PLX-PAD is manufactured from human placental cells with no immunogenicity, meaning they are off-the-shelf and require no immune matching. The company is about to kick off a 250-patient multinational CLI trial that will underpin a regulatory submission in both the US and Europe and the UK concurrently, and this together with another pivotal in Japan for the same product, same indication, which management expects will be sufficient to support a regulatory approval filing there as well.
The recent deal with Innovative Medical, besides giving a financial boost, gives the company an additional foot in the door of the labyrinthine Chinese regulatory apparatus. Cell therapy used to be legal in China for any hospital to engage in at its own discretion, and was only recently outlawed in favor of strict regulation. If the joint European/US/UK CLI trial succeeds, we can expect the same in Japan and regulatory follow up in China with its new partner’s help.
On the partnering front, Innovative Medical will have a seat on Pluristem’s board as long as it owns at least 12.5% of shares outstanding. This means the VC is actively with Pluristem and not just handing money over to buy discounted stock to sell at market just to make a quick buck. If this were the case, not only would Innovative Medical not get a seat on Pluristem’s board, but they wouldn’t have offered to buy shares at a double digit premium that still holds even after the news is out.
A Loaded Spring
What we have in Pluristem Therapeutics Inc. (NASDAQ:PSTI) is a powerfully loaded spring. A dual Phase III pivotal beginning early next year in an estimated $12 billion market with virtually no competition on the horizon, another trial for the same in Japan to begin early next year as well, its own manufacturing capabilities, a foot in the door to what is a massive Chinese market estimated at 30 to 60 million CLI sufferers, $8 million in EU funding for its upcoming Phase III with $63 million in cash and a quarterly burn of less than $6M – nothing about its current valuation seems to make any sense.
We believe, first and foremost, that its manufacturing capabilities are being completely overlooked, and that if and when the U.S/Europe pivotal Phase III to begin in the coming months succeeds, investors will take notice of not just the CLI market at its disposal, but everything else about the company that should give it a much higher valuation even now, before any of its treatments have been proven beyond Phase I.
The data for those trials, by the way, are impressive as well, which we detailed back in August.
And if, indeed, the CLI trial succeeds, Pluristem will be looking for a partner to help market and distribute PLX-PAD. But the critical point here is what it will not be looking for, and that is a manufacturer. Amgen, Inc.(NASDAQ:AMGN) and Genentech, now a subsidiary of Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) both became Big Pharma by controlling manufacturing, since by doing so they could bring home much more than a meager 10% royalty on any partnership. The market hasn’t figured this out yet with Pluristem and is still for whatever reason looking at the company as just another speculative long shot with a wishful pipeline. One success though could open the floodgates on this one, as investors will suddenly realize what they have up to now ignored.
Company COO Yanay summed it up well:
“ZSVC AND INNOVATIVE MEDICAL ARE LEADING STRATEGIC INSTITUTIONAL INVESTORS, FOCUSED ON TECHNOLOGY AND LIFE SCIENCE IN CHINA, THAT CAN CONTRIBUTE TO PLURISTEM’S DEVELOPMENT IN THE COMING YEARS AND WE LOOK FORWARD TO FORMING A LONG TERM PARTNERSHIP WITH THEM. UPON CLOSING THIS TRANSACTION, PLURISTEM WILL HAVE A STRONG BALANCE SHEET, TO ADVANCE THE PIVOTAL PHASE III TRIALS OF OUR PLX CELLS TOWARDS LARGE MARKETS. THE TRANSACTION, WE BELIEVE, CAN SIGNIFICANTLY ENHANCE PLURISTEM’S DEVELOPMENT, BUILDING VALUE TO OUR SHAREHOLDERS AND SUPPORTING OUR STRATEGY TO DEMONSTRATE THE ADVANTAGES OF PLURISTEM IN THE CELL THERAPY SPACE.”
Disclosure: At time of writing, the author was long PSTI.
Note: This article is written by Rafi Farber and originally published at Market Exclusive.
