Featured # Stock Picks 2016 | 3 years ago

Our New Alert: Pluristem’s ($PSTI) Stroke of Genius – Fundamentally Changing the Way We Treat Disease

The phrase “Stroke of Genius” is unfortunately a hackneyed expression these days. The concept it conveys is a fundamental paradigm shift achieved through the recognition and exploitation of simplicity. A true stroke of genius is something that just “clicks” when we hear it. It makes sense. It makes us wonder why nobody has ever thought of it before. It makes us raise an eyebrow at everyone else busy dreaming up complicated solutions to what turns out was actually quite a simple problem.

True strokes of genius do not happen often. They are extremely rare, but when they happen, they change everything. They change everything not by solving one problem out of many, but by fundamentally altering the way we think about an entire set of problems in the first place. They open new conceptual frameworks for problem-solving.

In this free and exclusive report, I’m going to thoroughly break down one biotech company’s true stroke of genius that, when you see it, will make you wonder why nobody has pursued it before. When I first discovered the company I thought the same thing. You’ll furrow your eyebrows asking yourself why everyone else is pursuing much more expensive and complicated solutions to problems that the medical community has had since the dawn of the scientific method.

Yes, the phrase is overused and meant to create short term hype. That said, I ask you not to believe me, but to simply read on and by the end of this report, you will understand. A true stroke of genius is simple enough for any investor to grasp almost immediately, no matter what your field of expertise is in. If you don’t recognize it immediately, then feel free to ignore the rest of this report.

Pluristem’s Stroke of Genius – Placental Expanded Cells

The company I am going to introduce you to is called Pluristem Therapeutics Inc. (PSTI), and its approach to disease could end up changing the way we think about and treat illness. The company is based in Israel’s high tech park in Haifa, surrounded by enormous companies that also changed human history for the better through their own strokes of genius. Pluristem’s neighbors include

1) Alphabet
2) Microsoft
3) and Intel

Alphabet brought us Google, which forever changed the concept of search and targeted advertising. Microsoft of course brought us the personal computer. Intel invented the microprocessor. Pluristem is right in their neighborhood, and has a very good chance of changing the world just like its three neighbors, except instead of tech and marketing, it could change the way we approach healthcare.

So what is Pluristem’s stroke of genius? In a word, the placenta.

The placenta is the only temporary organ in humans. Colloquially it is known as the afterbirth. Throughout pregnancy, it shields the embryo from the moment of implantation in the uterus to a baby’s birth, feeding the embryo/fetus and filtering out waste. Most importantly for the purposes of this report, it shields the fetus from the immune system of the mother, and it shields the mother from the immune system of the baby as that immune system develops in utero. It essentially prevents the two genetically distinct immune systems from declaring war on each other. If that were to happen, reproduction would be impossible.

Since a baby is not a clone of its mother, it has a different genetic makeup. 23 chromosomes of 46 are from the father, making it technically an invader. A woman can even carry a child that is not genetically hers, as in the case of a surrogate mother, without her immune system rejecting the fetus at all. The placenta stops any attack from happening.

Cells in the placental wall are different from any other cells in the human body from an immunity perspective in two ways. First, they have very low immunogenicity. This means they do not elicit an immune response. If they did, very few babies would survive the womb.

In other words, one big reason why the human race exists today is that placental cells are “immune to immunity”.

The immune system is essentially blind to placental cells, and for very good reason. This is the first of three steps in understanding Pluristem’s stroke of genius.

Second and equally important, placental cells have the capability of immune modulation, meaning they secrete proteins that shut down the immune response preemptively, preventing any immune cells from invading even accidentally and harming the fetus. So not only is the immune system blind to these cells, but if immune cells even get near the placental wall from mother or fetus, the cells of the placenta will shut them down. This is the second step.

Third, placental cells are built to monitor and direct fetal growth. They are the gatekeepers of fetal development in the womb. The progression from zygote to baby is unfathomably complicated, especially when considering that a fetus only has 9 months to develop from a single cell to an entire human body.

This of course includes the human brain, the most complex system of living cells known.
The proteins that placental cells secrete help guide this extremely complex development throughout the baby’s stay in the womb. Meaning, these cells are naturally designed to detect errors and signs of stress in other cells, and correct any problems. This is the third step.

Now let’s combine these steps.

1) First, placental cells are invisible to the immune system.
2) Second, they modulate the immune response so even if encountered they are not attacked.
3) Third, they are naturally designed, through protein secretion, to fix errors and repair any cell damage.

Put all that together, and we have human cells that can be injected into any area of any human body that require no genetic matching because they elicit no immune response, and these cells are designed to repair cell damage.

Pluristem is the first company in history to prove the concept that placental cells can be grown in 3D bioreactors, confirming “Batch to Batch” consistency, and then packaged, frozen, thawed, injected into any person or even any mammal, and repair damaged tissue.

That is Pluristem’s stroke of genius.

Conceptually it is a process that is beautiful in its simplicity. These are cells that both naturally dodge the immune system and are designed to repair human tissue. So why not grow them and use them to do just that? It seems like an absolute no-brainer, yet few have thought of it until now.

The real question is, does it work?

The full answer we do not yet know, and from here stems the risk inherent in all development stage biotech companies. But so far, the evidence, both preclinical and clinical, points to yes.

Let’s start with the clinical evidence on humans, and from there we will delve into the preclinical studies, which for reasons I will explain shortly, are in some ways even more impressive than the positive clinical data on humans.

Human Trials, So Far So Good

Do Pluristem’s cells actually work? What follows is the data we have so far. From there, you can decide for yourself.

Pluristem’s latest Phase II trial was a randomized, double blind, placebo controlled study in patients undergoing total hip replacement. In this 3 arm study one arm was given 150 million cells of Pluristem’s placental cells called PLX-PAD injected directly into the hip muscle during hip replacement surgery. The second arm received 300 million cells and the third arm received placebo. The primary endpoint was change in strength of the muscle 6 months post surgery, with the secondary endpoint being change in muscle volume measured by MRI.

All endpoints, both primary and secondary were met with flying colors.

The lower dose arm of PLX-PAD showed a 500% improvement in muscle strength. The higher dose counterintuitively showed “only” a 300% improvement with no safety issues.


An MRI of the muscle showed a 300% increase in muscle volume for the low dose over placebo, and a 150% for the high dose over placebo.


Not only that, but 6 months after surgery, the improvement in muscle force for the other hip muscle that wasn’t even operated on, was 40 times larger in patients on the lower dose of PLX-PAD cells.

This is critical because it shows a systemic effect that Pluristem’s PLX cells have on the entire body, and not just the place they are injected into.

Are preclinical trials even more impressive?

Here we come to another Pluristem stroke of genius, and that is its preclinical trials. While Pluristem is a clinical stage company currently involved in three Phase I and two Phase II trials with an initial approval timeline goal of 2018, its preclinical trials in some ways are even more impressive.

How so?

Preclinical trials generally test new medical approaches on murine, or mouse models in order to prove the accuracy of medical concepts. They only seek to prove that a given approach is at least theoretically possible. But here’s the catch – all preclinical studies on mice have the heavy disadvantage of having to translate success to humans, and that is never easy. If a treatment works on a mouse model, there is no assurance that it will work on human beings.

We have already seen how Pluristem’s human trials are succeeding. Nevertheless, Pluristem is different from most other companies in terms of its own preclinical data for one reason.

Simply stated, the cells that Pluristem uses on its murine models are not mouse cells. They are human placental cells, and they even work in mice.

The process of cross species cell transplantation is called xenogeneic transplantation. From what we know of the mammalian immune system, there is no reason why it should work. There is no reason why human cells should be able to survive in a murine host and fix murine diseases, but evidence suggests that they do.

The studies we will review now involve xenogeneic transplantation of human placental derived mesenchymal stromal cells from human placentas that Pluristem exclusively manufactures. The name PLX, or hPLX comes from the long form term “human PLacental eXpanded.”

One study found that hPLX transplantation into mice modeled for ischemic stroke resulted in a significant improvement of behavioral dysfunction, neurological severityscores and reducing infract volume post stroke.

Another found that hPLX, when injected into mice models with bone marrow deficiencies following acute radiation, fully survived and recovered.

We can keep going. A third study found that hPLX transplanted into a mouse model of Duchenne muscular dystrophy (DMD) demonstrated that placental cells reduced creatine phosphokinase (CPK), a marker of muscle degeneration or injury, by approximately 50% compared with placebo. Analyses of quadriceps muscles and diaphragms showed reduced levels of inflammation and cell death, and regeneration of muscle tissue.

If you’ve been following the drama surrounding Sarepta Therapeutics (SRPT) muscular dystrophy drug eteplirsen, you are familiar with the difficulty in getting a DMD patient’s muscles to regenerate, yet human placental cells can seemingly get mouse muscles to do just that according to data we have so far.

Another impressive example that goes to the heart of what hPLX cells are is a preeclampsia study in mice that showed that hPLX cells were able to normalize or significantly lower all key symptoms of preeclampsia during pregnancy. The results of this particular preclinical study make perfect sense considering that preeclampsia occurs when, for some reason, the immune shielding fails and the mother’s immune system begins attacking the baby. The only cure for the condition as of now is immediate delivery. Apparently though, reinforcing the immune shield by injecting hPLX cells, helps alleviate the condition in preclinical models.

Taking all preclinical indications together, Pluristem’s PLX placental cells have demonstrated efficacy in murine models of neuropathic and inflammatory pain, graft versus host disease (GvHD), preeclampsia, tendinosis, myocardial infarction, pulmonary fibrosis, multiple sclerosis, and pulmonary hypertension.

What this means is that Pluristem’s approach could be a turnkey treatment for autoimmune, genetic, and other cellular disorders all in one.

We’re not there yet, but the potential is definitely there. Read on and we’ll go deeper into the timeline. But first, manufacturing.

Manufacturing is the Key to Big Pharma

The point, in the end, is this, and it is crucial to understanding Pluristem’s business model. Pluristem, unlike most startup biotech companies, already has exclusive control of manufacturing these cells from donations of human placentas. What Pluristem does is enclose the cells in a patented 3D model of the human body which manipulates the cellular environment in order to trigger each group of cells to secrete the proteins that would theoretically help each given indication.

Pluristem’s manufacturing process allows 25,000 patients to be treated with one single placenta. Since placentas are donated and the manufacturing facility is already up and running, the cost of producing these cells is phenomenally cost effective compared to the competition for each indication. With Pluristem’s 3D manufacturing model, the manufacturing process from placenta to packaging takes 8 weeks, and the cells have a shelf life of 36 months. At current capacity, the company can churn out 150,000 doses of PLX cells every year.

In a business sense, controlling the manufacturing process is crucial because even when Pluristem partners with Big Pharma as distributors come the time, any potential partner will be completely dependent on Pluristem to manufacture the goods. Most companies looking to partner with Big Pharma have to give up 90% of more of their revenues and settle for a modest royalty. In the case of Pluristem, they have exclusive manufacturing rights already, making any future potential partnership much more lucrative and evenly split.

Pharma giants Roche (RHHBY) subsidiary Genentech, Sanofi (SNY) subsidiary Genzyme, and Amgen (AMGN) all went the same route in controlling manufacturing before reaching approval. It’s how they became Big Pharma.

How long until approval?

Nobody can say for sure, but Pluristem’s cell products are cleared for Europe’s Adaptive Pathways pilot project, which allows for conditional marketing authorization upon the completion of a Phase II/pivotal trial. One is set to being this year for a condition called Critical Limb Ischemia, or CLI.

We can think of CLI as a heart attack in the limbs. Blood vessels get clogged with cholesterol, leading in severe cases to limb amputation and death. Pluristem’s PLX-PAD cells have been shown to improve this condition by stimulating the formation of entirely new blood vessels that bypass those that are clogged with cholesterol or other obstructions.

The placenta at work, once again. Just as it is in the womb, so it seems when placental cells are injected.

Another regulatory pathway allowing early access to markets is the Japanese Accelerated Pathway for Regenerative Medicine. Last December, Japan’s Pharmaceuticals and Medical Devices Agency also cleared Pluristem’s protocol for a trial of PLX-PAD via this path in CLI. Positive results should be enough to apply for conditional marketing approval in Japan as well.

Will the trials go well? There is no crystal ball, but If phase I is any indication, then the likelihood is high.

Two Phase I trials totaling 27 patients were already completed in CLI, and data showed no evidence of immune response or other safety concerns. The studies also showed improvement in affected tissue, reduction of pain at rest, and increased quality of life.

In the U.S.-based trial, patients received one or two injections of 300 million cells. There were no cases of limb amputations or deaths during the 12-month follow up period, nor was there any evidence of immune cell activation.

In another Phase I, a 3 dose study, an optimal dose was selected at 300 million cells. In this dose selection study, 73% of patients survived at one year without any amputation compared to 100% amputation free survival (AFS) in the second study. The upcoming Phase II/III CLI studies patients will receive2 injections of 300 million cells 2 months apart.

The bottom line in terms of timeline then: If Pluristem can replicate these results in Phase II trials, they are likely to see approval in Europe and Japan by 2018.

And there is a chance that we could see approval even earlier than that, in 2017.

Here’s how.

The FDA has a special approval pathway called the Animal Rule in cases where human trials are not ethically possible. This is the case with one of Pluristem’s cell products billed PLX-R18 for Acute Radiation Syndrome (ARS). PLX-R18 placental cells are unique placental derived cells that, via Pluristem’s 3D manufacturing process are “programmed” to secrete proteins that support and repair the hematopoietic, or blood system.

This is the system that is afflicted with some of the worst damage due to radiation exposure, and fixing it with placental cells following exposure to toxic radiation could save many lives in the event of an attack.

Since it is impossible to test a medication like this on humans, the Animal Rule allows tests to be done on animals without having to proceed to Phase II or Phase III clinical development.

Working with the National Institute of Allergy and Infectious Diseases (NIAID), an arm of the National Institutes of Health (NIH), Pluristem and the NIAID together met with the FDA to confirm proceeding with the Animal Rule pathway. The FDA has already agreed that preclinical data for PLX-R18 are good enough to warrant the shortened pathway, meaning Pluristem’s first approval could even come as soon as next year.

The importance of this is not necessarily financial, as the chances of a nuclear attack are, thank goodness, quite slim. Hopefully, the demand for such a product will be zero. However, an approval will not only prove the placental approach effective, but will wake Big Pharma up to the fact that Pluristem’s technology – both the concept and its method of manufacture – work, and investors will take big notice even if the market for radiation sickness cures hopefully stays muted.

Financially, will Pluristem make it to 2018? With $40 million in cash and a quarterly burn rate of about $5 million, Pluristem has the capital to coast through the next 8 quarters. That’s two years from now, bringing us to 2018.

The cash is there. The data is there. The preclinical data are arguably even more impressive.

Beyond that, Pluristem is armed with over 60 issued patents and over 150 pending applications in the U.S., Europe, China, Japan, Israel, South Africa, South Korea, Mexico, Russia and South America for its products and manufacturing methods.
This is not simply a case of curing one specific disease, or even class of diseases. It is a potential paradigm shift in medical care itself.

I’m not going to multiply a bunch numbers and extrapolate how valuable the company could become two years from now on its first approavl. With a turnkey treatment to so many devastating diseases in its hands and exclusive manufacturing rights to the entire product, to say the sky is the limit is almost an understatement.

With Pluristem’s stock at a low along with the rest of the biotechnology complex, the adage “buy low sell high” was perhaps never more appropriately applied. Two years from now and beyond, shareholder gains could very well be off the charts.

Which is exactly why I will not attempt to chart them here.

The placenta is the gift of life, immune to immunity and the key to the missing proteins that cause so much suffering in so many people all over the planet. Pluristem exclusively holds that key, as well as the exclusive door to its manufacture.

Finally making use of this gift is nothing but a stroke of genius. Will it change the world? Impossible to know for sure yet, but certainly worth the risk.



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