Pluristem Therapeutics Inc (PSTI)

[midastouch017]

Flood of News Presents Buying Opportunity

GuruFocus.comJanuary 17, 2017
- By Matt Winkler


When it rains it pours, and the news is pouring in for Pluristem Therapeutics Inc. (PSTI).

Since early December, the company has announced six developments that have moved its flagship programs forward with the nearest milestone set for the first half of this year. Shares of the company have not moved since then, creating a compelling buying opportunity. The programs involved are its Phase III trial for PLX-PAD placental stem cell treatment for critical limb ischemia (CLI), Phase II for PLX-PAD for intermittent claudication (IC) and its animal rule study of PLX-R18 for acute radiation syndrome (ARS).

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PLX-R18 for acute radiation syndrome, umbilical cord blood adjuvant

The first announcement in this series came Dec. 6, 2016, concerning PLX-R18 for ARS. Pluristem announced the completion of dosing for the first cohort in a trial that will be followed by a pivotal large animal study under the Food and Drug Administration's (FDA) Animal Rule pathway. The development here is a bit obscure and it's understandable why this would not move the stock, but it's still an important advance. ARS can't be studied in humans for ethical reasons so the Animal Rule is the only possible pathway to approval here.

ARS affects bone marrow function, and PLX-R18 is composed of placental stem cells geared to secrete therapeutic proteins that help build and maintain blood cell production in bone marrow. While nuclear catastrophes have thankfully not been on many people's minds since the 1962 Cuban Missile Crisis, that doesn't mean Pluristem can't make significant revenue off an approval.

Although approval through the Animal Rule is rare, an anthrax vaccine known as raxibacumab, also approved by the Animal Rule, got a $151 million order from the U.S. government for stockpiling back in 2009. The vaccine is now owned by GlaxoSmithKline PLC (GSK). Though ARS is not the cornerstone of the company, the program has the nearest term milestones for the stock short term.

A second development with PLX-R18 came on Dec. 27, 2016, when the New York Blood Center (NYBC) agreed on a further collaboration with Pluristem where the company would provide the cells and the NYBC would conduct a preclinical study on using them as an adjuvant to cord blood transplants. The arrangement came with a $900,000 grant from the Binational Industrial Research and Development Foundation, an Israeli/U.S. collaboration. This is on top of the primary clinical study of PLX-R18 for incomplete recovery following a blood stem cell transplant. The logic of these trials is based on PLX-R18 cells aiding in the engraftment of blood stem cells, whether by cord blood or other means.

Phase III CLI trial OK'd by FDA and German regulators

Last week, the FDA gave the green light to Pluristem's pivotal Phase III trial of PLX-PAD for CLI. CLI occurs when the vascular system in the legs is blocked by plaque, causing a lack of blood flow and eventually gangrene, amputation and death. There is no treatment except manual bypass or angioplasty, and many patients are not candidates for this. If successful, Pluristem would basically have full access to the CLI market in the U.S. of between 5 million and 6 million patients.

Beyond the FDA, word just came in from the Paul Ehrlich Institute, Germany's health regulator, that the same trial could begin enrollment there. Though the trial will be enrolling 250 patients globally, approval is possible after the first 125 patients complete a 12-month follow-up post treatment. Regulatory authorities in the United Kingdom have already cleared the trial for enrollment in Britain as well, and enrollment will begin this year.

The CLI indication is Pluristem's flagship and where the real value will come from if the trial succeeds. Pluristem has no competition for CLI and manufactures its own cells, meaning it will take home a sizable chunk of revenues, much more than just a low double-digit royalty.

Intermittent claudication trial fully enrolled

Related to the Phase III CLI trial is Pluristem's intermittent claudication Phase II trial for PLX-PAD which just announced completion of enrollment of all 172 patients. Completion of enrollment starts the countdown to top-line results as any surprise delays following enrollment are unlikely. Results from this study will be used to underpin a marketing application for PLX-PAD in CLI as well since IC is an earlier stage of the same disease. The primary endpoint is change in maximum walking distance on a treadmill, and results are expected early next year.

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