Cell Therapy 2015: With Maturity Comes Promise

Under agreement with StreetWise Reports, I'm pleased to share their recent coverage of several companies in the cell therapy sector.

Original Source: Tracy Salcedo-Chourré of The Life Sciences Report (12/23/2014)
http://www.thelifesciencesreport.com/pub/na/cell-therapy-2015-with-maturity-comes-promise

A number of new and innovative medical paradigms are being explored by companies in the life sciences sector, with one of the front-runners being cell therapy—a disruptive technology that has, in the past few years, progressed out of preclinical studies and into clinical development. To learn more about the transformative promise of regenerative medicine, and what investors might expect from companies working in the sector in 2015, The Life Sciences Report asked analysts Jason Kolbert of Maxim Group and Dr. Christopher James of Brinson Patrick to discuss the advances that could generate robust returns on investment in coming years. 


Cell Therapy in a Nutshell
Cell therapies have been gaining momentum in the life sciences for more than half a century. The first cell therapies, bone marrow transplants, were performed in the 1960s, and since then the idea of using healthy cells to replace or regenerate diseased cells has expanded into a number of indications, from cancer to cardiac disease to cosmetic therapy. Today, a number of companies are engaged in both clinical and preclinical trials, and there is some consensus that cell therapies will be "mainstream" in the near future.

The new year could prove a bellwether for regenerative medicine. The sheer volume of companies, universities and financial institutions conducting or backing research and development in the field attests to its potential: The Alliance for Regenerative Medicine(ARM), an advocacy group working with legislators, the investment community and regulatory agencies to promote development of cell therapy technologies, has more than 170 members working in the field.

On the horizon: Australian cell-therapy company Mesoblast Ltd. (MSB:ASE; MBLTY:OTCPK) is positioning itself for expedited approval of several of its allogeneic (derived from the same species) cell therapy products in Japan in 2015, following passage of legislation in that country that expedites approval. And though it hit a significant speed bump last month, Dendreon Corp.'s (DNDN:NASDAQ) Provenge (sipuleucel-T), an autologous (derived from and returned to the same patient) cell therapy for metastatic castrate-resistant prostate cancer, was the first FDA-approved cell therapy, and has helped pave a path forward for additional approvals in the U.S.

To get a handle on what investors can expect, and an idea of which companies to keep an eye on, The Life Sciences Report turned to Dr. Christopher James, managing director and senior equity research analyst with Brinson Patrick Securities Corp. and Jason Kolbert, managing director, senior biotechnology analyst and head of healthcare research with Maxim Group. Here's what they had to say about what 2015 might bring in both the sector and for certain companies working in the space.

Great Expectations
Asked which specific indications could be most responsive to cell therapies, and about companies working in those therapy areas, Kolbert provided several names.

The next "major event" in the sector will be results in a Phase 2 trial in ischemic stroke being conducted by Athersys Inc. (ATHX:NASDAQ), with results expected in Q1/2015, the analyst said. A number of other trials are also slated to start in 2015, including NeoStem Inc.'s (NBS:NASDAQ) Phase 3 trial in acute myocardial infarction and Cesca Therapeutics Inc.'s (KOOL:NASDAQ) pivotal trial in critical limb ischemia.

Kolbert is also looking forward to two trials involving Mesoblast's own stem cell product, as well as results from Prochymal (remestemcel-L, human mesenchymal stem cells for intravenous infusion, acquired from Osiris Therapeutics Inc. [OSIR:NASDAQ]). The Mesoblast product is expected to enter a pivotal trial in back pain, and the company is currently enrolling a global trial in congestive heart failure with partner Teva Pharmaceutical Industries Ltd. (TEVA:NASDAQ). The Osiris product is expected to be redeveloped in the U.S. for graft-versus-host disease (GvHD). Prochymal has been conditionally approved in Canada and New Zealand for GvHD in children. In addition, Mesoblast is expected to release data in a Phase 3 Prochymal trial in Crohn's disease.

James believes the area where cell therapy—cell regeneration—could have the biggest impact is also one of the riskiest—in the central nervous system (CNS), treating disorders or injury of the brain or spinal cord. James sees applications in multiple sclerosis (MS) and spinal cord injury, to regenerate neuronal function, and in Parkinson's disease, to address the death of dopaminergic cells. He also likes ocular applications, for treatment of such conditions as age-related macular degeneration (AMD).

James has two cell therapy companies under coverage. Opexa Therapeutics Inc. (OPXA:NASDAQ), with its Tcelna platform technology, is developing therapies in both CNS and the eye. A Phase 2 trial in secondary progressive MS is expected to read out in mid-2016. The company is also developing OPX-212, an autologous T-cell immunotherapy, to treat neuromyelitis optica, an autoimmune condition that leads to blindness.

The second company, StemCells Inc. (STEM:NASDAQ), is in a Phase 2 trial in the treatment of cervical spinal cord injury. On Dec. 18, the company announced that it had transplanted its HuCNS-SC (purified human neural stem cells) into its first patient; James expects final data from that trial in late 2015. Results from the company's Phase 1/2 trial in dry AMD, are expected in Q1/2015—perhaps as early as January.
StemCells' Phase 2 trial in cervical spinal cord injury points out what James sees as one of the regulatory hurdles cell therapies will have to overcome as they progress through the U.S. Food and Drug Administration's (FDA's) approval process. The trial is a randomized, controlled, single-blind study, as opposed to the FDA standard of double-blind pivotal studies.

To treat central nervous system disease or injury, companies must inject cells into a patient, a "surgical" intervention, James explained. But clinicians "can't do a sham surgery on the brain or on the spine. . .that's not ethical." So companies like StemCells must work with the FDA to develop pivotal trial designs that are "less stringent" than the double-blind model.

The Bigger Picture
Kolbert is enthusiastic about the prospects for cell therapies in 2015, and doesn't see much in the way of headwinds. "Cell therapy ultimately lowers the cost of treating disease, and at a time when there is an outcry over high-priced therapies, cell therapy offers promise to lower the cost of treating disease. In terms of politics, the cell therapies we are focusing on are typically not controversial (using adult stem cells, not cells from embryos). As such, we don’t see any controversy. The big change in the landscape now is the acceptance that cell therapy is 'safe.'"

On the plus side of the spectrum is oncology. Using cell therapy in cancer immunotherapy "holds great promise," Kolbert continued. "The ability to rev up the immune system with checkpoint inhibitors, and couple that with therapeutics, like the therapies being developed by ImmunoCellular Therapeutics Ltd. (IMUC:OTCBB) and Agenus Inc. (AGEN:NASDAQ) targeting glioblastoma, and the work that OncoSec Medical Inc. (ONCS:OTCBB), Inovio Pharmaceuticals Inc. (INO:NYSE.MKT) and NeoStem are doing in melanoma, is exciting."

James and Kolbert agree that recent elections, in which Republicans gained control of both houses of Congress, shouldn't affect ongoing work in the cell therapy field. "They have bigger issues to deal with," James commented.

However, James believes cell therapy companies may suffer from an "overhang" following the recent bankruptcy of Dendreon Corp. And Kolbert cautions investors that second- and third-generation technologies always follow. Such is the case with Bavarian Nordic's (BAVA:OMX) Prostvac. Prostvac has the potential to be equivalent to, or even superior to, Provenge, but at a fraction of the cost. The Phase 3 Prostvac trial reports data next year.

Another concern for investors, according to James, is the question of whether cell therapy companies can manufacture their products on a commercial scale. But the analyst believes that concern can be addressed, and cites the StemCells model, in which, according to the company, "[c]ryopreserved lines of donor-derived cells can be reproduced at commercial scale as 'stem cells in a bottle,' then distributed for patient doses as needed, much like an off-the-shelf pharmaceutical product."

Christopher James, M.D., is a managing director and senior equity research analyst focusing on life sciences companies with strong growth potential and developing novel agents for serious diseases including cancer and infectious, neurological, inflammatory, metabolic and cardiovascular diseases. He was previously a senior equity research analyst at Rodman & Renshaw and MLV & Co. Prior to joining Brinson Patrick, Dr. James was chief medical officer and senior vice president of medical affairs at Retrophin, a biotechnology company focused on developing therapeutics for rare and devastating diseases. While at Retrophin, he played a pivotal role in the study design and subsequent acceptance of an investigational new drug application with the cardiorenal division of the FDA to initiate a Phase 2 clinical study in a rare kidney disease called focal segmental glomerulosclerosis. Dr. James has prior buyside experience working at Trivium Capital Management and MSMB Capital Management. Dr. James trained in neurological surgery at Cornell-New York Hospital and Memorial Sloan Kettering Cancer Center. He obtained a medical degree from Yale University School of Medicine and a bachelor of science in biology from Cornell University.

Jason Kolbert has worked extensively in the healthcare sector as product manager for a leading pharmaceutical company, as a fund manager and as an equity analyst. Prior to joining Maxim Group, where he is head of healthcare research, senior managing director and biotechnology analyst, Kolbert spent seven years at Susquehanna International Group, where he managed a healthcare fund and founded SIG's biotechnology team. Previously, Kolbert served as the healthcare strategist for Salomon Smith Barney. He is often quoted in the media and is a sought-out expert in the biotechnology field. Prior to beginning his Wall Street career, Kolbert served as a product manager for Schering-Plough in Osaka, Japan. He received a bachelor's degree in chemistry from State University of New York, New Paltz, and a master's degree in business administration from the University of New Haven.

Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:
1) Tracy Salcedo-Chourre compiled this article for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: NeoStem Inc., Athersys Inc., StemCells Inc., Inovio Pharmaceuticals Inc. Mesoblast Ltd. is not affiliated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
3) Christopher James: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Opexa Therapeutics. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Jason Kolbert: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Streetwise – The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part..
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Life Sciences Report. These logos are trademarks and are the property of the individual companies.
101 Second St., Suite 110
Petaluma, CA 94952
Tel.: (707) 981-8204
Fax: (707) 981-8998
Email: jluther@streetwisereports.com

Reprint from LSR: How RepliCel Is Harnessing the Awesome Power of Cell Therapy

I've interviewed a number of executives from several cell therapy companies recently and intend to post my interview of them in the coming weeks but in the interim, StreetWise Reports published this interview of me which I'm pleased to share.

Original Source: George S. Mack of The Life Sciences Report (11/07/2014) 

Regenerative medicine and cell therapies hold possibilities for achieving near miracles in a multitude of indications, from life-saving treatments to aesthetic applications. RepliCel Life Sciences Inc. (RP:TSX.V; REPCF:OTCQB) is tackling a mix of medical and cosmetic issues that include hair regeneration, repair of painful and debilitating tendon injuries and rejuvenation of damaged skin. In this interview with The Life Sciences Report, R. Lee Buckler, the company's new vice president of business and corporate development, discusses his firm's innovative technology platform and the upcoming milestones that could affect its shares.

The Life Sciences Report: Lee, you've made a recent career change and are now an executive at RepliCel. Tell us about that.

R. Lee Buckler: As of Oct. 1, I have been appointed vice president of business and corporate development for RepliCel Life Sciences Inc., which is engaged in development of cell-based regenerative medicine therapeutics in Canada, Europe and Japan through our licensing partner, Shiseido Company Ltd. (4911:TSE). I found RepliCel to be a very interesting company poised to go on an exciting run, and that enticed me to join the team.

TLSR: Prior to your work with RepliCel, what experience had you had in the cell therapy industry?

RLB: In 2000, I left the practice of law to join Allen Eaves in the Stem Cell Technologies group of companies, where I ran a company called Malachite Management Inc. In 2006, I was recruited by Progenitor Cell Therapy to run its business development, marketing, communication and sales before the NeoStem acquisition.

In 2008, I founded my own consulting firm, called the Cell Therapy Group (CTG), which focused exclusively on the cell therapy industry. In the early days, we did some communications work for clients, but for the bulk of my tenure with CTG, we were involved in a wide range of planning and business development work. Some of it was transactional, but other aspects included market and competitive intelligence, building strategies, identifying partners, targeting partners, engaging in partnership discussions on behalf of clients and the like. I also worked with fund managers and investors through education, namely technology and platform explanations.

Over the past year, I worked as a consultant and on the board of directors positioning TheraVitae Inc. (private) for a merger with a company listed on the Toronto Venture Exchange. The merger is expected to complete in early November, and the company will be renamed Hemostemix Inc. I helped TheraVitae raise several million dollars as part of that process. Being on the road giving presentations to prospective investors is a new skill set for me, but I've found I really enjoy this side of the business.

TLSR: You are an attorney by training, but I see from your curriculum vitae that you did a couple of stints as a medical laboratory technician while you were still in law school. Is that what led you to the life sciences field?

RLB: Yes. I always joke with people that I didn't get to the cell therapy/regenerative medicine industry through education—I got here more by osmosis. I was not a silver spoon kid; I had to work my way through school. So while I was studying to be an attorney, I ended up working in the lab of a leading cardiovascular investigator, who was involved in some clinical trials at the time. I was mainly doing grunt work, but it exposed me to an environment where people were extremely dedicated to their sciences and to doing something novel. I was exposed to the excitement that builds when people truly believe what they're doing could revolutionize the way people are treated.

I've always felt a little bit like an outsider in an industry of people who belong here. While that may feel uncomfortable from time to time, it also affords me a unique perspective that others don't have. While others in the industry tend to focus on vertical specialties, I've come to specialize in a macro view of this industry. My focus has been very horizontal, which gives me a perspective of the industry that not many people are able to see.

TLSR: What kind of work has RepliCel been doing in the cell therapy field?

RLB: When CEO and President David Hall took over the company in 2011, it was built around hair regeneration. That is still an important part of our portfolio; however, he had a vision for broadening the technology and building a platform, which the company has now executed.

We are preparing to launch a very significant Phase 2 trial using our RCH-01 (dermal sheath cup [DSC] cells) for hair regeneration. This is a cellular injection—a cell transplant rather than a hair transplant—and is an important evolution because hair transplant is limited by three very significant factors. First, when transplanting hair follicles from one location on your scalp to another, there are only so many follicles available to harvest. With a cell transplant, there is no limit to the number of cells we can grow to use in regenerating poorly functioning hair follicles. Second, hair transplantation only achieves a satisfactory result when performed by a gifted surgeon, of which there are few. A simple cell injection takes the art out of the procedure—particularly when combined with our proprietary injection device designed to optimally deliver the cells into the scalp. Finally, hair transplantation is not an option women find attractive for a number of reasons, and a significant population of women suffer from hair loss.

TLSR: How is RepliCel working to ensure this therapy will be effective in both the short and long term? What prevents the dermal sheath cells from ceasing to grow hair once they are in the locale where the original follicles quit producing hair?

RLB: The cells we are using to address pattern baldness (androgenetic alopecia) are taken from a cell population found at the base of the hair follicle. These DSC cells are used to produce our RCH-01 product. Research has demonstrated that these cells are responsible for the reorganization of the hair follicle, which is a mini-organ that organizes upon an unknown signal. Our research leads us to believe this cell population is responsible for hair regeneration.

We source our particular cells from hair follicles isolated from the back of the scalp, between the ears, because most balding people retain this area of hair. This hair is insensitive to the androgen hormone (DHT), which causes hair loss, making these hair follicles prime candidates for our hair regeneration product.

As to the question of whether this will be a durable response—how long the hair will last—this is one of several questions both we and Shiseido are targeting in our respective upcoming pattern baldness trials. We're designing this next phase to look at dosing. We're also looking at frequency of treatment: One cohort of the study gets a single treatment, another gets a second treatment at day 91.

But we'll also be following these patients for a considerable length of time, to see whether the intended effects are maintained or whether they diminish over time. Even though there are only a proposed 160 participants, utilizing different dosing and different injection points throughout the scalp, there will be 396 treatment sites, or data points, that we will be able to gather from those 160 patients, in addition to the data to be gleaned and shared from the trial Shiseido is funding in Japan. These questions are great—effectiveness and duration of effect—and we have an obligation to answer them, which is why the trials are designed the way they are.

TLSR: What else is RepliCel working on at the moment?

RLB: We have another population of cells derived from the hair follicle (the non-bulbar dermal sheath cells [NBDS cells]) that we believe is a platform capable of generating multiple products for various indications. These cells can be readily expanded, and it turns out they are highly expressive of type 1 collagen. Our first trial with these cells will be using our RCT-01 product for the treatment of chronic Achilles tendinosis.

Up to 90% of healthy tendon is comprised of well-constructed type 1 collagen, and a number of indications manifest in patients due to the loss of type 1 collagen production in the endogenous cells, one of which is Achilles tendinosis. Tendons often are not well vascularized, and after a series of injuries and as a patient ages, the endogenous fibroblasts are exhausted of their ability to continue to produce the type 1 collagen necessary to support healthy tendons. RepliCel's predicate science is built around the injection of autologous (harvested and administered back to the same patient) fibroblasts capable of producing the kind of collagen needed to restore the patient to healthier function and better pain scores.

TLSR: Do you have evidence of actual tendon regeneration?

RLB: In three tendinosis-related clinical trials performed using a similar cell type, which has now been licensed into the company, MRI imaging shows that tendon treated with this cell type was much more akin to healthy, young, functioning tendon than what the patients had prior to injection of cells. This is an exciting platform, and the company is about to launch a Phase 1/2 trial in chronic Achilles tendinosis. We believe the cells could also have application in other indications, including jumper's knee, golfer's elbow, tennis elbow and torn rotator cuffs, as well as in a number of dermatological applications. Late this year, we will launch a Phase 1 study in healthy volunteers to look at the ability to regenerate the underlying tissue of skin in patients who have aging or sun-damaged skin.

TLSR: Achilles tendinosis and androgenic alopecia are very different indications. Androgenic 

alopecia is a hormone-dependent condition, while Achilles tendinosis is trauma-related.

RLB: That's a great point. Even though both of these studies—tendon repair and hair regeneration—use cells derived from the hair follicle, we're working with two very different cell populations. As a result, they have the ability to elicit very different, targeted responses.

TLSR: RepliCel's shares have suffered considerably over the past six months. What caused the dip and what is the company doing to fix the issue?

RLB: The fact of the matter is the company was delayed in progressing to its Phase 2 trial for RCH-01 in hair regeneration because of an issue with the supply of a critical growth media. The new media wasn't producing the same results, so we had to go back to the drawing board and discover what the problem was. The comparability data is now coming in to support our belief that we've solved that problem. We have four trials expected to launch in the next few months (three of ours and one of Shiseido's). Two of these are expected to give clinical readouts late next year. Until we are a company executing clinical trials, we are a company talking about executing clinical trials, and certain investors grow understandably impatient.

I'm very pleased that in October we submitted an application to Health Canada for the proposed Phase 1/2 clinical trial for chronic Achilles tendinosis. This triggers a 30-day window during which Health Canada can provide a No Objection Letter allowing us to proceed with the trial. This event is the initial trigger for a cascade of catalysts anticipated over the following months related to this trial, as well as our proposed Phase 1 clinical trial in Germany for aging and sun-damaged skin, our proposed Phase 2 trial for pattern baldness (androgenetic alopecia) in Germany, and Shiseido's upcoming trial for pattern baldness in Japan. We've been on the road for several weeks, crisscrossing the U.S., Canada and Japan, talking to investors, analysts and potential partners. We are pleased with the level of interest being generated, and believe that once we demonstrate we are executing on schedule, we will generate increased support.

TLSR: Is it possible that all these milestones will be met by the end of 2014?

RLB: We are working very hard to make that happen. I believe we're on target to have our three clinical trial application filings submitted by year-end. We expect Shiseido to file its clinical trial application early in Q1/15.

We are, of course, dependent on regulatory clearance to initiate any trial, but we have had very active dialogues with the regulators overseeing all our proposed trials, and are submitting precisely what has been discussed. As mentioned, we have now filed the first of our three applications. The second trial application proposes to use a product (RCS-01) developed from the same platform technology, so the clinical-regulatory team can leverage much of the work already done to get the second application filed.

One thing to note is that the dermatology and tendinosis trials are relatively quick studies to enroll. We've been in constant dialogue with the principal investigators of the RCT-01 trial in chronic Achilles tendinosis, and they assure us there's a pipeline of patients waiting to enroll in the study. The RCT-01 tendon trial is going to be a 28-participant study, and the RCS-01 in skin rejuvenation is a proposed 28-participant study design as well, but using healthy volunteers. The RCH-01 hair regeneration study is going to extend over a longer period of time, because it targets 160 participants. But the RCT-01 and RCS-01 studies will be relatively quick to enroll and to follow up on, and we expect data in 2015 for both of those.

Both of these studies are randomized, placebo-controlled and specifically designed to provide measurable and material biologic and mechanistic data that we will use to drive partner discussions. Remember that the company's business model is to codevelop assets with partners who understand the markets and have proven commercialization capabilities.

We are excited about being in the position we are now in, poised to imminently execute on three clinical trials, finalize the development and validation of our propriety injection device (which has licensable applications for acellular injectables), capitalize on our partnership with Shiseido and the innovative regulatory pathway for regenerative medicines in Japan, which provides a window to early-market access for our pattern baldness treatment, and to execute on one or more additional licenses with co-development partners in the near term.

TLSR: Thank you very much for your insight, Lee.

RLB: Thank you.

R. Lee Buckler is vice president of business and corporate development with RepliCel Life Sciences Inc. Prior to working with RepliCel, he was the managing director of Cell Therapy Group, a firm he formed in 2008, where he did business development consulting for companies and organizations in or interested in the cell therapy sector. Buckler served six years as executive director of the International Society for Cellular Therapy, and just over two years as director of business development for Progenitor Cell Therapy. He is on the editorial advisory boards of the journal Regenerative Medicine and the BioProcess International magazine, as well as the co-chair of the Alliance for Regenerative Medicine's Communications and Education Committee. Buckler cofounded Cell Therapy News, founded Cell Therapy Blog, cofounded Regenerative Medicine Jobs, founded and continues to manage the LinkedIn Cell Therapy Industry Group, and is an active industry commentator in publications and in social media. He serves on numerous industry conference advisory boards, is an advisory board member for BioCision and RoosterBio, and is on the board of directors for Hemostemix. He has a bachelor's degree in education and a law degree.

For additional comments on RepliCel Life Sciences Inc., Shiseido Company Ltd. and Hemostemix Inc. from newsletter writers, money managers and analysts, click on their respective links or visit The Life Sciences Report.

Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE: 

1) George S. Mack conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the company mentioned in this interview: None. 

2) RepliCel Life Sciences Inc. paid Streetwise Reports to conduct, produce and distribute the interview

3) R. Lee Buckler had final approval of the content and is wholly responsible for the validity of the statements. Opinions expressed are the opinions of R. Lee Buckler and not of Streetwise Reports or its officers. 

4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Streetwise – The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part..

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Life Sciences Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8204

Fax: (707) 981-8998 

Email: jluther@streetwisereports.com

Japan Gives a Hug to the Cell Therapy Industry

Original Source: George S. Mack of The Life Sciences Report (10/22/14)

Last year, Japan rolled out the red carpet for cell therapy developers with new legislation designed to expedite development of regenerative medicine solutions for all manner of disease. In this interview with The Life Sciences Report, former regenerative medicine consultant R. Lee Buckler, now a vice president with RepliCel Life Sciences Inc., puts his consultant's hat back on to talk about Japan's hospitable stance on proposed cell therapies. He provides an update on the meaning of the new law and discusses a small cohort of companies poised to reap the advantages.

The Life Sciences Report: (TLSR) Lee, you've been around the stem cell and regenerative medicine industry for quite a long time, and you have a special interest in the new legislation enacted by the Japanese Diet (parliament) back in November 2013. The intention of the law is to hasten clinical development of cell therapies and regenerative medicine therapies. A new cell therapy can get conditional approval in Japan for a limited time with clinical (Phase 2) data showing safety in humans. This new law goes into effect in November. Tell me your thoughts.

R. Lee Buckler: The entire industry is watching Japan and this new regulatory model with an incredible amount of interest. We're on the brink of seeing more detail around the regulations.

This initiative sets up a paradigm of conditional approval, where a company can bring an application to the Japanese regulators, and if it shows sufficient safety evidence and some evidence of efficacy, the company could get conditional approval to sell its product in the Japanese marketplace. This conditional approval would be for a seven-year window, during which the sponsor or sponsors would have an obligation to continue to file clinical data toward an eventual final market approval—a biologics license application (BLA) or the Japanese equivalent thereof. There is also some suggestion that during the seven-year window, some reimbursement will be attached to the product being sold on the market.

TLSR: In mid-September, Pluristem Therapeutics Inc. (PSTI:NASDAQ), an Israeli company, said it was going to pursue a development strategy in Japan. It hired consultants to help the company get into that market. The company's lead indications are peripheral artery disease, intermittent claudication, critical limb ischemia and muscle injury. But otherwise, I don't see a lot of other companies initiating programs in Japan. Do you see companies from the U.S., Canada or Europe getting into that regulatory environment?

RLB: I think most companies in the regenerative medicine industry have a tremendous desire to have a Japanese strategy right now. The problem is that a lot of companies in this sector don't have enough bandwidth, or capital, to execute on that.

However, a few are making Japan a high priority. Currently, less than a handful of companies have a clearly articulated Japanese strategy, and only that many again have begun executing on the opportunity.

Pluristem has made the announcement about pursuing opportunities in Japan, and Chairman and CEO Zami Aberman has done an admirable job of executing deals. The company has the partnership with United Therapeutics Corp. (UTHR:NASDAQ), which is conducting a Phase 1 study of the company's PLX-PAD (full-term placenta-derived adherent stromal cells) product in pulmonary arterial hypertension, which is a fatal disease and happens to be a very large market. Pluristem also has a nice deal in place in Korea with CHA Biotech Co. Ltd. (CHA:KOSDAQ).

Going it alone all the way to market is not a good option for most cell therapy companies, and with the change in the Japanese regulation there is an appetite for regenerative medicine products in Japan that foreign companies in the sector need to capitalize on.

TLSR: You said there were a few others. Give me an overview, please.

RLB: Athersys Inc. (ATHX:NASDAQ) has announced a desire to move into Japan, and I know it is putting boots on the ground in the country to develop a strategy there. Back in January, the company announced some new Japanese patents in graft-versus-host disease (GvHD) and autoimmune diseases, such as inflammatory bowel diseases.

Cytori Therapeutics Inc. (CYTX:NASDAQ) has always had strong relationships in Japan, and has been there for a decade. It has a subsidiary in Tokyo called Cytori Therapeutics K.K.

Also, my own company, RepliCel Life Sciences Inc. (RP:TSX.V; REPCF:OTCQB), has an existing relationship with Shiseido Company Ltd. (4911:TSE), which will launch a clinical trial in Japan for pattern baldness in the next few months. This is one of the few cell therapy deals—perhaps the only one to date—that involves putting manufacturing capacity in Japan.

The company that is potentially in the pole position in Japan at the moment, however, may be Mesoblast Ltd. (MSB:ASE; MBLTY:OTCPK). The company inherited a relationship with Japan-based JCR Pharmaceuticals Co. Ltd. (4552:TKY) when, in 2013, it acquired the Prochymal (remestemcel-L or allogeneic, adult human mesenchymal stem cells) product portfolio from Osiris Therapeutics Inc. (OSIR:NASDAQ). The Osiris/JCR partnership, which was put into place a number of years ago, had been stagnant until the reemergence of the Japanese market as an important one for the regenerative medicine sector. Now Mesoblast has "regenerated" that relationship, and announced on Oct. 1 that JCR would be filing a market approval application for Prochymal in Japan for the treatment of pediatric GvHD, following similar approvals in Canada and New Zealand.

TLSR: Will a company be able to take Phase 2 data generated in the U.S. or Europe or Canada, including positive proof-of-concept and safety data, and submit that in Japan, potentially getting a seven-year conditional approval?

RLB: That's an important question. The best intelligence I have, based on interacting with people who have been working with the Japanese, including Professor Chris Mason from University College London, indicates the answer is "yes." The Japanese government is intentionally welcoming ex-Japan data for conditional market approval in Japan.

If a company gets conditional approval to market a product in Japan, it will also have to generate pivotal data outside of Japan, because no patients in Japan will want to risk being involved in a placebo trial when they have the option to buy the product in the marketplace. The end result of the paradigm is that there will continue to be data generated outside of Japan, which will be brought into Japan to support eventual final approval.

TLSR: Thank you for your time.

RLB: Many thanks to you.

[Editor's Note: Between the time this interview was scheduled and the time it was conducted, Buckler left his consultancy firm to become vice president of business and corporate development at Vancouver-based RepliCel Life Sciences Inc., a cell therapy company.]

R. Lee Buckler, vice president of business and corporate development at RepliCel Life Sciences Inc., has been an executive in the cell therapy sector since 2000, beginning with Malachite Management in the Stem Cell Technologies group of companies. Most recently he was the managing director of Cell Therapy Group, a firm he formed in 2008 to do business development consulting for companies and organizations working in or interested in the cell therapy sector. His work included deal-targeting, transactions, market intelligence, competitive analyses, strategic assessments and market profile planning for companies ranging from top-tier multinationals to start-ups. Buckler served six years as executive director of the International Society for Cellular Therapy and just over two years as director of business development for Progenitor Cell Therapy. Buckler has a bachelor's degree in education, and a law degree. He is on the editorial advisory boards of the journalRegenerative Medicine and the BioProcess International magazine. He is also co-chair of the Alliance for Regenerative Medicine's Communications and Education Committee. He is an active industry commentator in publications and in social media and serves on numerous industry advisory boards.

Want to read more Life Sciences Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) George S. Mack conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and he provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

2) R. Lee Buckler: I own, or my family owns, shares of the following companies mentioned in this interview: RepliCel Life Sciences Inc. I personally am, or my family is, paid by the following companies mentioned in this interview: RepliCel Life Sciences Inc. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

3) The following companies mentioned in the interview are sponsors of Streetwise Reports: RepliCel Life Sciences Inc., Athersys Inc. Mesoblast Ltd. is not affiliated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Streetwise – The Life Sciences Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part..

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Life Sciences Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8204

Fax: (707) 981-8998

Email: jluther@streetwisereports.com

Lessons from Toronto on the Future of Regenerative Medicine in Japan

Tweet

One of the early pioneers of cell therapy as we know it today is Professor Arnold Caplan commonly thought of as responsible for the identification and isolation of the mesenchymal stem cell.  Several years ago Dr. Caplan launched a summer course at Case Western Reserve University he called Business of Regenerative Medicine. This year it was hosted by the Centre for Commercialization of Regenerative Medicine (CCRM) in Toronto - the first time it's been hosted outside of Cleveland.  

I was fortunate to be invited to participate in this year's 7th Annual “Business of Regenerative Medicine: New Therapies, New Models”.  Signals blogger, Mark Curtis, has done a nice job of summarizing the highlights of this year's course.  

One of the most valuable take-aways for me was from a talk given by the inimitable Professor Chris Mason of University College London who has reportedly been advising Japanese lawmakers and regulators on their new proposed regulatory framework for regenerative medicine.  

Let me back up.  In June 2012, regenerative medicine was given priority status in the national Cabinet Secretariat’s Five-year Healthcare Innovation Strategy. In October 2012 Prof. Shinya Yamanaka of Kyoto University won a share in the Nobel Prize in Physiology or Medicine for his work in the development of iPS cell technology. This solidified regenerative medicine as an area of national pride and one of the areas in which Japan wanted to demonstrate innovative global leadership not just for scientific discovery but for the development of an industry around those discoveries. However, the Japanese regulatory framework which applied to cell therapies was widely recognized as being in desperate need of revision in order to support true commercialization of these products.  It made sense, then, that the Japanese started their innovation with the regulation. 

In November 2013, the Japanese legislature (the National Diet) passed legislation that revised Japan's Pharmaceutical Affairs Law and created the new Regenerative Medicine Law intended to be the groundwork for establishing Japan as a global leader in regenerative medicine in the years ahead. The import of this legislation was that it created a legislative mandate to create regulation that established an expedited development and commercialization pathway for regenerative medicine therapies while continuing to ensure and protect patient safety. The legislation passed with overwhelming support in both the lower and upper houses of the Diet.  Since then the policy makers and regulators at the MHLW and PMDA have been busily attempting to build a regulatory framework around this mandate.

There has been a lot written about this potentially ground-breaking approach to regulating cell therapies (see also here and here) but until now I have seen very little detail around how the mandate of the new law might be translated into operational regulation.  On that front, here is my brief second-hand synopsis of what I think I learned from Chris:

• conditional approval will be available to any cell therapies that provide evidence of safety and early signals of efficacy - this is reportedly not limited in any way by the indication or by product type 
• in other words there is no need to be addressing an orphan indication or for the product to be autologous in order to qualify
• at least in the early days of this implementation it is expected that this data will be 'imported' from trials conducted outside of Japan 
• once conditional approval is granted, a sponsor company will have 7 years to obtain final approval
• there is likely to be a requirement that a product be manufactured in Japan to obtain final approval 
• conditional approval will also come with reimbursement though there is no indication yet as to how pricing will be determined
• there is an expectation that the pivotal studies needed to obtain final approval will be done outside of Japan - since the product is already being sold in Japan, conducting a placebo-controlled trial would be next-to-impossible

There are a number of Japanese companies already in the regenerative medicine and cell therapy space that may be the initial and primary beneficiaries of this new regulatory paradigm.  Most of these are involved in the Forum for Innovative Regenerative Medicine (FIRM) established in 2011 to promote and support the commercialization of regenerative medicine in Japan. 

As largely an industry organization, FIRM really started emerging as a key national player with its involvement in the development of this newly emerging regulatory framework.  To quote FIRM, "Commercializing this state-of-the-art technology is not just a question of scientific and biotechnological prowess; the broad-ranging manufacturing capabilities nurtured by Japan’s industrial community will also be an indispensable element. Indeed, this is an opportunity for Japan to leverage its unique technologies to grow an internationally competitive industry."

Over the past months it has been interesting to observe how companies in Japan (even large multinational conglomerates) have responded to this new national mandate.  Many of them appear quite anxious to demonstrate to their shareholders, government, and peers that they have active programs in regenerative medicine and thus are supporting this national initiative.  This appears to be creating considerable appetite among Japanese companies, many of whom have not been in the sector to-date, for regenerative medicine technologies with which they can associate. 

As a result of this phenomenon, we expect there will be many regenerative medicine companies outside of Japan which will find wins for themselves as a result of this national initiative.  Naturally, companies in the regenerative medicine and cell therapy space outside of Japan are tripping over themselves to prioritize Japan as part of their corporate planning and to elucidate their Japanese strategy to investors and partners as a competitive advantage and potential earlier route to market if not return on investment.  Some of the companies distinguishing themselves early in this race are Cytori (NASDAQ:CYTX), Mesoblast (ASX:MSB), and Athersys (NASDAQ:ATHX). 

Cytori has long been in Japan and is making sure no one forgets that by press releasing the importance of their Japanese focus.  

Mesoblast inherited a Japanese licensee when they took over the Prochymal portfolio from Osiris.  JCR Pharmaceuticals has the license for the allogeneic mesenchymal stem cell (MSC) product in Japan to treat steroid refractory graft-versus-host disease (GvHD). Mesoblast has announced its intention to leverage this door to the Japanese market. Given that the product has already received approval in Canada and New Zealand for pediatric GvHD, it has been speculated that JCR may be the first company to secure conditional approval for a cell therapy in Japan.

Not to be outdone, Athersys announced in January, "We are actively evaluating the potential for accelerated development of MultiStem cells in a number of therapeutic areas in Japan, and will seek to establish strategic collaborations to assist in the rapid development of products that will help Japanese patients." 

One of the sleepers in this race may be an emerging regenerative medicine company named RepliCel Life Sciences (TSXV:RP).  In May 2013 RepliCel announced a Collaboration and Technology Development Transfer Framework Agreement with Shiseido Company, Limited (Tokyo Stock Exchange Code: 4911) for an exclusive geographic license for RepliCel’s RCH-01 hair regeneration technology.  Shiseido has an exclusive geographic license to use RCH-01 in Japan, China, South Korea, Taiwan and the ASEAN countries.

This deal garnered RepliCel ~$4M in upfront cash and was valued at over $30M in milestone payments and sales royalties.  Perhaps more importantly, since that time the companies have executed a tech transfer agreement, RepliCel was granted a key patent in Japan, and Shiseido recently celebrated the opening of its new cell-processing facility at the Kobe Biomedical Innovation Cluster (KBIC).  This facility will focus on the commercialization of RepliCel’s RCH-01 hair regeneration technology for Shiseido's markets.

In speaking with management, I understand Shiseido has plans to conduct its own clinical trial of the product in Japan and that the companies are collaborating closely (through a joint development committee) on the continued improvement of the technology to ensure a single product emerges.  This means there will be data from two concurrent trials (RepliCel's proposed phase 2 trial in Germany and Shiseido's proposed trial in Japan).

My own take on this is that it seems RepliCel/Shiseido may be well positioned to take advantage of early conditional approval of this technology in Japan in a way that generates near-term revenue while they continue to generate clinical data and optimize the treatment (dose, frequency) and manufacturing.  In due course this data will be available to RepliCel to use in licensing discussions for non-Shiseido markets.  Furthermore, RepliCel/Shiseido have already solved the anticipated hurdle of having manufacturing in the country as a predicate to eventual final approval.

The fact that their Shiseido collaboration may position RepliCel as a leader among foreign companies taking early advantage of this new regenerative medicine framework in Japan has not been lost on management (see here) but given RepliCel's expanded technology platform and product/clinical pipeline combined with the 3rd party validation and unique attributes of the Shiseido deal, I'm not sure the message has sunk in with investors yet given the ~$30M market cap.

I'll be watching the Japanese regenerative medicine race with great interest over the next few months.  It has been reported that there will be a MHLW-sponsored public comment period for the new regenerative medicine law announced soon. All stakeholders are encouraged to provide feedback on the new legislation aimed at regenerative medicine therapies. 

Also of note will be to monitor how other regulatory agencies respond.  Already we have seen moves toward expedited or conditional approvals (in limited circumstances) in Europe and potentially expedited pathways (e.g., breakthrough designation) in the U.S.  Other jurisdictions such as South Korea, Canada, and Australia have apparently taken a more functional approach to expediting certain cell therapy product approvals but on a case-by-case basis.

RepliCel -- Treating Functional Cellular Deficits. An Interview with CEO, David Hall

Despite us both living in the Vancouver area and both being involved in cell therapy, I didn't meet David Hall until we were both in La Jolla late last year for the Alliance for Regenerative Medicine's Stem Cell on the Mesa meeting.  Since then we've been keeping in close contact and I have had opportunity to learn a lot more about him, his team, RepliCel, and the company's technology.  

The company is by all appearances a company on the tail end of a number of significant transitions in terms of its structure, finance, clinical pipeline, and even the breadth of its underlying technology.  The company is now unveiling RepliCel 2.0 (my term, not theirs) which builds on the company's core expertise and platform technology but combines newly added assets and clinical strategies that create end-to-end solutions and multiple pillars around which shareholder value is being created.

David presents a sound logic for the transitions through which he has taken the company in the past 18 months and the pace of that change.  He does, perhaps more than many CEO's I have had the opportunity to interview, present a strong and focused vision for the company with a clear goal and a well-defined pathway for how he intends to get the company there.  From my vantage point, this vision permeates into most aspects of the company from clinical trial design, to patent strategy, to defining collaborations, and even recruiting.

Suffice it to say I have been increasingly impressed by what I see and welcome the opportunity to share the interview below with you.  I hope you enjoy learning a little more about RepliCel as much as I have.

CTB:  Tell us a little about your background, David, and how you got involved in a cell therapy company?

DH: My initial career was in finance working on both sides of the street as a money manager and as a banker and analyst.  It was as a banker that I came to join ID Biomedical which then led to my joining Angiotech Pharmaceuticals not long after it was started.  During my time there I served as Chief Financial Officer, Chief Compliance Officer and Treasurer and Corporate Secretary.  After 20 years in life sciences, I spent time focused on public policy in BC and Canada as it related to developing our BC life sciences industry.   During that time I was approached to look at a cell therapy company developing a treatment for pattern baldness.  Despite my lack of empathy at that time for pattern baldness as a disease, I was struck by the elegance of this group’s scientific approach and how that might be expanded into other treatments where there was a deficit of healthy active cells.

CTB: Can you give us a snapshot of RepliCel as a company?

DH: RepliCel is treating cellular deficits in two main areas. The first is addressing conditions where there is a deficit of healthy functioning fibroblasts such as chronic tendinosis and damaged skin. 

The second is in treating pattern baldness where there is a deficit of dermal sheath cup cells that are responsible for maintaining a hair follicle cycle of fiber production.  

In addition, we have developed cell manufacturing technology and procedures to support the potential commercialization of these indications as well as specialised delivery devices which in themselves are unique and have the potential for licensing for other medical and cosmetic uses.  We believe the manufacturing and delivery assets are very important to the company as you need to be able to demonstrate scalability and commercial delivery.

CTB: What is the company’s technology?

DH: RCH-01 is our treatment for pattern baldness.  This technology specifically focuses on replacing a deficit of healthy active dermal sheath cup cells (DSCs).  Our product thesis is that these DSC cells control and maintain the population of dermal papillae (DP) cells in a hair follicle and the number of DPs determine the length and thickness of the hair fibre.  In patients with pattern baldness (men and women), DSCs are compromised by the androgen hormone for no known reason.  It is kind of like the reverse of unwanted or aggressive hair growth.  Some people have five-o-clock shadows when they are 15 and others don’t shave until they are 20+.  In pattern baldness, the androgen hormone compromises hair growth.  RCH-01 addresses the deficit of the active DSC cells in the areas of pattern baldness in the scalp.

The RCT family of products* are for the treatment of chronic tendinosis including Achilles, patellar  and both golfer’s and tennis elbow.  In each case we are addressing a deficit of healthy active fibroblasts.  The scientific thesis is that this chronic disease is the result of incomplete healing cycles due to a deficit of healthy functioning fibroblasts.  Our early human clinical work on chronic tendinosis was done by our collaborator, Dr. David Connell, using fibroblasts isolated from the dermis.  Our program is based on using fibroblasts isolated from the hair follicle due to their ability to express higher levels of type I collagen than dermal fibroblasts.  Type I collagen is the main cell constituent of a tendon.  (*RCT-A-01, RCT-P-01, RCT-G-01 and RCT-T-01)

RCS-01 is focused on replacing damaged or non-functioning fibroblasts in the dermis.  Fibroblasts damaged by UV irradiation, smoking and other factors stop producing healthy amounts of collagen and the constituents of the skin’s extracellular matrix.  As a result, the skin loses its texture.  Similarly, acne and burn scars are targets for us to deliver highly expressive fibroblasts to initiate remodelling of the damaged skin. 

The supporting manufacturing technology is also a critical asset to the company as we believe our process is scalable.  

In addition, we have developed a very unique injection cell injection device for dermal injections for both our derm and pattern baldness program.  This device minimizes shear force, optimizes staged cell delivery, and has a built in freezing element that obviates the need for any kind of anesthetic and can control both volume and depth of injection.

CTB: Where are you doing your trials?  Why Europe and Canada?

DH: All of our trials are being conducted under the terms of reference from the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH).   Each trial is designed to meet these international standards of which all of the western nations are members.  As such, all of our data up to Phase 2 are admissible towards Phase 3 pivotal programs in each jurisdiction.  

Our RCS-01 trial is being done in Germany.  The co-founder of the Company Dr. Rolf Hoffmann, is located in Germany and he is leading this initiative.  Similarly, our RCH-1 treatment is being conducted in Germany at the Charité Hospital in Berlin.  The Charité is one of the largest teaching and research hospitals in Europe.  In addition, the technology itself was first developed in Dr. Hoffmann and Dr. McElwee’ s lab at the University of Marburg in Germany.  There is history with these technologies in Germany and in addition, the cells are being processed by our contract manufacturer in Austria.

The clinical trial for RCT-A-01 will  be conducted at the University of British Columbia because it is a world centre of excellence for sports medicine research including tendinosis.  We have three very special advisers leading the development of the clinical trial protocol including Dr. Ross Davidson, Dr. Jack Taunton and Dr. David Connell.  Each of them are key opinion leaders in sports medicine.  It is also convenient to have this trial in our own city, but it was not the deciding factor.  Reputation, skills and the ability to recruit patients were the deciding factors.  The cells will be processed in Austria; however, we are moving to bring online a second contract facility validated in North America at the Centre for Commercialization for Regenerative Medicine in Toronto. 

CTB: What is the strategy for the U.S. market?

DH: The US market will be addressed from two angles.  First, we are presenting our fibroblast program to the US military under their peer reviewed medical research program.  The DoD has a great interest in musculoskeletal research to deal with damaged tendons and skin.   We believe our programs are ideally suited for their needs and are preparing filings for funding for clinical programs both in Canada and the US.  The second approach is to undertake phase 2 clinical work on other target tendons in the US after we have gotten our RCT-A-01 program launched.  Importantly, all of our trials are being conducted under ICH standards with the US regulatory pathways in mind. 

CTB: Tell us about the deal you did recently with Shiseido and what your drivers were for that kind of deal?

DH: In 2013 we completed a geographic license with the Shiseido Company.  Shiseido has its own hair research lab and they had come to the conclusion that our approach was the leading cell therapy technology for treating pattern baldness.  

We were interested in doing a geographic license for Japan and parts of Asia for three main reasons.  The first was to have a third party validation of our science and technology which is always important to a start-up company.  The second was to be partnered with a large company whom had the resources (both human and financial) to conduct their own clinical program which along with our program would more than double the data being collected as we work towards establishing our dosing and other protocols for the technology in humans.  Thirdly, Shiseido has committed to cell therapy in a significant manner including having commissioned and now opened a purpose-built cell processing centre in Kobe Japan, in the heart of the country’s regenerative medicine initiative.   

Our ongoing collaboration will see technology improvements shared between parties.   Financially, we received $4 million up front, future milestones totaling approximately $30 million as well as middle single digit royalties on sales.  We are very pleased with our collaboration with Shiseido.  They are a focused and dependable collaborator.

CTB: From our perspective, the company is significantly under-exposed both in the regenerative medicine industry and investment communities.  Can you give us a sense of why you think that might be and your plans in that regard?

DH: Every company has its own chronological pathway to develop a profile in its industry and in the public domain.  During the later stages of 2012 and through 2013 RepliCel was very concentrated on completing the Shiseido transaction as well as completing the filing of PCT patent applications on its fibroblast platform.  Until we had completed the task of protecting our expanded technology, it did not serve the company to disclose these activities.  

Now in 2014, we are completing the next round of financing, pushing hard on our clinical filings to launch 3 clinical trials and now have the freedom to discuss our programs.  As such, we are going to be out in the public domain at conferences and doing roadshows in order to get the RepliCel story known and followed both in industry and in the capital markets.

CTB: While many of the companies in the cell therapy sector are focused on indications like cardiovascular disease, oncology, autoimmune disorders, or diseases of the central nervous system, RepliCel is going after sports injuries, baldness, and wrinkles.  Do you see these indications as low-hanging fruit?  Do these indications battle problems of lower-margin and/or reimbursement challenges?

DH: I would agree that our programs are low hanging fruit in the regenerative medicine business and that is an attractive distinction.  Furthermore, as an autologous therapy, there is less risk of rejection than an allogeneic therapy. 

Our therapies are designed to simply multiply a patient’s particular cells that are in deficit and then deliver it to the area of deficit.  We are not differentiating or inducing cell change, we are simply letting the cells do what they normally do when placed in the area of the wound or damage.  

A lot of regenerative medicine is focused on very complex processes that take a source cell and then engage in extensive cell manipulation and/or differentiation.  While these treatments are going to arrive in the future, today they are very difficult therapies to perfect both in assuring that the cell differentiations are exact and controlled and that the cells are delivered in volume and stay and function where they are needed.  Our process is just simpler.  So, yes, this is low hanging fruit in terms of safety risk and the commercial development timeline.

In terms of margins, we are quite confident in our ability to demonstrate manufacturing scalability.  In terms of reimbursement, initially we have only one product that would need pharmacoeconomic validation and that is the tendon program.  However, we know that we can replicate and deliver a tendon program at a reasonable cost and that there is no current clinically established solution for chronic tendinosis.  Therefore, we do not anticipate any problem pricing at a good margin.  In terms of the derm program, the initial focus is a cosmetic therapy and I think pricing a solution for sun damaged skin, wrinkles, etc. should not be an issue.  A treatment with good efficacy will have no problem getting a premium price. In terms of margins on a treatment for pattern baldness, it would be priced against the current standard of care which is hair transplant surgery.  And at that price, we can make good margins.

CTB: Many of the cell therapy products already approved are in the musculoskeletal, dermatology, and wound repair space and none are a run-away success.  Does it worry you to be also focused on these areas for your near-term opportunities?

DH: That is a statement on the relative efficacy and difficulty of delivery.  Approval does not necessarily equate to commercial success.  We believe that our programs will have significant efficacy for their targeted indications, be easily delivered and they will become the gold standards.  But that is the nature of product development; you have go out and demonstrate efficacy!  One comment on wound repair is that we are not at this time interested in pursuing open wound repair as that space has many solutions ranging from complex cell therapies to medical devices.  It is a crowded space and we prefer at this time to prove our platforms where we are confident in our success and are not populated by other treatments.  

CTB: Your initial focus is on autologous applications of the hair follicle-derived cells, what are plans to address some of the commercial (cost) challenges presented by autologous cell therapies already on the market?

DH: As mentioned above, we are focused in parallel to our clinical development programs, on developing a scalable process for our cell manufacturing.  We see this as a process engineering program and not a development process requiring scientific breakthroughs.  This development program is underway.  It is also true that we believe that our hair follicle derived cells are immune privileged and that in the future, our technologies could well become an allogeneic offering.  But that is down the road. 

CTB: Few companies of ReplCel’s size and market cap are simultaneously tackling multiple products in clinical trials let alone also the concurrent development of a proprietary delivery device.  Some might argue it would be more prudent to preserve capital to ensure you have what it takes to move one product further down the line.   Can you give us a sense of your why you prefer this multi-pronged strategy?

DH: Our programs are inherently cheaper to develop and test than more complex cell therapies and for that matter, new chemical entities or biologics.  We are simply expanding a patient's cells and giving them back to them.  It is just cheaper to do than other therapies.  As such, we can undertake more programs and I would argue that for shareholders, more shots on goal helps to mitigate risks associated with clinical programs.  We believe we have a single focus on leveraging our core expertise around cells derived from the hair follicle organ and finding meaningful clinical applications for those cells.  Optimizing the manufacturing and delivery of those cells just makes sense as part of the risk mitigation and value optimization of those assets.

CTB: To those investors interested in the regenerative medicine and cell therapy sector, where does RepliCel fit in the industry and how do you think it stacks up against sector comparables as an investment opportunity?

DH: I would characterize RepliCel as a mid-stage development company that exists between earlier approved products like Apligraf and Dermagraft for wound healing, and much more complex cell therapy clinical development programs.  There are other mid-stage programs like Athersys' MultiStem and Mesoblast’s Mesenchymal Precursor Cells.   However, I would argue that our simple cell replication process of a target cell deficit is simpler to manufacture and deliver than many cell therapies.  So, I would characterize our development programs as lower risk.  Nevertheless, I would also say to investors that regenerative medicine is going to be a huge field in the future as science and technologies evolve.  This industry will be delivering incredible medical solutions for patients in the future.  

 CTB: Talk to us a little about the stock.  It’s very lightly traded on both the Toronto venture exchange and over-the-counter bulletin board.  What’s the plan going forward in terms of its listing and liquidity?

DH: Yes, it is true our trading has been low.  That is a direct function of our tightly held stock, (management, founders, etc., own approximately 45% of the stock) and the fact that we were very focused in 2103 on our partnership and the patent filings.  As discussed above, we are now launching our story on a focused basis that will see the company out on road shows delivering its message to potential investors.  We think that RepliCel is an attractive and unknown story which will have a good reception.  That effort is focused on addressing the valuation and liquidity.  In terms of listing, the natural progression as we develop assets and valuation is to up list which we will be pursuing.

CTB: Where do you see RepliCel in 18-24 months?

DH: On a clinical basis, we will have data in both our tendon and derm programs and will be closing in on the clinical trial data for our treatment for pattern baldness.  We should at that time be initiating at least one other tendon program and a phase 2 derm program.  We will have developed clinical protocols for two new indications for our fibroblast platform (not yet being disclosed due to patent work) and we will have demonstrated scalability of our manufacturing platform.   If we accomplish this as planned, we will have established an extremely valuable group of assets.   

CTB:  Thank you, David, for the opportunity to spend some time learning more about RepliCel and your plans for the company.