
For the three months ended March 31, 2014, research and development expenses were $4.8 million, compared to $3.2 million for the three months ended March 31, 2013, an increase of $1.6 million and a result of support of the advancement of the Treg Program, and to a lesser extent, in support of the Phase 2 PreSERVE AMI trial, the company reported.
Overall, there were approximately 50 percent more active clients as of March 31, 2014 compared to March 31, 2013, including five new clinical service contracts initiated during the first quarter.
“We are pleased to see positive revenue growth in this quarter over first quarter 2013 and to report that, as of March 31, 2014, we had an ending cash balance of over $41 million,” Smith stated. “Coupled with our best-in-class manufacturing capability, the stage is set for us to realize meaningful clinical development and manufacturing efficiencies, further positioning NeoStem to lead the cell therapy industry.”
The company is pursuing commercial expansion of its manufacturing operations both in the United States and internationally. Additionally, with the acquisition of CSC, PCT can leverage CSC’s additional manufacturing capacity in Irvine, Calif., as well as their personnel’s experience and expertise in immunotherapy.

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