In April 2018, Pluristem announced that the FDA had given two pipeline programs IND clearance: PLX-PAD for femoral neck fracture (FNF) healing and PLX-R18 for acute radiation syndrome (ARS). The company plans to initiate the Phase III trial investigating PLX-PAD for FNF healing later this year. IND approval of the PLX-R18 program allows for potential use of the product in the event of radiological emergencies for investigational purposes, which could provide in-human data.
Written by
Pluristem Therapeutics |
FDA gives two programs the green light with IND |
Earnings update |
Pharma & biotech |
29 May 2018 |
Share price performance
Business description
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In April 2018, Pluristem announced that the FDA had given two pipeline programs IND clearance: PLX-PAD for femoral neck fracture (FNF) healing and PLX-R18 for acute radiation syndrome (ARS). The company plans to initiate the Phase III trial investigating PLX-PAD for FNF healing later this year. IND approval of the PLX-R18 program allows for potential use of the product in the event of radiological emergencies for investigational purposes, which could provide in-human data.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/16 |
2.8 |
(20.2) |
(0.25) |
0.0 |
N/A |
N/A |
06/17 |
0.0 |
(24.2) |
(0.28) |
0.0 |
N/A |
N/A |
06/18e |
0.0 |
(19.7) |
(0.19) |
0.0 |
N/A |
N/A |
06/19e |
0.0 |
(43.9) |
(0.38) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.
Plans to initiate PLX-PAD FNF trial in 2018
The company recently announced that the FDA has granted IND approval for the Phase III clinical trial investigating the use of PLX-PAD cell therapy for the treatment of FNF healing. The randomized, double-blind, placebo-controlled trial will enrol 240 patients undergoing hip arthroplasty across the US and Europe. Pluristem remains in discussions with the EU regarding clinical trial approval; however, the company anticipates enrolling patients in both regions later this year.
PLX-R18 IND approval for investigational purposes
IND approval for the PLX-R18 cell therapy program for ARS allows for the treatment of victims who may have been exposed to acute high-dose radiation due to radiological emergencies such as either industrial accidents or nuclear weapons devices. However, given the limited occurrence of these events, we do not expect this to alter the clinical development path or need for non-human primate studies.
Indiana University collaboration agreement
In April 2018, the company announced that the NIH had awarded $2.5m to Indiana University to study survival efficacy in geriatric and pediatric populations treated with the PLX-R18 cell therapy. As per this five-year agreement, Pluristem will be reimbursed for supplying the PLX-R18 cells for use in these studies. The company plans to use the first year of data to support its BLA filing for marketing approval.
Valuation: $212m or $1.92 per basic share
We have slightly increased our valuation to $212m or $1.92 per basic share from $208m or $1.89 per share. This increase is driven by advancing our NPVs to the most recent period, which is partially offset by cash expenditure. We expect Pluristem to need $50m in financing to reach profitability in 2020.
PLX-PAD for FNF Phase III study is a “go” in the US
The company recently announced that the FDA has approved the IND for a Phase III study of PLX-PAD cell therapy for the treatment of muscle injury following hip arthroplasty due to femoral neck fracture (FNF). The Phase III trial will enrol 240 patients across the US and Europe who will receive an intramuscular (IM) injection of 150m PLX-PAD cells (or placebo treatment, allocated at a ratio of 1:1) during an arthroplasty procedure. The study will be randomized, double-blind and placebo-controlled. The primary endpoint will be change in the Short Physical Performance Battery (SPPB) at 6.5 months following treatment. The SPPB is a series of physical tests of the lower extremities that mimic the physical requirements of daily activity that is typically used to assess geriatric patients. The battery is semi-quantitative and composed of three sections measuring different aspects of function: balance, gait speed, and getting into and out of a chair (Exhibit 1). Each test is scored objectively on a scale ranging from zero to four, where a score of zero indicates the subject is unable to perform the task. The company plans to begin enrolment some time in 2018 in both regions.
Exhibit 1: SPPB assessment
Function |
Test |
Standing balance |
Feet in a side-by-side position for 10 seconds |
Gait speed |
Timed 8-foot (2.4-meter) walk |
Getting into and out of a chair |
Five timed, repetitive chair stands |
Function |
Standing balance |
Gait speed |
Getting into and out of a chair |
Test |
Feet in a side-by-side position for 10 seconds |
Timed 8-foot (2.4-meter) walk |
Five timed, repetitive chair stands |
Source: Multiple sources.
FDA accepts PLX-R18 IND for the treatment of ARS
In April 2018, the FDA accepted the company’s IND application for PLX-R18 for acute radiation syndrome (ARS) allowing for the treatment of victims who may have been exposed to acute high-dose radiation, potentially attributable to either industrial accidents or nuclear weapons devices, which could provide in-human data for investigational purposes. This radiation can cause DNA damage, which can have devastating effects on rapidly dividing cells such as those in the bone marrow. PLX-R18 is derived from placenta donated after delivery from a fraction of cells existing at the interface between the maternal and fetal tissue that secretes growth factors encouraging hematopoiesis. Therefore, the company hopes to use these properties of the treatment to encourage the recovery of bone marrow cells and the immune system after they are killed with radiation. Following this clearance, the company has stated that it will begin the necessary preparations for accumulating an emergency inventory of PLX-R18 in case of radiological emergencies. It is important to note that this product is being developed via the FDA animal rule, which allows for approval based on animal studies for conditions such as ARS that cannot be feasibly studied in human clinical trials. We therefore assume that the completion of the non-human primate trial and human/animal dose conversion study are both pivotal to its clinical advancement, and essential for obtaining emergency use authorization (EUA) and an eventual Strategic National Stockpile (SNS) contract.
Furthermore, the National Institute of Allergy and Infectious Disease (NIAID) department of the NIH recently granted $2.5m to Indiana University to study survival efficacy in geriatric and pediatric populations treated with the PLX-R18 cell therapy, as well as to compare effectiveness and analyze drug-drug interactions. According to this agreement, Pluristem will be reimbursed for supplying the PLX-R18 cells for these studies. The company plans to use the first year of this five-year research collaboration to support its BLA filing for marketing approval.
Valuation
We have slightly increased our valuation to $212m or $1.92 per basic share from $208m or $1.89 per share. This increase is driven by advancing our NPVs to the most recent period, which is partially offset by the lower cash position. Our assumptions remain unchanged. We expect to update our valuation with the results from the Phase II IC study, which we believe will have implications for this program and provide insight into the CLI program.
Exhibit 2: Valuation of Pluristem
Development program |
Prior data |
Clinical stage |
Prob. of success |
Launch year |
Launch pricing ($) |
Peak sales ($m) |
Patent/exclusivity protection |
Royalty/ |
rNPV ($m) |
CLI, US |
2x Phase I |
Phase III |
10% |
2021 |
22,500 |
235 |
2036 |
63% |
45.90 |
CLI, Europe |
2x Phase I |
Phase III |
10% |
2021 |
13,500 |
247 |
2036 |
59% |
43.56 |
CLI, Japan |
2x Phase I |
Phase I/II |
20% |
2021 |
22,500 |
76 |
2036 |
27% |
10.13 |
CLI, development costs |
(19.51) |
||||||||
FNF (US and Europe) |
Phase I for THR |
Phase III ready |
15% |
2021 |
22,100 |
171 |
2036 |
55% |
18.29 |
ARS |
Primate Studies |
Pivotal Primate Study |
10%-20% |
2020 |
N/A |
155/ |
2036 |
77% |
37.96 |
IC, US |
N/A |
Phase II |
7.5% |
2022 |
11,500 |
443 |
2036 |
57% |
39.41 |
IC, Europe |
N/A |
Phase II |
7.5% |
2022 |
6,900 |
466 |
2036 |
50% |
34.95 |
IC, Japan |
N/A |
Phase II |
15% |
2022 |
11,500 |
144 |
2036 |
20% |
7.43 |
IC, development costs |
(32.29) |
||||||||
HCT (US and Europe) |
Mouse Studies |
Phase I |
5% |
2023 |
29,300 |
239 |
2036 |
61% |
8.62 |
Unallocated costs |
(16.71) |
||||||||
Total |
|
|
|
|
|
|
|
|
177.76 |
Net cash and equivalents (Q318) ($m) |
34.07 |
||||||||
Total firm value ($m) |
211.82 |
||||||||
Total basic shares (m, Q318) |
110.1 |
||||||||
Value per basic share ($) |
1.92 |
||||||||
Dilutive warrants |
7.62 |
||||||||
Diluted firm value ($m) |
222.49 |
||||||||
Value per diluted share ($) |
$1.89 |
||||||||
Source: Pluristem Therapeutics reports, Edison Investment Research
Financials
Pluristem ended its fiscal Q318 in 31 March 2018 with an operating loss of $9.0m. R&D spending was the company’s major expense at $6.4m, which was slightly up from previous quarters (Q218: $5.6m, Q118: $4.6m). We assume this increase is associated with the advancement of the Phase III CLI and preparations for the Phase III FNF trial. Our FY18 R&D and SG&A estimates remain unchanged at $22.8m and $10.2m, respectively. We expect the company to require $50m in additional capital ($20m in FY18, $30m in FY19, recorded as illustrative debt) to reach profitability in 2020.
Exhibit 3: Financial summary
$'000s |
2015 |
2016 |
2017 |
2018e |
2019e |
||
Year end 30 June |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
379 |
2,847 |
0 |
50 |
0 |
Cost of Sales |
(13) |
(100) |
0 |
(2) |
0 |
||
Gross Profit |
366 |
2,747 |
0 |
48 |
0 |
||
Research and development |
(19,173) |
(19,580) |
(21,092) |
(22,754) |
(36,267) |
||
Selling, general & administrative |
(6,460) |
(6,486) |
(6,927) |
(10,215) |
(10,726) |
||
EBITDA |
|
|
(27,341) |
(25,469) |
(30,196) |
(34,872) |
(48,165) |
Operating Profit (before amort. and except.) |
(25,267) |
(23,319) |
(28,019) |
(32,878) |
(46,993) |
||
Intangible Amortization |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
(25,267) |
(23,319) |
(28,019) |
(32,878) |
(46,993) |
||
Financing income |
590 |
73 |
205 |
6,668 |
(3,475) |
||
Other (change in fair value of warrants) |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(20,625) |
(20,173) |
(24,152) |
(19,684) |
(43,941) |
Profit Before Tax (IFRS) |
|
|
(24,677) |
(23,246) |
(27,814) |
(26,211) |
(50,468) |
Tax |
0 |
0 |
0 |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(20,625) |
(20,173) |
(24,152) |
(19,684) |
(43,941) |
||
Profit After Tax (IFRS) |
(24,677) |
(23,246) |
(27,814) |
(26,211) |
(50,468) |
||
Average Number of Shares Outstanding (m) |
70.3 |
79.5 |
87.4 |
105.9 |
114.5 |
||
EPS - normalized (c) |
|
|
(29.35) |
(25.36) |
(27.63) |
(18.58) |
(38.38) |
EPS - IFRS ($) |
|
|
(0.35) |
(0.29) |
(0.32) |
(0.25) |
(0.44) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
11,287 |
10,345 |
8,518 |
6,854 |
10,885 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Tangible Assets |
10,173 |
9,216 |
7,277 |
5,546 |
9,577 |
||
Other |
1,114 |
1,129 |
1,241 |
1,308 |
1,308 |
||
Current Assets |
|
|
56,868 |
35,596 |
29,016 |
47,145 |
31,993 |
Stocks |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
1,691 |
2,228 |
1,036 |
596 |
596 |
||
Cash |
53,119 |
32,750 |
26,665 |
45,503 |
30,351 |
||
Other |
2,058 |
618 |
1,315 |
1,046 |
1,046 |
||
Current Liabilities |
|
|
(6,183) |
(5,775) |
(5,414) |
(6,269) |
(9,090) |
Creditors |
(6,183) |
(5,775) |
(5,414) |
(6,269) |
(9,090) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(3,829) |
(2,010) |
(1,869) |
(21,936) |
(51,936) |
Long term borrowings |
0 |
0 |
0 |
(20,000) |
(50,000) |
||
Other long term liabilities |
(3,829) |
(2,010) |
(1,869) |
(1,936) |
(1,936) |
||
Net Assets |
|
|
58,143 |
38,156 |
30,251 |
25,794 |
(18,147) |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
(20,605) |
(18,522) |
(21,611) |
(24,084) |
(39,948) |
Net Interest |
0 |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
0 |
||
Capex |
(831) |
(1,750) |
(378) |
(292) |
(5,204) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Financing |
17,201 |
807 |
15,728 |
17,314 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(4,235) |
(19,465) |
(6,261) |
(7,062) |
(45,152) |
||
Opening net debt/(cash) |
|
|
(58,819) |
(53,119) |
(32,750) |
(26,665) |
(25,503) |
HP finance leases initiated |
5 |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
0 |
||
Other |
(1,470) |
(904) |
176 |
5,900 |
0 |
||
Closing net debt/(cash) |
|
|
(53,119) |
(32,750) |
(26,665) |
(25,503) |
19,649 |
Source: Company accounts, Edison Investment Research
|
|
Research: Consumer
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