We’ve always been very interested in regenerative medicines, because they’ve shown tremendous promise in clinical studies in the fight against various cancers, and degenerative diseases. Regenerative medicine refers to the process of replacing, engineering, or regenerating human cells, tissues or organs to restore or establish normal function. Our work on Asterias Pharmaceutics (Asterias), a leader in the regenerative medicine space, lead us to Asterias’ parent company, BioTime. BioTime is a clinical-stage biotechnology company focused on developing and commercializing products addressing degenerative diseases and age related diseases. Their clinical programs are based on two platform technologies: pluripotent stem cells and cell/drug delivery platform technologies. The foundation of their core therapeutic technology platform is pluripotent cells that are capable of becoming any cell type in the human body.
BioTime’s platform technology harnesses the regenerative potential of pluripotnent stem cells to address large areas of unmet need. The company’s most advanced product, Renevia, recently met its primary endpoint in its pivotal trial in Europe, for the treatment of HIV-related lipoatrophy. The company has publicly stated that they expect Renevia to have a CE mark by the end of calendar year 2017. Additionally, Renevia could potentially expand beyond the lipoatrophy indication, into the $7 billion aesthetics market as a replacement for fat transfers and facial fillers such as Juvederm. . In addition, BioTime is in a Phase I/II study evaluating OpRegen, the company’s pluripotent cell-derived retinal pigment epithelium (RPE) cells in patients with dry age-related macular degeneration (AMD). Dry AMD represents is the leading cause of blindness in patients over 60 years of age and one of the largest unmet medical needs in the world. There are currently no approved treatments that can prevent the progression of the disease. According to industry analysts, there are between 10-15 million dry AMD patients in the U.S. and 20 million in the EU with no approved therapies, representing an over $40 billion global market opportunity.
In addition to developing its own technologies, BioTime holds significant ownership in two other publicly traded companies. The first, Asterias, is 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 and lung cancer). The second is OncoCyte Corporation (OncoCyte). OncoCyte is developing confirmatory diagnostic tests for lung cancer, breast cancer, and bladder cancer utilizing novel liquid biopsy technology.
BioTime may represent a unique investment opportunity for investors because there are numerous “shots on goal,” or potentially significant monetization opportunities. First Renevia is poised to address the multi-billion dollar lipoatrophy market and can potentially expand into the multi-billion dollar aesthetics market. Second, OpRegen targets a multi-billion dollar dry AMD market and has thus far demonstrated compelling results in humans. Third, the company has a strong balance sheet and significant institutional ownership and interest, given that Broadwood Partners and Blackrock own ~23.4% and ~4.35% of BioTime respectively. In addition, as of December 31, 2016 BioTime owned ~46% of the common shares of Asterias (~$68 million value), 46.8% of OncoCyte (~$98 million value), and 85% of AgeX, a 2017 spin off that focuses on the development of regenerative medicines targeting the diseases of aging and metabolic disorders. AgeX recently completed a $10 million raise at a $68 million post-money valuation, meaning BioTime’s AgeX holdings are valued at roughly $58 million.
BioTime currently trades at a market cap of approximately $323 million, which means the Street is only assessing a meager ~$99 million value to BioTime’s clinical pipeline. Typically a company as advanced as BioTime that is targeting indications as large as dry AMD, lipoatrophy, and aesthetics, trades exponentially higher. Gilead’s recent acquisition of Kite Pharma for $11.9 billion is a prime example of the kind of valuation that can be ascribed to a pre-revenue regenerative medicine company with promising indications. Note that Kite Pharma had no approved drugs, and was still in the clinic at the time of acquisition.
BioTime’s Pluripotent Stem Cell Technology
Novel and comprehensive-pluripotent stem cells have the potential to give rise to all tissue types in an adult organism. Due to their versatility, pluripotent cells are a valuable type of stem cells for the field of regenerative medicine, and can be obtained from a variety of different sources. These cells are very easy to produce in large quantities and represent an off the shelf product opportunity that would be far more economical than other cell therapy technologies like the ones used by Kite and Juno.
Evaluating each of BioTime’s candidates in turn, we’ll begin with OpRegen.
According to industry analysts, there are between 10-15 million dry AMD patients in the U.S. and 20 million in the EU with no approved therapies, representing a $40 billion plus global market opportunity. Preliminary results from a Phase I/II study showed that OpRegen has the potential to be a treatment option for dry AMD given the restoration of retinal pigmentation, as well as the stabilization of vision achieved (so far) at the two doses that have been trieddose. The RPE treatment was well-tolerated with no signs of tumor formation, immune reactions, or cells differentiating into unwanted ectopic cell types. These findings are important given that even just slowing the progression of the disease would be a significant improvement in dry AMD and OpRegen shows the potential to possibly arrest but also regenerate previous atrophy
The company is currently conducting a dose ranging Phase I/IIa clinical trial. The design of this study involves the treatment of a patient’s one eye, while the other “fellow” eye is left untreated (control). Two-thirds of patients experienced increased retinal pigmentation, indicating a successful engraftment of RPE cells, while two patients experienced significantly improved visual acuity of the treated eyes. In terms of safety, the first two cohorts of threepatients each from the Phase I/IIa clinical trial revealed no serious adverse events related to the injected RPEs.
Renevia is intended to be a superior alternative for traditional fat transfer procedures by mimicing the naturally-occurring extracellular matrix and providing 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.. Renevia’s initial indication is for HIV patients with facial lipoatrophy (FLA). Lipoatrophy (LA) is a localized abnormal loss of fat beneath the skin and is often associated with trauma, surgery, other illnesses, as well as normal aging. FLA being the most stigmatizing aspect of LA, and is characterized by the loss of the buccal or temporal fat pads, leading to facial skeletonization with concave cheeks, prominent naso-labial folds, periorbital hollowing and visible facial musculature. FLA is frequently experienced by HIV patients who have been treated with antiretroviral therapy (ART), with the primary driving force of the disorder being the cumulative exposure to thymidine analogue drugs such as stavudine and zidovudine, which antagonize mitochondrial DNA polymerase function and consequently lead to apoptosis of fat cells. According to statistics published by AVERT, worldwide there were 36.7 million people living with HIV/AIDS in 2015 with the number of people receiving ART reported to be approximately 17 million. It has been estimated that 35-50% of patients on ART have lipoatrophy.
Renevia successfully met its primary endpoint in a pivotal trial in patients with HIV-associated lipoatrophy conducted in Europe. Treated patients retained approximately 100% of transplanted volume at 6 months compared to no incremental hemifacial volume in the untreated patients (p<0.001). All Renevia transplants were shown to be safe and well tolerated and there were no serious adverse events during the trial. BioTime is on track to file for CE Mark for commercial approval for Renevia in Europe by the end of 2017. Additional trials in the U.S. are planned that target a broader $7 billion aesthetics market opportunity, which is consistent with the previously stated goal of indication and geographic expansion for Renevia.
Significant Ownership in Companies with Multi-Billion Dollar Potential
OncoCyte was spun off from BioTime in 2015. Oncocyte focuses on the discovery, development, and commercialization of non-invasive, liquid biopsy (blood and urine) molecular diagnostics for the early detection of cancer. The company’s diagnostics products are based on its proprietary set of cancer markers as well as the unique gene expression classifier, which could potentially deliver high sensitivity and specificity. The company’s initial focus is to generate confirmatory assays that can be used to improve the existing tests that often lead to inconclusive results. OncoCyte’s leading product, a confirmatory diagnostic test for lung cancer being developed under the laboratory developed test regulatory pathway, is currently in a clinical validation study. In addition, the company is also developing another confirmatory test for breast and bladder cancers.
We’ve covered Asterias fairly extensively, but as a quick recap the company is focused on the development of cell therapies for cancers and spinal cord injury. Check out our interview with Asterias CFO, Ryan Chavez (here), or our company coverage (here).
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