BioTime Is Right On Time: Files IND For AMD

BioTime (NYSEMKT:BTX) recently announced it has filed an IND with the FDA for its stem cell therapy designed to treat patients with Dry-AMD. This represents the first ever IND filing for an embryonic stem cell-based therapy developed in Israel. It's also only the third group to ever file an IND for an embryonic stem cell-based therapy (the other two are Geron, founded by Michael West, and Advanced Cell Technology, where Dr. West was formally CSO). As most know, Dr. West is also founder and CEO of BioTime. It is also important to note that BioTime controls the hESC IP that was previously owned by Geron, through BioTime's subsidiary, Asterias.

This article is a follow up to my prior article, BioTime Joins Advanced Cell Technology In The AMD Race. BioTime, Inc. and Advanced Cell Technology, Inc. (OTCQB:ACTC) are competitors in the stem cell space. Both have platforms that use Retinal Pigment Epithelial Cells (RPE for short) derived from hESC to treat Age-Related Macular Degeneration (AMD for short). As I stated in my prior article, AMD represents a huge $30 billion market afflicting more than 30 million people worldwide, with no current medical treatments available to stop or reverse the progression of the disease, which eventually leads to blindness. Stem cell replacement therapy offers a glimmer of hope for this difficult disease.

The prior article highlighted the fact that BioTime was setting its sights on AMD through its affiliate, Cell Cure Neurosciences Ltd. (Cell Cure). Cell Cure is an Israeli company owned by BioTime, Hadasit Bio-Holdings Ltd., and Teva Pharmaceutical Industries Ltd. (NYSE:TEVA). As stated in the previous article, Cell Cure has entered into an exclusive license option agreement with Teva to develop and market OpRegen (Cell Cure's RPE cell therapy) for the treatment of AMD. If Teva exercises its option, it will have responsibility for funding clinical trials from that point on, obtaining regulatory approval, and marketing the product. With a fresh new capital raise and a partnership with a large pharma, BioTime is well positioned to move forward with its Phase I trial. I would add, in addition to Teva's involvement, having a direct partnership with the medical group leading the study provides considerable synergies. Based on Cell Cure's resources and leadership, I would say BioTime has entered the race in earnest.

Advanced Cell Technology (or ACT for short) has the clear lead from a timing perspective in the race to find a treatment for AMD. It started its trials over 3 years ago and is waiting to treat its final Phase I patients. Due to well documented legacy issues, the company has been in a slow slog in progressing its Phase I trial. ACT is also in need of a capital raise to ensure sufficient resources to move forward with Phase II of the trial. Lastly, ACT will need to address its stem cell line that's being used for the trial and may need to bridge to a new line with sufficient donor documentation to meet FDA's requirements for commercialization.

Bridging to a new line could require additional pre-clinical or trial testing, which would obviously take time and resources. In September 2013, anInternational Workshop on Regulatory Pathways for Cell Therapies addressed the issue head on. Speaking specifically to ACT's situation, the paper stated,

Examples were provided of hESC-derived cell therapies that had apparently not met the full donor eligibility requirements but had, to date, been able to enter early phase clinical trials in the U.S. It is unclear whether these cell lines will be suitable for licensure.

Further into the findings and conclusions, the workgroup recommended the following,

With regard to regulation of cell lines for therapeutic development, a great degree of ambiguity currently surrounds the use of cell lines derived from donors prior to the year 2005-ambiguity for which there is little scientific basis. In the view of many of the workshop participants, if a regulatory authority approves a particular cell line for use for a first-in-human clinical trial for a specific disease indication at a specific stage in disease progression, the regulatory authority should provide assurance that this cell line can be used for subsequent commercialization. If there is a need to change the cell line during clinical development, consideration of comparability requirements should be undertaken.

FDA guidance on comparability lists the following as potential outcomes:

The FDA concludes with:

FDA may determine that manufacturers of biological products, including therapeutic biotechnology-derived products regulated as biologics or drugs, may make manufacturing changes without conducting additional clinical efficacy studies if comparability test data demonstrate to FDA that the product after the manufacturing change is safe, pure, potent/effective.

The question for ACT is what evidence accounts for safe, pure, potent/effective? We won't know the answer until ACT crosses that bridge, but I would think sooner is better than later.

BioTime, on the other hand, doesn't have the same uncertainty. One of the benefits to getting in the game late is the ability to develop a stem cell line that not only meets the FDA's requirements for donor documentation and manufacturing quality, but also provides an improved technique that allows for clinical grade (cGMP) and xeno-free cells. Xeno-free means the cells are not manufactured with cells or reagents of animal origin. ACT's cells, on the other hand, are not clinical grade, meaning they were not derived in "clinical-grade" conditions and were not derived without the use of animal derived products. This is, of course, another reason ACT will need to bridge to a well documented, clinical grade cell line at some point during the trials.

ACT and BioTime are both pursuing the same indication using a similar procedure, which involves replacing RPE cells in AMD patients. ACT is winding down its Phase I studies, while BioTime will be waiting for FDA approval of its IND to begin its Phase I studies. ACT still needs to bridge to a stem cell line that meets FDA guidelines for commercialization and there's considerable uncertainty since this will be a first test of FDA's comparability requirements for hESC.

In the end, both of the companies' RPE platforms will either succeed together or fail together based on very similar science. BioTime will be playing catch-up, but it will have its ducks lined up out of the gate with quality clinical grade stem cell lines, critical partnership arrangements, and resources.

We're really in the beginning stages of a long medical marathon to treat a horrible disease. Competition is good. In the long run, the clear winner will be AMD patients if both companies can execute on their plans and the science proves out. From an investor's perspective, my approach will be to maintain a core position in both companies and trade the volatility to offset the necessary and expected dilution along the way. With the right approach, investors too can be long-term winners.

Disclosure: Nothing in this article constitutes investment advice or any recommendation with respect to a particular security. Investing in developmental-stage biotech is highly speculative and risky. The road to commercialization is long, and full of peaks and valleys. Take profits when offered, and most importantly, diversify.