In December of 2009, Athersys, Inc. announced it entered into an agreement with Pfizer Inc.to develop and commercialize MultiStem for the treatment of Inflammatory Bowel Disease (IBD).
Under the terms of the agreement, Athersys received an up-front cash payment of $6 million, as well as research funding and support during the initial phase of the collaboration. In addition, Athersys is also eligible to receive milestone payments of up to $105 million upon the successful achievement of certain development, regulatory, and commercial milestones. Pfizer will have responsibility for development, regulatory, and commercialization while paying Athersys tiered royalties on worldwide commercial sales of MultiStem IBD products.
Athersys feels this study will provide the opportunity to highlight its foundation of prior work and de-risk other opportunities, including Crohn's disease. The company thinks the rapid progression of this program illustrates the effectiveness of the Pfizer collaboration. The objectives of this Phase II study for ulcerative colitis include evaluating efficacy through week sixteen along with one year's worth of safety data.
Another Phase II study regarding the MultiStem technology is in the area of ischemic stroke. We think this is a big opportunity for the company as it represents a major unmet need and includes an annual market opportunity of more than $15 Billion. Athersys has a big lead in developing its technology for stroke victims over companies such as StemCells Inc. which is in pre-clinical trials for the same indication. In these trials, StemCells Inc. has conducted preliminary studies in collaboration with professors of neurosurgery at Stanford University School of Medicine, successfully demonstrating that its human neural stem cells enhance functional recovery after stroke in rats. This is certainly an important step for StemCells and definitely a potential value driver for the company.
However, StemCells market cap is almost exactly the same as Athersys, yet Athersys has a much more intriguing pipeline as well as a much more advanced stroke candidate. In addition, the company has an upcoming catalyst that could rally the stock in the shorter term. The cash position of the two companies is about the same while StemCells burns more per quarter at $5M versus $4.55M for Athersys. While as we mentioned, StemCells is undervalued promising speculation investment stem cell company, Athersys offers better value at this time in my strong opinion.
Stroke is a leading cause of serious disability and the third leading cause of mortality in U.S. and globally. Annually, there are approximately 800,000 stroke victims in the U.S. and 15 M globally (85% ischemic strokes). With an increasingly obese and aging population, the clinical need and commercial opportunity is expected to increase dramatically in years ahead.
Currently the only FDA approved drug for ischemic stroke is rtPA (recombinant tissue plasminogen activators), which helps dissolve the blood clot that impedes blood flow to the brain. However, this is only effective if administered within 3-4 hours of the stroke. Athersy's Phase II study is evaluating the effectiveness of their medicine in the 24-36 hours following the stroke. Clearly, this would be a significant development because by the time many stroke victims even get to the hospital and/or are properly diagnosed, the time frame for using the currently available treatment may have elapsed.
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