NEWARK, Calif., Jan. 6, 2014 (GLOBE NEWSWIRE) -- StemCells, Inc. (Nasdaq:STEM), a leading stem cell company developing novel cell-based therapeutics for disorders of the central nervous system, posted today the following Letter to Shareholders from its President and CEO, Martin McGlynn.
Dear Fellow Shareholders,
Every day, the news media brings us word of some new advancement in the development of stem cell therapies. While you clearly comprehend the vast potential of stem cell therapeutics to transform the practice of medicine, it can be understandably difficult to assess which companies to bank on amidst so much hoopla and hyperbole. As CEO, one of my easiest and most gratifying jobs is to report our persistent progress to you — real evidence that StemCells, Inc. continues to be a clear frontrunner.
What is more difficult is trying to understand our Company's stock performance for the year just ended. We have reached out to usually well-informed third parties in the analyst and investor communities to help us understand this dynamic, but have been unable to identify anything unusual or particularly enlightening. Perhaps we have not adequately explained to the market the progress we have made in advancing the science and the greatly enhanced organizational capabilities that we have put in place to enable StemCells, Inc. to effectively progress our technology to significant value-creating milestones. Clearly, we feel compelled to remedy any misconceptions about the Company's true value. I trust this letter will be a first step in the right direction.
Continuing to Lead the Industry
Our Company's guiding mission has been, and remains, to harness the regenerative power of stem cells to restore the healthy functioning of organs and other tissues impaired by the ravages of disease or injury. Focusing on uses for our proprietary platform technology consisting of purified and expandable human neural stem cells (HuCNS-SC® cells), StemCells, Inc. has emerged as a leader in the quest for cellular therapies designed to treat diseases and disorders of the central nervous system (CNS). StemCells, Inc. was the first company to complete a U.S. clinical trial using human neural stem cells and is the only company with a pipeline currently addressing disorders in all three regions of the CNS: the spinal cord, the eye and the brain. Before this year is out, we intend to initiate Phase II multicenter, controlled efficacy clinical studies in both spinal cord injury (SCI) and dry age-related macular degeneration (AMD); in 2016, we expect to file an IND to evaluate the safety and efficacy of our HuCNS-SC cells to restore lost memory in Alzheimer's patients. No other company has so successfully and so broadly advanced R&D in stem cell-based therapies for such pervasive CNS disorders.
Clinical Trials Currently Underway and Completed
Spinal Cord Injury. In September 2011, we transplanted the first patient in our Phase I/II clinical trial in chronic spinal cord injury in Switzerland. To date, we have dosed eight of the twelve patients planned for this study. We have reported very encouraging results from the first three spinal cord injury patients who have already completed the trial. Twelve months post-transplant, two of the three patients regained lost sensation below the site of injury, and one of them improved from an Asia A classification (complete injury with no function below the site of the injury) to Asia B (partial sensation below the site of injury). Using the encouraging safety and efficacy data obtained from the Swiss trial, in 2013 we sought and obtained approval from Health Canada and the FDA to expand the study into North America, the largest market in the world for spinal cord injury. We did so to accelerate completion of the current study, and so we are confident that we will wrap up enrollment in Q1 2014, which should pave the way for the controlled Phase II efficacy trial that we plan to initiate by the middle of 2014.
Age Related Macular Degeneration. In October 2012, we transplanted the first patient in our FDA-authorized Phase I clinical trial for dry age-related macular degeneration (AMD), the leading cause of blindness in people over the age of 65. There is no approved treatment for dry AMD. To date, we have dosed seven of the sixteen patients planned for the study. Initially, out of an abundance of caution for patient safety, the Company agreed with the FDA to three major restrictions for the conduct of the trial: (i) we would restrict recruitment to two clinical sites in an effort to minimize the potential for adverse outcome due to differences in surgical skills; (ii) the first four patients would have little visual acuity, i.e., would be "legally blind;" and (iii) we would limit the number of cells to be transplanted into the back of the eye to 200,000 cells per patient. Upon successful completion of the first four transplants at the Retina Foundation of the Southwest in Dallas, Texas, and upon full review of all the available data by an independent data-monitoring committee comprised of physicians with well-recognized expertise in ophthalmology, macular disease and vitreal-retinal surgery, the FDA agreed to increase the number of clinical sites from two to five, allowed for the enrollment of patients at a much earlier stage of the disease, and allowed us to increase the dose five-fold to one million cells per patient. As a result of this encouraging action by FDA, the Company is confident that it will be able to complete enrollment in its current study and initiate a controlled Phase II efficacy study later this year.
Genetic Disorders. We have completed and published the results of two Phase I trials evaluating the safety and preliminary efficacy of our HuCNS-SC cells in two rare genetic disorders: Neuronal Ceroid Lipofusinosis (Batten's Disease) and Pelizaeus Merzbacher's Disease (PMD). These studies have shown that we can safely transplant up to one billion cells into the brain of an infant or a child. We also learned that the cells engraft robustly, migrate deep into the brain structure, remain biologically active post withdrawal of the immunosuppression regime and, in the case of the PMD trial, we showed by MRI imaging that the cells had shown signs of myelination in the transplanted regions of all four children who received the cells. The hallmark of PMD, a fatal genetic disease affecting mostly male children, is that from birth these children are unable to produce sufficient protective myelin sheathing, which is essential for the survival of the neurons in the white matter tract of the brain. In severe cases, this characteristically results in critical neurological and intellectual deficits leading to the death of the child within the second decade of life.
Phase II controlled efficacy Proof of Concept Trials Planned this Year
Proof-of-Concept (PoC) studies are the definitive gate before initiating pivotal registration trials. Contrary to safety studies that are typically open label (where all patients receive the same treatment and there is no "control" procedure), PoCs are "controlled" because some patients receive the experimental treatment while others receive either a placebo or no treatment. Such methodology enables a definitive assessment of the efficacy of the experimental procedure. In the world of biotech, these results usually represent the inflection point determining a "go/no-go" status for the product candidate.
Phase II controlled efficacy PoC Studies in Spinal Cord Injury and AMD. We are very excited to be so close to taking our spinal cord injury and dry AMD programs to this definitive PoC stage of clinical testing. We plan to have interim results from these PoC trials in 2015, when half of the patients will have been enrolled and evaluated at the six-month point post-transplant. The complete study results would follow one year later.
Phase II controlled efficacy PoC Study in PMD. PMD falls into the category of being "rare," so thankfully the number of children born with this fatal illness is very small. Under the urging of Congress, the FDA has adopted various creative regulatory mechanisms to accelerate the development of therapies for such rare diseases as PMD. The Company met with the FDA last month to discuss the results of the Company's completed Phase I PMD trial, the design of a Phase II trial and possible pathways for approval to market our product candidate for treatment of this devastating disease. We are now evaluating how we might best fold a third Phase II trial into our rapidly expanding clinical translation agenda.
Alzheimer's IND on the Horizon
Experts estimate that as many as 5.1 million Americans may currently suffer from Alzheimer's disease, the most common cause of dementia in older people. This figure is expected to more than double by 2050, when it is estimated that the annual cost to our nation for the treatment of this disease will reach one trillion dollars.
In 2013, StemCells, Inc. drew down the first funds ($3.8 million) of the $19.3 million awarded by the California Institute for Regenerative Medicine (CIRM) to help support the Company's efforts to file an IND for the use of our HuCNS-SC cells to restore lost memory in Alzheimer's patients. The Company committed to file this IND by mid-2017, however, we are diligently exploring ways to accelerate this milestone and currently anticipate filing by mid-2016. (I would like to remind you that, if for some scientific or technical reason along the way, it becomes clear that the project is a "no-go," any monies provided by CIRM up to that point would be forgiven.)
Poised for Success
As I mentioned at the start of this letter, StemCells, Inc. is in the unique position of concurrently developing novel product candidates for major medical conditions that have thus far defied traditional treatments, in all three components of the CNS: the spinal cord (spinal cord injury – approximately 1.3 million cases in the United States), the eye (dry AMD – approximately 8 million cases in the United States, with prevalence expected to double by 2020) and the brain (Alzheimer's disease – approximately 5.1 million cases in the United States). If we succeed in bringing our HuCNS-SC cells to market for even one of these indications, we believe it will be very meaningful to patients, shareholders and society at large.
Meanwhile, our most recent executive hires offer additional evidence that the industry considers StemCells, Inc. to be on the right track. Greg Schiffman, our new CFO as of January 1, 2014, is a seasoned veteran in the healthcare industry, with over fifteen years of experience leading the financial operations and strategy of global, publicly-traded biotech companies including Affymetrix and Applied Biosystems. In his most recent role as Executive Vice President and CFO of Dendreon Corporation, Dendreon secured marketing authorization from the FDA and the European Commission for the world's first cell-based, autologous immunotherapy for prostate cancer. Prior to entering the healthcare field, Greg served as controller of Hewlett Packard's European P.C. manufacturing and distribution operations in Grenoble, France and as manufacturing manager and controller of HP's Netmetrix Division.
Eliseo Salinas, MD, who joined the company in May 2013 as Executive Vice President and Head of Research and Development, has more than twenty years of experience and expertise developing therapeutic products for CNS disorders. As a leader at Elan, Adolor, Shire and elsewhere, he successfully guided fifteen programs to regulatory approval in the United States and in other major international markets.
In 2013, we closed on approximately $54.6 million in fresh capital, $29.3 million (or 54%) of which is debt, including the committed forgivable loan from the CIRM of up to $19.3 million. We start 2014 with a little over $30 million in the bank, and we expect to receive the second tranche of non-dilutive funding from the CIRM (again $3.8 million) later this month.
Those of you who have known me over the years know that I take great care to be meticulously clear and conservatively precise in my reporting of the Company's progress. As StemCells, Inc. gathers momentum moving forward into 2014 and beyond, I find it hard to contain my enthusiasm about how close we are coming to delivering on the promise we have made to our stakeholders — to transform our "Groundbreaking Science" into "Breakthrough Medicine." Given the strength of our balance sheet, the encouraging clinical data already reported with the prospect of more to come, and the world-class team of professionals we have attracted to help get us there, we are poised to make a significant difference in the practice of medicine and in the lives of millions of patients and their families.
Once again, on behalf of our employees and the patients and families who are counting on us to deliver the promise of this powerful technology, I would like to thank you for your support and your faith in our ability to make it happen.
In closing, I would like to wish you a Happy, Healthy and Prosperous New Year!
Sincerely,
Martin McGlynn
President and Chief Executive Officer
A copy of the shareholder letter may be found on the StemCells, Inc. website at: http://www.stemcellsinc.com/About-Us/CEO-Corner.htm
About StemCells, Inc.
StemCells, Inc. is engaged in the research, development, and commercialization of cell-based therapeutics and tools for use in stem cell-based research and drug discovery. The Company's lead therapeutic product candidate, HuCNS-SC® cells (purified human neural stem cells), is currently in development as a potential treatment for a broad range of central nervous system disorders. In a Phase I clinical trial in Pelizaeus-Merzbacher disease (PMD), a fatal myelination disorder in children, the Company has shown preliminary evidence of progressive and durable donor-derived myelination in all four patients transplanted with HuCNS-SC cells. The Company is conducting a Phase I/II clinical trial in chronic spinal cord injury in Switzerland, Canada and the United States, and has reported positive interim data for the first three patients. The Company is also conducting a Phase I/II clinical trial in dry age-related macular degeneration (AMD) in the United States. In addition, the Company is pursuing preclinical studies in Alzheimer's disease, with support from the California Institute for Regenerative Medicine (CIRM). StemCells also markets stem cell research products, including media and reagents, under the SC Proven® brand. Further information about StemCells is available at http://www.stemcellsinc.com.
Apart from statements of historical fact, the text of this press release constitutes forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created therein. These statements include, but are not limited to, the prospect for screening and then enrolling additional patients with incomplete spinal cord injury and dry AMD; the potential of the Company's HuCNS-SC cells to treat spinal cord injury, dry AMD and other central nervous system diseases and disorders; the timing and prospect of drawing additional funds from the California Institute for Regenerative Medicine; the timing and prospect of initiating one or more controlled Phase II efficacy studies; and the future business operations of the Company. These forward-looking statements speak only as of the date of this news release. The Company does not undertake to update any of these forward-looking statements to reflect events or circumstances that occur after the date hereof. Such statements reflect management's current views and are based on certain assumptions that may or may not ultimately prove valid. The Company's actual results may vary materially from those contemplated in such forward-looking statements due to risks and uncertainties to which the Company is subject, including the fact that additional trials will be required to demonstrate the safety and efficacy of the Company's HuCNS-SC cells for the treatment of any disease or disorder; uncertainty as to whether applicable regulatory agencies will permit the Company to continue clinical testing in spinal cord injury or in future clinical trials of proposed therapies for other diseases or conditions; uncertainties regarding the Company's ability to recruit the patients required to conduct its clinical trials or to obtain meaningful results; uncertainties regarding the Company's ability to obtain the increased capital resources needed to continue its current and planned research and development operations; uncertainty as to whether HuCNS-SC cells and any products that may be generated in the future in the Company's cell-based programs will prove safe and clinically effective and not cause tumors or other adverse side effects; uncertainties regarding the Company's ability to commercialize a therapeutic product and its ability to successfully compete with other products on the market; and other factors that are described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and in its subsequent reports on Form 10-Q and Form 8-K.