The Investment Thesis for Biotime $BTX:
What you get for Biotime at 330 million Dollar Market Cap (June 2017):
1) 7 Clinical Trials, of which 2 at later Stage Pivotal Trials.
2) 2 Product nearing launch aimed at >Billion $ TAM, One Aesthetics and one Cancer Diagnostics (launched at 2H2017).
3) 2 Subsidiaries trading separately worth about 147 M$ at market (valuing the rest of which one product – Renevia, launched at 2018 is targeting a 7 billion Dollar market) at less than 200 million$.
4) Several promising early stage Programs.
5) Many proprietary Assets (in the shape of Pluripotent Stem Cells lines I/P – more discovered every day).
6) Large Stable of IP dominating Embryonic and Pluripotent Stem Cells – close to complete chokehold on the field of Stem Cell Regenerative medical therapies -possibly the main disruptor of Healthcare in the next 20 years.
7) Large Shareholders as Board of Directors.
8) Superior financial acumen by insider owner Board– ridiculous Dilution incurred in developing the business.
9) Imminent Catalysts – 1 Product to be launched 2H2017, another one during 2018.
10) Science led by the Father of Stem Cell Medicine– Dr. Michael West.
11) Medical therapeutics possessing powerful moat – virtually protected from the threat of Generics (you cant “copy” a cell – one must walk through the full, expensive, journey leading to approval) – highly desirable.
12) Infinite possibilities for reinvestment of cash into highly profitable products for many years (production of on the shelf stem cell medicine very profitable business).
13) Little to no Street coverage because the business rarely taps Wall Street for funds (hence no Sell Side Analyst coverage) – Stocks are usually bought directly by large insiders, and Held, not Traded.
In terms of investor narrative: BioTime group of companies increasingly look like the Intel of Stem Cells, The Tesla/Musk of future disruption and possibilities, at dirt cheap prices today.
Business Overview (recent S-3 Form):
We are a clinical-stage biotechnology company focused on developing and commercializing products addressing degenerative diseases. Our clinical programs are based on two platform technologies: pluripotent stem cells and cell and drug delivery platform technologies. The foundation of our core therapeutic technology platform is pluripotent cells that are capable of becoming any of the cell types in the human body.
The foundation of our cell delivery platform is our HyStem® cell and drug delivery matrix technology.
Our current clinical programs are targeting three primary sectors: aesthetics, ophthalmology and cell and drug delivery.
We also have significant equity holdings in two publicly traded companies, Asterias Biotherapeutics, Inc., or Asterias, and OncoCyte Corporation, or OncoCyte, which we founded and which, until recently, were our majority-owned consolidated subsidiaries.
Asterias (NYSE MKT: AST) is presently focused on advancing three clinical-stage programs that have the potential to address areas of very high unmet medical need in the fields of neurology (spinal cord injury) and oncology (Acute Myeloid Leukemia, or AML, and lung cancer).
OncoCyte (NYSE MKT: OCX) is developing confirmatory diagnostic tests for lung cancer, breast cancer, and bladder cancer utilizing novel liquid biopsy technology.
The combined market value of our holdings in Asterias and OncoCyte was about $147.69 million as of June 15, 2017.
We are also enabling early-stage programs in new technologies through our own research programs as well as through our subsidiaries and affiliates. These technologies have the potential to improve the treatment of diseases associated with aging, including diseases such as diabetes, and cardiovascular and metabolic disorders that affect large numbers of people. We are also researching other novel technologies that may help the body regenerate certain types of degenerated cells and tissues.
Together with our subsidiaries and affiliates, we currently have seven product candidates in human clinical trials, one of which is in a late-stage, pivotal study in Europe, one cancer diagnostic that is expected to be commercially launched in the U.S. during the second half of 2017 and several early stage programs that may help address some of the biggest unmet medical needs faced by our aging population.
In addition, we have obtained a collection of pluripotent stem cell assets and a proprietary therapeutic delivery platform with many potential uses.
Pluripotent stem cells are capable of becoming any of the cell types in the human body. Cell types derived from pluripotent stem cells have potential applications in many areas of medicine with large unmet patient needs, including various tissue injuries and age-related degenerative diseases and degenerative conditions for which there presently are no cures.
Unlike pharmaceuticals which almost always require a molecular target, cell therapy strategies use cell types derived from pluripotent stem cells to regenerate, replace or augment affected cells and tissues, and therefore may have broader applicability and impact than traditional pharmaceutical products.
Our pluripotent stem cell technology is complemented by our HyStem® technology, which includes a family of unique, biocompatible resorbable hydrogels to deliver bioactive compositions for therapeutic benefit.
HyStem® was designed to enable the effective transfer, engraftment and metabolic support for cells, whether derived from pluripotent stem cells or from a patient’s own somatic or adult stem cells. The flexibility of the HyStem® technology also allows for direct therapeutic use and the sustained delivery of therapeutics.
Our near term therapeutic focus is in three core areas of aesthetics, ophthalmology, and cell and drug delivery.
In addition, we, through our subsidiaries and affiliates, also focus on therapeutic products in neurology and oncology and liquid biopsies for diagnosis of cancer.
Facial Aesthetics Renevia®, our lead facial aesthetics product, is a potential treatment for facial lipoatrophy. “Lipoatrophy” is another word for “fat loss or deficiency.” It is currently in a pivotal clinical trial in Europe to assess its safety and efficacy in restoring normal skin contours in patients whose subcutaneous fat, or adipose tissue, has been lost due to the use of certain drugs often used to treat patients with HIV. While this pivotal trial, if successful, is expected to enable a filing for marketing authorization in the European Union, we see this trial as supportive of U.S. development of Renevia®, for a much larger market opportunity, for treating additional forms of facial volume restorations, whether from drugs, trauma or aging. Renevia® consists of our cell-transplantation delivery matrix (HyStem®) combined with the patient’s own adipose progenitor cells. Developed as an alternative for traditional fat transfer procedures, Renevia® is designed to mimic the naturally-occurring extracellular matrix and provide a 3-D scaffold that enables effective cell transplant, engraftment and proliferation. Renevia®, is being developed with the goal of providing a natural, long-lasting improvement to the patient’s skin contouring.
Ophthalmology OpRegen® is our lead product for ophthalmological disorders. It is a suspension of retinal pigment epithelial, or RPE, cells that are derived from pluripotent stem cells. RPE cells form the back lining of the retina, and support the function of photoreceptors (rods and cones). RPE cells can be damaged and lost in various forms of retinal degeneration. The OpRegen® therapeutic approach is to replace damaged or lost RPE cells and possibly slow disease progression and/or preserve or restore visual function. It is currently in a Phase I/IIa clinical trial for the treatment of the dry form of age-related macular degeneration, or AMD. AMD affects approximately 1.6 million newly diagnosed people annually in the U.S. and is the leading cause of blindness in people over the age of 60. Approximately 90 percent of AMD patients suffer from the dry form, for which the U.S. Food and Drug Administration, or FDA, has not approved any therapies. In February 2017, we expanded our ophthalmology portfolio through the acquisition of exclusive global rights to technology from University of Pittsburgh through the execution of an exclusive license agreement. This technology allows the generation of three-dimensional laminated human retinal tissue derived from human pluripotent stem cells. This tissue contains all the cell types and layers of the human retina and has shown evidence of functional integration in proof of concept animal models for advanced retinal degeneration. The technology is being developed for implantation in patients to potentially treat or prevent a variety of retinal degenerative diseases.
Cell and Drug Delivery In addition to Renevia®, we have two additional primary programs utilizing our proprietary HyStem® technology. HyStem®-BDNF is a preclinical development program for the delivery of recombinant human brain-derived neurotrophic factor, or BDNF, directly into the stroke cavity of patients with the goal of aiding in tissue repair and functional recovery.
ReGlyde™ is in preclinical development as a device for viscosupplementation and a combination product for drug delivery in osteoarthritis, or OA. The viscosupplementation device program aims to administer ReGlyde™ directly into affected OA joints provide joint lubrication to reduce pain and improve quality of life. The drug delivery programs seek to enable the sustained release of therapeutics in affected OA joints to slow or reverse disease progression, in addition to improving pain and joint function.
Also, included in our delivery platform is Premvia™, which is a HyStem® hydrogel formulation for the management of wounds including partial and full-thickness wounds, ulcers, tunneled/undermined wounds, surgical wounds, and burns. Premvia™ was cleared by the FDA via a 510(k) device approval pathway.
In addition to these programs, we are developing HyStem® product enhancements. Current efforts are focused on the development of a frozen liquid product format, which, if successful, will make significant improvements in end-user convenience.
Therapeutic Products in Neurology and Oncology Asterias is presently focused on advancing three clinical-stage programs, which have the potential to address areas of very high unmet medical need in the fields of neurology and oncology. Asterias’ lead products are:
· AST-OPC1, a therapy derived from pluripotent stem cells that is currently in a Phase I/IIa clinical trial for spinal cord injuries, with positive early efficacy data reported in September 2016;
· AST-VAC1, a patient-specific cancer immunotherapy with promising Phase II clinical trial data in AML; and
· AST-VAC2, a non-patient specific cancer immunotherapy for which the initiation of a Phase I/IIa clinical trial in non-small cell lung cancer is planned for the first half of 2017.
Liquid Biopsies for Diagnosis of Cancer OncoCyte is developing confirmatory diagnostic tests for lung cancer, breast cancer, and bladder cancer utilizing novel liquid biopsy technology. While current biopsy tests use invasive surgical procedures to provide tissue samples to determine if a tumor is benign or malignant, OncoCyte is developing a next generation of diagnostic tests that will be based on liquid biopsies using blood or urine samples. OncoCyte recently conducted a 300- patient study of its lung cancer test. On March 6, 2017, OncoCyte announced the successful completion of the study.
Our Subsidiaries and Our Affiliates
The following table shows our subsidiaries and affiliates, their respective principal fields of business, our percentage ownership, directly and through subsidiaries, as of June 15, 2017, and the country where their principal business is located:
Cell Cure Neurosciences Ltd. Products to treat age-related macular degeneration 62.53%(1)
Israel ES Cell International Pte. Ltd. Stem cell products for research, including clinical grade cell lines produced under cGMP 100% Singapore
LifeMap Sciences, Inc. Biomedical, gene, disease, and stem cell databases and tools 81.74% USA
OncoCyte Corporation(2) Cancer diagnostics 49.84% USA
OrthoCyte Corporation Developing bone grafting products for orthopedic diseases and injuries 99.76% USA
ReCyte Therapeutics, Inc. Research and development involved in stem cell-derived endothelial and cardiovascular related progenitor cells for the treatment of vascular disorders, ischemic conditions and brown adipocytes for type-2 diabetes and obesity 94.84% USA
Asterias Biotherapeutics, Inc.(3) Therapeutic products derived from pluripotent stem cells, and immunotherapy products. Clinical programs include: ASTOPC1 for spinal cord injury, AST-VAC1 for acute myelogenous leukemia, and AST-VAC2 for non-small cell lung cancer 43.90% USA
(1) Includes shares owned by us and ES Cell International Pte. Ltd. Does not include shares that would be owned by us, if we were to convert certain convertible debt into Cell Cure Neurosciences Ltd., or Cell Cure, ordinary shares. In June 2017, we entered into agreements to acquire 168,800 ordinary shares of Cell Cure from the selling shareholders. As a result, we will own 99.79% of Cell Cure upon completion of the transactions.
(2) As of February 17, 2017, we deconsolidated OncoCyte and OncoCyte is no longer a subsidiary of ours as of that date, but remains an affiliate and significant investee of our company.
(3) Since the deconsolidation of Asterias in May 2016, Asterias is an affiliate and significant investee of our company. We will continue to work on simplifying our corporate, financial and organizational structure to allow us to execute our objectives more efficiently, while also making it much easier for investors, and other external stakeholders, to better understand our company. Our purpose is to deliver therapies for significant unmet, or under-met, needs to patients, while creating value for our investors. We believe that we have several valuable assets within our company, our subsidiaries and our affiliates.
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