Regenerative Medicine Deal Review

Author: Mark Curtis, 10/17/13

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Welcome to the first Regenerative Medicine Deal Review, an overview of recent licensing, partnering, and financing activity all exclusively in the regenerative medicine and cell therapy industries. Like my first post ‘Update from the Clinic’, this piece is intended to be a regular contribution that can be used for informational purposes to stay apprised of industry activity. Of note, in this first review, is a major deal between Australia’s Mesoblast and Osiris Therapeutics and a cell therapy deal between pharmaceutical giant Novartis and Regenerex. There were also two well-executed financings by StemCells and NeoStem.

Licensing

In a deal valued at ~$100 million Mesoblast (MSB) will acquire the expanded mesenchymal stem cell (MSC) business of Osiris Therapeutics (OSIR), including Prochymal®, which is the world’s first approved stem cell product and currently approved in Canada for Acute GvHD. Prochymal® is an allogeneic product derived from the bone marrow of healthy donors.

As part of the deal Mesoblast will receive 110 patents, 49 of which are in the US, 21 in Europe, and another 9 in Japan; these are all areas of strategic focus for the company. The IP protects use of the cells until 2025, with the potential to extend protection out to 2031 with the granting of additional patents. A significant consideration for Mesoblast in deciding on the acquisition was the promising Phase 3 data of Prochymal® in treating patients with Crohn’s disease and Acute GvHD for liver complications in adults.

In exchange for the MSC platform, Osiris will receive the following: an upfront payment of $20 million cash, $15 million in Mesoblast stock, an additional $15 million cash in six months, and up to $50 million in milestone payments based on the success of late-stage approvals.

In other news, we saw an exclusive global licensing deal and research collaboration between Novartis (NVS) and Kentucky-based Regenerex for use of the company’s hematopoietic stem cell-based Facilitating Cell Therapy (FCRx) platform, which has previously been investigated for use with kidney transplantation to prevent immune rejection and the need for life-long immunosuppression.

This technology will add to Novartis’ growing cell therapy portfolio, which currently includes a cell therapy approach using expanded cord blood-derived hematopoietic stem cells for the treatment of hematological malignancies and a T-cell therapy for the treatment of acute lymphoblastic leukemia and chronic lymphocytic leukemia.

California-based BioTime (BTX) sublicensed its HyStem hydrogel technology to Jade Therapeutics, which is currently developing a number of time-release therapeutics for corneal healing. BioTime’s hydrogel, which mimics the extracellular matrix, is being investigated across a number of applications including wound healing, vocal cord scarring, and cardiac infarct. BioTime’s CEO, Dr. Michael West, will be visiting Toronto on November 7 to deliver a presentation at the University of Toronto, hosted by CCRM; it’s not to be missed, if you can get a seat. Visit www.ccrm.ca for the topic, timing and location.

NeoStem (NBS) licensed three families of patents from the University of California, San Francisco, that will provide another layer of protection around the company’s human Regulatory T Cell (Treg) platform for the treatment of diabetes. NeoStem’s patent estate covers methods to isolate, expand, and use Tregs for treating autoimmune disorders.

Bioheart, a company commercializing patient-specific cell therapies for cardiovascular disease, has struck up a licensing deal with Invitrx to acquire its adipose-derived stem cells. The cells will contribute to the development of Bioheart’s AdipoCell (patient-specific fat-derived stem cells) product for chronic ischemic cardiomyopathy.

Financing

As mentioned above, StemCells Inc. (STEM) was out in the markets hoping to raise $16.2 million and breezed through raising gross proceeds of $18.5 million. The deal was a unit offering of common shares, priced at $1.45, with a half-warrant priced at $1.80 for five years. Chardan Capital Markets and Maxim LLC co-managed the deal.

NeoStem followed suit with a deal of its own looking to raise $35 million, instead raising gross proceeds of $40.25 million. The offering was straight common shares priced at $7. The funds will, in part, be used to continue to develop AMR-001, a chemotactic and patient-specific HSC product being investigated for treating damage to the heart from acute myocardial infarction.

There has been a flurry of financing activity in the biotech space this year, including 40 or so companies that have gone public and managed to raise $6 billion in capital. Despite the weak IPO by Fate Therapeutics (FATE) on October 1st, the StemCells and NeoStem financings suggest investor sentiment in the RM space remains reasonable. Both deals were fully subscribed and in both cases the underwriters exercised their over-allotment option to sell additional shares.

 

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Mark Curtis

Mark Curtis

Mark is a Business Development Analyst at the Centre for Commercialization of Regenerative Medicine (CCRM), where he collaborates with the team to help evaluate the commercial potential of regenerative medicine and cell therapy technologies. He began his career at Princess Margaret Hospital studying cellular reprogramming of human skin cells. Following this project, he left the laboratory and took on a role with Bloom Burton & Co., a healthcare-focused investment dealer. While there he supported the advisory team in carrying out scientific diligence on early-stage biotechnology companies. Prior to joining CCRM he was a consultant to Stem Cell Therapeutics, a Toronto-based biotechnology company focused on developing therapeutics targeting cancer stem cells. Mark received a Master’s degree from the University of New South Wales in Sydney, where he studied the directed differentiation of embryonic stem cells, and a Bachelor’s degree in Biology, from Queen’s University. Follow Mark on Twitter @markallencurtis
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