The Commercialization of Stem Cells ANNA CAULDWELL, PHD ANALYST, CNS, AUTOIMMUNE/INFLAMMATION & OPHTHALMOLOGY

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1 The Commercialization of Stem Cells ANNA CAULDWELL, PHD ANALYST, CNS, AUTOIMMUNE/INFLAMMATION & OPHTHALMOLOGY

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3 Recent advances have shown that stem cells can provide truly restorative and diseasemodifying treatment. Stem cells have been used to successfully restore sight to those with vision loss and products are in development for some of the most important and intractable chronic conditions. These treatments offer greater potential over palliative ones and so expectations riding on these therapies are high. Here, we investigate the involvement of biotech and pharma companies in this high-reward, but also high-risk industry. Historical trends Citeline s Pharmaprojects tracks industry-sponsored drug development for human disease since 1980 and since 1995 we have additionally been snapshotting key data points each year. Figure 1 profiles a year-on-year comparison of the number of stem cell therapies by phase of development. Perhaps unsurprisingly, the overall trend is of a considerable increase in the number of stem cell therapies in every phase of development over time. Stem cell therapies started to be developed in the late 1990 s; however, it wasn t until the early 000 s following the discovery of human embryonic stem cells that this area really started to take off, driven by high expectations about their therapeutic potential. There was an upsurge in commercial interest and several specialist cell therapy companies were launched whose focus was on the translation of research into commercially successful products. Recently, there has been a considerable expansion of late stage candidates there are currently 87 products in Phase II, Phase III or Pre-registration, while in 010 there were only 18. The space is clearly maturing with talk of pivotal trials becoming commonplace. Figure 1. Trends in Stem Cell Therapy Development Over Time No. of therapies Launched Registered Pre-registration Phase III Phase II Phase I Preclinical Source: Citeline s Pharmaprojects, May 015 3

4 Figure focuses on the number of drugs currently in each stage of development. This healthy developmental pipeline has a particularly busy Phase II section with 73 drugs it is common to see a build-up in this phase because drugs spend far more time passing through Phase II, than undergoing the much shorter Phase I trials and so this effect is partly produced by the snapshot nature of the data. Eight stem cell therapies have now been launched in at least one country in the world (mainly in Australia and South Korea). These products have been developed to treat osteoarthritis, myocardial infarction, anal fistula, bone regeneration and the treatment of torn or damaged tendons, ligaments and cartilage. These successes suggest opportunities for similar clinical candidates to progress. Figure. Number of Therapies by Phase Preclinical Phase I Clinical Trial Phase II Clinical Trial Phase III Clinical Trial Pre-registration Registered Launched Source: Citeline s Pharmaprojects, June 015 Where is the development taking place? Citeline s Sitetrove was used to investigate where in the world this commercial stem cell therapy research is being undertaken (Figure 3). A large number of trials sites are located in the US and the EU, but a number of regional regulations have also had a considerable impact on where products are being developed. Japan is fast becoming a center of importance thanks to regulatory changes which were introduced at the end of 014. Japan formally enacted new legislation governing the development, approval and use of regenerative medicines. The new laws provide a legal framework designed to encourage the development of novel regenerative therapies and to speed up product approvals in the sector. This new approval process is similar to the one used in South Korea. Conditional approvals can now be granted based on safety and efficacy data from Phase II clinical trials instead of full Phase III programs. These conditional approvals will allow for commercial sales for up to seven years. (Source: PharmAsia Japan: Sumitomo Dainippon Pharma is one of the Japanese companies investing in this field. It has a joint venture with Healios KK to commercialize induced pluripotent cell treatments for macular degeneration. Earlier this year the U.S.-based Athersys entered into a cell therapy alliance with Chugai (Roche). Chugai will develop and commercialize Athersys MultiStem for ischemic stroke in Japan. The alliance is worth $10 million 4

5 upfront to Athersys plus additional development and regulatory milestone payments of up to $45 million. Moreover, as recently as April this year Takeda announced that it will work with the Center for ips Cell Research Application (CiRA) of Kyoto University on stem cell research in a 10 year program to develop clinical applications of induced pluripotent stem cells in areas such as heart failure, diabetes mellitus, neurological disorders and cancer immunotherapy. Whilst this new regulation enables stem cell therapies to reach the market more quickly, some critics are concerned about the lack of rigorous testing and argue that stem cell therapies which aren t assessed in Phase III trials should only be designated experimental treatments. Figure 3. Industry-Sponsored Trial Site Locations Source: Citeline s Sitetrove, June 015 Which are the most commercially attractive therapeutic areas to invest in? In order to determine which disease areas are attracting the most R&D investment, we grouped the indications in Pharmaprojects, as shown in Figure 4. Cardiovascular is the hottest area for stem cell research, accounting for more than a quarter of all stem cell therapies currently in development. The Phase III pipeline is dominated by therapies for heart failure, angina and myocardial infarction, making it the most advanced pipeline among all other therapy areas (Table 1). Currently, conventional management for heart failure does not address loss or scarring of cardiac muscle cell mass, resulting in a high level of unmet medical need and an opportunity for regenerative stem cell therapies. A mix of speciality and large pharma are trying to capitalise in the cardiovascular space, including Bioheart, Teva and Baxter International. Baxter is currently 5

6 running a pivotal Phase III trial to evaluate the efficacy and safety of adult autologous CD34+ stem cells to increase exercise capacity and amelioration of anginal symptoms in patients with chronic myocardial ischemia, one of the most severe forms of coronary artery disease. The study has enrolled approximately 300 patients in over 40 clinical sites in the US (Trialtrove: TrialtroveID pdf). A large number of stem cell products are also in development in the metabolic and neurological therapeutic areas. Some of the key indications under investigation include hepatic dysfunction, bone regeneration, spinal cord injury and Parkinson s disease. Ophthalmology is another up and coming area for stem cell therapies with treatments for corneal injury, macular degeneration, optic neuritis, macular oedema and diabetic retinopathy in the clinic. In December last year the EMA approved Holoclar, a treatment for moderate to severe limbal stem cell deficiency due to physical or chemical burns to the eye(s) in adults. This was the first advanced therapy medicinal product containing stem cells to be approved in the EU. When considering the most commercially attractive cell type to invest in, mesenchymal stem cells (MSCs) are currently ahead of the field. The ethical concerns and potential for teratoma formation with embryonic stem cells, and induced pluripotent stem cells, have compromised their utility; whereas, the unique properties of MSCs have led to their intense investigation as a cell-based therapeutic strategy. The advantages of MSCs are that they are easily isolated, can be amplified from the bone marrow, are immunologically tolerated as an allogeneic transplant, and have multi-lineage potential. Figure 4. Number of Stem Cell Products by Therapeutic Area Phase III Phase II Phase I Preclinical No. of therapies Autoimmune/ Inflammation 8 7 Cardiovascular 5 Dermatological Gastrointestinal Genitourinary Infectious Disease Metabolic Neurological Oncology Ophthalmology Respiratory Source: Citeline s Pharmaprojects, May 015 6

7 Table 1. Stem Cell Therapies in Phase III Development or Pre-Registration THERAPY DESCRIPTION ORIGIN INDICATION COMPANY MyoCell myoblasts removed from a patient s thigh muscle, isolated, grown through their proprietary cell culturing process, and injected directly in the scar tissue of a patient s myocardium autologous heart failure Bioheart carlecortemcel-l/ StemEX ex vivo expanded umbilical cord blood cell graft allogeneic haematopoietic reconstruction after chemotherapy in haematological malignancies Gamida Cell; Teva stem cell therapy, Baxter blood-derived selected CD34+ stem cell therapy autologous angina Baxter International CX-601 suspension of allogeneic expanded adipose-derived stem cells allogeneic anal fistula TiGenix CEP-41750/Revascor adult-derived mesenchymal precursor cells allogeneic heart failure Mesoblast; Teva PHASE III C-Cure mesenchymal bone marrow-derived stem cells, Stemedica-1 bone marrow-derived stem cells differentiated into cardiopoietic cells ischemic tolerant mesenchymal stem cells autologous heart failure Celyad allogeneic myocardial infarction Stemedica mesenchymal precursor cells, allogenic, BMT, Mesoblast adult-derived mesenchymal precursor cells allogeneic stem cell engraftment; unspecified haematological cancer Mesoblast; Teva PREOB osteoblastic cells derived from bone marrow mesenchymal stem cells autologous osteonecrosis; fracture healing Bone Therapeutics Cerecellgram-Spine Cerecellgram-Stroke bone marrow derived mesenchymal stem cells bone marrow derived mesenchymal stem cells autologous spinal cord injury Pharmicell autologous cerebral ischaemia Pharmicell rexlemestrocel-l, Mesoblast proprietary adult-derived mesenchymal precursor cells allogeneic chronic lower back pain due to moderate intervertebral disc degeneration of the lumbar spine Mesoblast Stempeucel ex vivo cultured adult bone marrow-derived mesenchymal stem cells allogeneic limb ischaemia; osteoarthritis Stempeutics; Cipla PRE-REG GSK CD34+ haematopoietic stem/ progenitor cells engineered ex vivo with a retroviral vector encoding the therapeutic gene adenosine deaminase autologous severe combined immunodeficiency GlaxoSmith- Kline Source: Citeline s Pharmaprojects, May 015 7

8 Which companies are investing in the industry? So who are the key players in this field? We ve pulled out the companies with four or more products in development and it s apparent that most of these are cell therapy specialists (Figure 5). Teva bucks the trend by being the only top 0 pharmaceutical company on the list. Biotime is the biggest player in the stem cell field with 9 products in development. Through their subsidiary companies Cell Cure Neurosciences and OrthoCyte, they are developing OpRegen, (a cellbased therapy for age-related macular degeneration), and therapies for arthritis. In addition, their subsidiary ReCyte Therapeutics is using proprietary technology to reverse the developmental aging of human cells to manufacture young vascular progenitors for the treatment of age-related vascular disease. Australian company Mesoblast is another key player with 8 stem cell therapies in development. Mesoblast s allogeneic regenerative medicine products focus on repair of damaged tissues and modulation of inflammatory responses in conditions with significant unmet medical needs. The company s clinical product candidates focus on four major areas: orthopedic diseases, cardiovascular diseases, systemic diseases and improving outcomes of bone marrow transplantation in patients with cancer or genetic diseases. Mesoblast s remestemcel-l was acquired from Osiris Therapeutics as an off-the-shelf adult mesenchymal stromal cell product, which has been approved in several countries for acute graftversus-host disease, and it is expected to be launched in Japan later this year. Mesoblast had a further boost recently with Celgene confirming that it will invest $45 million in the company. Figure 5. Companies With Active Stem Cell Therapy Pipelines Number of Therapies BioTime Cell Therapy Pharma Biotechnology Phase III Phase III Phase III Phase II Phase II Preclinical Phase I Preclinical Preclinical Mesoblast Pluristem Teva Stemedica Bharat Serums and Vaccines Bone Therapeutics CHA Bio & Diostech Ocata Therapeutics Pharmicell Xcelthera Source: Citeline s Pharmaprojects, May 015 8

9 The pharmaceutical industry has embraced stem cells as a tool in drug discovery. Most of the major pharmaceutical companies are using embryonic stem cells or adult stem cells for internal drug discovery programs. These internal efforts are often enhanced through the expertise of external partnerships with academics or biotech companies. However, big pharma has historically been slow to invest in developing stem cell-based regenerative medicine. The barriers facing this industry will be dependent on the type of cell-based approach under development, but there are also a range of more general concerns that have worried investors. These include a lack of familiarity with the business model, pricing, concerns over whether the products can be manufactured on a commercial scale, regulatory concerns and the question of whether they can be proven safe and offer substantial benefit over existing therapies. Despite the concerns these truly restorative and disease-modifying treatments offer considerable promise and the involvement of big pharma has the potential to dramatically support the space in terms of providing finance, the capability of conducting Phase II/III clinical trials, expertise in communicating with regulators and lobbying for regulation in their favour, as well as the potential to mass produce and enable worldwide distribution of cell therapies. Table shows the stem cell products being developed by the top pharma companies. There s been a steady increase in the number of therapeutic products in development year-on-year since the late 000 s with many well-recognised names joining the fray. For several companies the tipping point has been reached and the potential benefits are starting to outweigh the risks. Indeed, not only has there been an increased number of pharmaceutical stem cell assets; but also the opening of large separate units and programs (e.g. Neusentis of Pfizer) and a trend for more partnership with academic institutions, which illustrates the growth in this sector. It seems that big pharma has moved from being curious about the stem cell therapy industry to being increasingly committed. In contrast to the key players shown in Figure 5, who were mostly developing their own products, the big pharma companies are more likely to be in-licensing products for development. These companies often take the observer s chair as a company works to complete a crucial leg of the R&D journey. Teva has the most products in active development with 7 in total. The company has licensee agreements in place with Mesoblast, BioTime and Gamida Cell. In addition, Teva has three products in Phase III development including Revascor which is currently in a global, pivotal, 1,700-person trial in congestive heart failure (Trialtrove: Novartis broadened its position in the stem cell space in 014 by investing $35 million in Gamida Cell. This development came after Novartis announced in September 013 that it had partnered with Regenerex to gain access to their stem cell technology. Johnson & Johnson is another big name which has recently shown its commitment to this field by betting $1.5 million on the Capricor Therapeutics cell therapy program for cardiovascular applications, notably CAP-100, through its subsidiary, Janssen Pharmaceuticals, Inc. In addition, through Janssen Pharmaceuticals, J&J invested in ViaCyte s VC-01 combination product being developed for type 1 diabetes. The agreement provides Janssen with an option in the future to consider a transaction related to the VC-01 combination product. Despite these investments, there is also an increasing realization of just how long a road stem cell research has to travel and this has triggered some companies to back out of the area. For instance, Osiris offloaded its mesenchymal stem cell platform and Prochymal to Mesoblast, after Sanofi decided not to sign up to a $1.5 billion collaboration that came with a $130 million upfront payment. Even so, other companies are showing that they are still prepared to invest Chiesi and AstraZeneca entered the space just this year with their own preclinical candidates. 9

10 Table. Stem Cell Therapies Being Developed by Big Pharma THERAPY DESCRIPTION COMPANY PRECLINICAL anticancers, MedImmune epidermolysis bullosa therapy, Chiesi HLS-001 PF anti-cancer stem cell therapies to directly and specifically attack tumor cells ex-vivo-expanded autologous human keratinocytes containing epidermal stem cells transduced with a LAMB3-encoding retroviral vector for epidermolysis bullosa ips cell-derived retinal pigment epithelial cells for age-related macular degene embryonic stem cell derived retinal pigment epithelium for wet age-related macular degeneration AstraZeneca (Originator) Chiesi (Originator) Dainippon Sumitomo Pharma (Licensee) Pfizer (Originator) Multistem multipotent adherent progenitor cells for ischemic stroke Roche (Licensee) Parkinson s therapy, Cell Cure NeurArrest embryonic stem cell-derived mid-brain progenitor cell therapy embryonic stem cell-derived neural progenitor cell therapy for multiple sclerosis Cenplacel-L placental-derived adherent stem cell product for Crohn s disease Celgene (Originator) SB-63 allogeneic neural stem cell therapy for cerebral ischaemia Dainippon Sumitomo Pharma (Licensee) GSK ex vivo gene therapy based on insertion of a lentiviral vector expressing human Wiskott-Aldrich syndrome protein into autologous CD34 positive haematopoietic stem cells GlaxoSmithKline (Originator) PHASE II GSK CAP-100 ex vivo gene therapy based on insertion of a lentiviral vector expressing arylsulfatase A (ARSA) into autologous CD34 positive haematopoietic stem cells for metachromatic leukodystrophy allogeneic cardiosphere-derived stem cells for heart failure and myocardial infarction GlaxoSmithKline (Originator) Johnson & Johnson (Licensee) HSC-835 LFU835-expanded umbilical cord blood haematopoietic stem cells for leukaemia & lymphoma Novartis (Originator) Multistem multipotent adherent progenitor cells for irritable bowel disease and ulcerative colitis Pfizer (Licensee) MPC-5-IC allogeneic stem cell therapy based upon proprietary adult-derived mesenchymal precursor cells for intra-coronary treatment of acute myocardial infarction PDA-00 placental derived stem cells for peripheral arterial disease & diabetic foot ulcers Celgene (Originator) Stem cell therapy, Baxter blood-derived selected CD34+ st em cell therapy for angina Baxter International (Originator) Revascor allogeneic stem cell therapy based upon its proprietary adult-derived mesenchymal precursor cells for heart failure & myocardial infarction MPC-CBE allogeneic stem cell therapy based upon its proprietary adult-derived mesenchymal precursor cells for bone marrow transplantation PHASE III Carlecortemcel-l cord blood-derived ex vivo expanded CD34-positive stem/progenitor cells for haematopoietic reconstruction after chemotherapy in haematological malignancies VC-01 pancreatic endocrine ß-islet cells derived from embryonic stem cells for type I and II diabetes Pfizer (Licensee) OpRegen retinal pigmented epithelial cells derived from human embryonic stem cells for dry age-related macular degeneration CNTO-476 allogeneic umbilical cord tissue-derived cell therapy Johnson & Johnson (Originator) PRE-REG GSK Stempeucel autologous stem cell therapy that consists of CD34+ haematopoietic stem/progenitor cells engineered ex vivo with a retroviral vector encoding the therapeutic gene adenosine deaminase for ADA severe combined immune deficiency ex vivo cultured adult bone marrow-derived mesenchymal stem cell product for osteoarthritis & critical limb ischemia, other indications GlaxoSmithKline (Originator) Cipla (Licensee) Source: Citeline s Pharmaprojects, May

11 Conclusions The worldwide stem cell therapy market and development pipelines are poised to grow at a considerable rate. Increased global awareness, as well as funding and commitment from larger pharmaceutical companies, are propelling the growth of this industry. Allogeneic stem cell therapies enable the treatment of many patients from the same cell bank in an off-the-shelf manner and we expect that these therapies will offer the greatest commercial opportunities. The advantages of allogeneic stem cell products over autologous products are that they have wider therapeutic applications and the batch to batch consistency means greater product reproducibility for clinical trial outcomes and widespread clinical use. The opportunity for batch production also significantly lowers costs compared with patient-specific autologous products and pricing is critical to both patient accessibility and therapy development. Currently approved allogeneic stem cell therapies include remestemcel-l (Mesoblast) for graft-versus-host disease and Cartistem (Medipost). To develop stem cell therapies on a commercial scale it s essential that stem cell populations can be expanded successfully. Much work has been done to expand the growth of stem cells from classical cell culture flasks to novel multilayer vessels, microcarriers and bioreactors; however cell expansion still remains a major challenge. Many biotech and pharma companies are developing their own proprietary processes to facilitate this and, in addition, are developing technologies for cryopreservation. Due to the importance of cell expansion and cell preservation we expect this to be an area of considerable innovation in the coming years. Overall, despite the complexity of many diseases and the risks involved in developing stem cell therapies, the pace of research in this industry continues to increase, with new advances announced regularly. It will be interesting to monitor this field over the coming decade to see if its considerable potential can be realised. 11

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