Aastrom Biosciences’ stem-cell therapy for treating critical limb ischaemia (CLI) had a happier outcome than its gene therapy competitor Vical in that the stem-cell approach reported positive clinical data last week (Gene therapy suffers another blow as Temusi crashes out, September 23, 2010). Unfortunately, the stock market reaction was strikingly similar.
After a doubling of Aastrom's share price over the last three weeks to $4.20, investors took their profits and ran; the stock tumbled 35% to $2.71 on November 18 when encouraging interim phase IIb results were announced for Aastrom's CLI candidate. It may not have helped that the Michigan group recently signalled that dilutive share offerings are likely in the not-too-distant future to help fund a phase III trial.
Aastrom uses patients’ bone marrow to manufacture its vascular repair cells product to generate regrowth of blood vessels in patients with (CLI), a disabling condition that results in a majority of patients suffering death or amputation within the first year of diagnosis.
An interim analysis of Aastrom’s Restore-CLI trial in 86 subjects found that patients injected with the vascular repair cells had significantly longer time to treatment failure, the primary endpoint encompassing several negative outcomes such as amputations and onset of gangrene, but did not have significantly longer amputation-free survival. The company said unexpectedly good outcomes in a control arm contributed to its failure on this secondary endpoint.
In a meeting with investors company executives said interim results have proven positive enough that they are proceeding with planning for a phase III trial.
It should not be too surprising to hear such positive news on a stem cell therapy project. In detailing the failure of Vical's gene therapy Temusi last week at the American Heart Association scientific meetings, lead investigator Dr William Hiatt said cell therapy appeared to have more promise in this disease (AHA 2010 – Little hope for gene therapy in ischaemic limbs, November 17, 2010).
But as with many mid-stage trial results, experts in the space are urging caution. “Remember, however, that NV1FGF (Temusi) showed very positive results in a more than 100-patient phase II study, so all we can say at this stage is that we are encouraged by the data and await future, larger clinical trial results,” Dr Douglas Losordo, director of the Feinberg Cardiovascular Research Center at Northwestern University in Chicago, said in an email to EP Vantage.
Aastrom will need to raise funds or secure a partner to get its product into phase III, but with so many question marks remaining against the regulatory and commercial potential of stem cell therapy, the company is planning to go it alone in phase III.
As of September 30 the company held just $14.5m in cash and on November 12 Aastrom filed a shelf registration to sell up to $75m in new shares. While a company with a market cap of $69m is highly unlikely to do such a large offering all at once, it signals that the group is preparing for a significant dilutive fundraising. This no doubt helped to exaggerate the profit-taking.
In addition, with results from the phase IIb in CLI already announced, the company is looking at very few catalysts in coming months. Given that shares had surged past the average price target of $3 from two analyst firms covering Aastrom, a sell-off is not surprising.
In the form of its vascular repair cell technology, Aastrom is giving the CLI space a second chance for success. Investors may yet give Aastrom a second chance, but only when they know the extent of fundraising required and detailed plans and timelines for those pivotal trials.