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.
January 26, 2015
Dear Fellow Shareholders:
Over the past year, StemCells, Inc. has made substantial
progress. We completed enrollment and dosing in our Phase I/II
clinical trials in two major indications: spinal cord injury and
age-related macular degeneration; we reported interim results from
these trials showing encouraging safety and preliminary efficacy
for our HuCNS-SC® cells in both; and we transplanted the first
patient in our Phase II clinical trial in spinal cord injury. We
strengthened our executive management team. We closed on a $20
million transaction with two institutional investors, and we hosted
a very well-attended event which confirmed the growing number of
institutional investors and analysts following the company.
While our stock price in 2014 was disappointing, we are making
undeniable progress. We will continue to focus intently on what we
can control: progressing our clinical studies, managing our costs,
and executing our strategy in a capital-efficient manner. In this
letter, I will share some of my thoughts regarding the real value
of STEM and why I believe it is a sound investment; I will recap
our recent actions and achievements, and I will update you on our
future plans.
Why Invest in STEM: The Long and Short of
It
Vaccines against diphtheria, tetanus, anthrax, cholera, plague,
typhoid and tuberculosis were not developed until the 1930s –
nearly 200 years after Edward Jenner successfully created a
smallpox vaccine in 1796. Perhaps this historical timeline puts
some perspective on the relatively rapid advances we are witnessing
in the development of stem cells as therapeutics.
Our journey began in 2000, when scientists at StemCells, Inc.
were able to purify the expandable population of human neural stem
cells that became our HuCNS-SC platform technology. When formulated
for transplantation, HuCNS-SC cells maintain their stem cell
phenotype, self-renew and generate the three types of mature cells
comprising the CNS: neurons, astrocytes and oligodendrocytes.
HuCNS-SC cells have since been analyzed extensively in pre-clinical
studies, both in vitro and in vivo, as a therapeutic candidate to
treat a vast number of diseases and disorders of the central
nervous system.
Just a few years later, in 2006, our HuCNS-SC cells were
surgically transplanted into the brain of a six-year-old child with
neuronal ceroid lipofuscinosis (NCL), a rare, fatal disorder of the
central nervous system. Since then we have gone on to achieve other
significant "firsts" including completion of a very successful
trial in Pelizaeus-Merzbacher disease (PMD), another incurable
pediatric disorder, and our recent completion of enrollment and
dosing in the world's first neural stem cell transplant trials in
not just one, but two indications with large patient populations
awaiting viable treatments: spinal cord injury (SCI) and dry
age-related macular degeneration (AMD).
Now, with Phase II clinical trials commencing in both SCI and
AMD, we are closing in on achieving our goal of clinical
proof-of-concept in both indications by 2017, making relatively
rapid progress in the realm of clinical development. The successes
we have already achieved and those anticipated are quite
encouraging for investors who take the longer-term view. Even those
who may seek a more rapid return have reason to hold fast, for now,
as well. We expect that as in the historic progress of most
pharmaceutical and therapeutic products, our stock should gain
value with each advancing stage of clinical development, moreover
driven by the news flow of data over the next three years resulting
from our clinical trials in SCI and AMD:
- By mid-2015 — final results from our Phase I/II trials
- Ongoing from 2015 through 2018 — additional read-outs from the
4-year follow-up studies already underway in our Phase I/II trials,
which will continue to provide insight into how our cells may be
impacting these conditions over time
- In the second half of 2015 — interim data from the first
open-label cohort in the Phase II Pathway® Study in cervical spinal
cord injury
- In the second half of 2016 — a planned interim analysis from
the Phase II Pathway study will assess pre-defined success and
futility outcomes along with safety events. If neither metric is
met or detected, respectively, then the trial will be continued to
complete enrollment.
- In 2017 — proof-of-concept results from our Phase II trials in
both SCI and AMD
It is also important to note that we have been manufacturing our
HuCNS-SC cells for clinical trials since 2006, in compliance with
current Good Manufacturing Practices (cGMP). We currently have
enough product banked and cryopreserved to fulfill the needs of our
Phase II clinical trials. We are prepared to scale our processes as
needed to meet the requirements of future clinical trials and
commercialization.
Investors and Analysts are Taking Notice
The Company's first "Investor and Analyst Day," held in New York
City on November 20, 2014, was enthusiastically attended by a
standing-room-only crowd. The agenda included a keynote by Company
founder Irving Weissman, a stem cells science overview by Executive
Vice President of Scientific and Strategic Alliances Ann Tsukamoto,
and updates on our clinical programs presented by Vice President of
CNS Clinical Research and Chief Medical Officer Stephen Huhn, Vice
President of Clinical Development in Ophthalmology Joel Naor, and
Principal Investigators Raphael Guzman and Richard Rosen. The
program also premiered video segments featuring three patients who
have participated in our SCI and AMD clinical trials. I am hopeful
that many of you took full advantage of the webcast of this event,
but if you have not yet done so, I encourage you to view the
archive at: http://www.media-server.com/m/p/m8h3mw5w. In addition,
the patient videos can be seen at the following web address:
http://www.stemcellsinc.com/News-Events/Video-Library.htm.
Recent Actions: Streamlining Our Business
We are now able to fully concentrate our corporate resources on
SCI and AMD, our two lead clinical programs, as a result of two
actions completed toward the end of 2014:
- The SC Proven® reagents business located in Cambridge, England
was sold to Takara Bio.
- We also decided to wind down our pre-clinical study in
Alzheimer's disease, which had been funded in part by a forgivable
loan from the California Institute of Regenerative Medicine (CIRM).
We have demonstrated that transplantation of our HuCNS-SC cells
into the hippocampus, the area of the brain responsible for
learning and memory, increases connectivity between the points of
contact (synapses) between neurons an important finding given that
clinical disability in humans correlates with synapse loss. The
observation that our cells increase synapse density in the
hippocampus opens the possibility that HuCNS-SC cells may improve
neuronal function in human neurodegenerative disorders in general.
However, this finding did not translate into a statistically
significant improvement in memory as measured by specific
behavioral tasks in the animal models, which was a pre-determined
criteria for ongoing funding of this pre-clinical program by CIRM.
We will continue to assess the data from this study, which suggests
hope for the use of HuCNS-SC cells in the treatment of Alzheimer's
disease and other cognitive impairments, as we seek alternative
means of funding future work.
The Company is now fully focused on two clinical targets with
significant unmet need: chronic spinal cord injury, which is the
second leading cause of paralysis in the U.S., and geographic
atrophy of age related macular degeneration, the most advanced form
of dry AMD, and the leading cause of vision loss in developed
countries. There are currently no curative treatments for either of
these indications. Our mission is clear: to demonstrate, in well
controlled Phase II clinical trials, that our HuCNS-SC cells can
restore lost motor function in patients with chronic spinal cord
injuries and lead to preservation of visual function in patients
who are progressively losing eyesight.
Recent Achievements: Progressing Our Clinical Studies in
Two Major Indications
The Company continues to make significant progress toward its
twin goals of demonstrating the safety and efficacy of HuCNS-SC
cells in spinal cord injury (SCI) and dry age-related macular
degeneration (dry AMD).
Spinal Cord Injury: Earlier this month, we
announced that we had successfully dosed the first patient in our
groundbreaking Pathway Study. This Phase II controlled
proof-of-concept study is designed to evaluate the safety and
efficacy of our HuCNS-SC cells in cervical spinal cord injury
patients.
In 2014, we completed enrollment in our Phase I/II clinical
trial in thoracic spinal cord injury and reported encouraging
safety and preliminary efficacy data:
- With twelve patients out to six months and eight out to twelve
months post-transplant, we have reported interim data that suggests
the first signs of biological and clinical effect post HuCNS-SC
transplantation in chronic thoracic spinal cord injury.
- Seven patients had sensory gains below the site of injury,
detected by measurable improvements involving more than one sensory
modality and incorporating multiple thoracic spinal cord segments,
changes that are unanticipated at their individual stages of
recovery following motor-complete spinal cord injury.
- Moreover, there has been a very recent observation of voluntary
toe movement in an AIS-B patient one year post transplant and three
years post injury, suggestive of restoration of some motor
function.
Dry AMD: We recently announced plans to
initiate a multi-center Phase II proof-of-concept study in
geographic atrophy (GA) of dry age-related macular
degeneration.
In 2014, we completed enrollment in our Phase I/II clinical
trial in dry AMD and reported encouraging safety and preliminary
efficacy data:
- Initial six-month follow-up data on the first cohort showed a
reduction in the rate of GA in the study eye versus the control
eye, and additional interim data released at the Analyst Day which
included five patients with twelve-month follow-up in the first
cohort, continues to support the plans for a controlled Phase II
study.
An Eye on the Future
Ultimately, we will be judged by our success in achieving our
goal of translating our "Groundbreaking Science" into "Breakthrough
Medicine." The progress we have seen in our clinical programs, to
date, signifies that we are en route to fulfilling the therapeutic
promise of human neural stem cells — as a one-time intervention
yielding a long-term benefit for millions of patients suffering
from the devastating effects of intractable diseases and disorders
of the central nervous system. We are confident that our Company's
value will come through because our mission, and therein the
opportunity, is to realize the potential of stem cell therapy to
create new, life-altering treatment paradigms. There is simply too
much at stake for the patients and their families who are counting
on us to succeed for us to waiver in our commitment to finish what
we started in 2006.
On behalf of our employees, as well as the patients and families
whose hopes we hold dear, I want to thank you for your continuing
support and your faith in our ability to prove our value.
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
Apart from statements of historical fact, the text of this press
release constitutes forward-looking statements within the meaning
of the U.S. securities laws, and is subject to the safe harbors
created therein. 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 those
described under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2013 and in its
subsequent reports on Forms 10-Q and 8-K.
CONTACT: Greg Schiffman
StemCells, Inc.
Chief Financial Officer
(510) 456-4128
Andrea Flynn
Russo Partners
(646) 942-5631
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