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Biotech Stock Mailbag: NeoStem, MannKind, Inovio

Welcome to this week's Biotech Stock Mailbag. Before I kick off, a few housekeeping items to note:

I launched a new blog on TheStreet this week. It's called Adam's Biotech Beat. I know, not the most original name but straightforward. I'll have more to say about the blog later, but please bookmark the page and check it often. You'll see me posting a lot of intraday news and analysis, plus it's a great way to keep track of all my tweets.

The J.P. Morgan Healthcare Conference starts Monday in San Francisco. I'm flying out there Sunday and will be providing live coverage from the presentations and breakout rooms.

Chelsea Therapeutics (CHTP) and its hypotension drug Northera will be the star of an FDA advisory panel on Tuesday. I have invited healthcare investor and TheStreet contributing writer Aafia Chaudhry to live-blog the Chelsea panel, so please tune into that.

Must Read: The French Cancer Immunotherapy Stock Investors Don't Know, But Really Should

Alright, let's get to your questions.

Marie B. writes:

I was just starting to follow your predictions when I did some research into your background and found that you really know nothing about Bio-techs and it appears that the majority of your picks most likely mimic your holdings because you provide no logical reasoning for your predictions. 

Can you provide some basics about cellular development and explain the differences between pluripotent and totipotent cells. I am a doctoral student and have always felt that if I am going to give my opinion, I must have more than a BS (bull-shit) degree in Political Science, so would you mind sharing what you know about the differences in the above-mentioned cells and about molecular biology. I would like to be able to say that the individual which provides information on some of my holdings knows what he is talking about because you have yet to provide substantiating data to back-up your opinions.

Thank you, Marie, and happy new year!

I'm not sure which stock in particular has you angry at me, but given the mention of stem cells, I suspect you disagree with my prediction of doom for Neostem (NBS) in 2014.

No worries, we can disagree. Do you mind if I don't waste space here answering your question about the difference between pluripotent and totipotent cells? I think we can all use the Google to find the answer.

On Neostem, the main stock value driver is AMR-001, an autologous stem cell therapy derived from a patient's bone marrow. Neostem believes these stem cells have healing properties, so when they're injected back into a patient who has suffered a heart attack, for example, AMR-011 will restore blood flow, rebuild the damaged cardiac muscle and improve function.

Autologous means the stem cells are harvested from, and re-injected into, the same individual, meaning AMR-001 must be manufactured specifically for each patient. This is not an off-the-shelf drug.

Neostem recently wrapped up enrollment in a double-blind, placebo controlled phase II study of AMR-001 in 160 patients following a heart attack. The primary endpoint of the study is to determine if AMR-001 improves blood flow through the heart, measured via a non-invasive imaging scan done after six months. Secondarily, the study will look at AMR-001's effect on other measures of cardiac function and post-treatment reductions in major adverse cardiac events (MACE) at 6, 12, 18, 24 and 36 months.

The first results from the AMR-001 "PreSERVE" study are expected in the third quarter, according to Neostem. The study was supposed to have completed and reported data before the end of 2013, but slow patient enrollment caused a significant delay.

Why is Neostem having trouble completing the AMR-001 phase II study? Perhaps because lots of trials injecting heart attack and heart disease patients with stem cells have already been conducted, producing mediocre results.

This past spring, Swiss researchers who injected bone marrow-derived stem cells into heart attack patients found no improvement in heart function

Last April, the American Journal of Cardiology reported on a meta-analysis of 10 clinical trials involving stem-cell therapy in heart disease patients, which found improvements in some measures of heart function but no meaningful, positive impact on patients' lives.

"Stem cell therapy is generating considerable excitement as a potential treatment modality, however, it is still very early in the game," said senior author Dr. Jagmeet Singh, director of the Cardiac Resynchronization Therapy Program at Massachusetts General Hospital in Boston, quoted by Medscape."Although the administration of stem cells in its current form has been demonstrated to be a safe procedure, the results are still quite lukewarm." 

I find little reason to believe Neostem's AMR-001 phase II study will produce significantly better results.

In my experience, companies conducting phase II studies of stem-cell cardiovascular therapies tend to accentuate the positive when reporting results, even when actual results leave much to be desired. The fuzzy endpoints and short follow-up periods in these studies help produce data susceptible to overly optimistic interpretation. That's certainly what happened in July 2012 when Osiris Therapeutics (OSIR) white-washed all the negative from its Prochymal study in heart attack patients

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