Sunday, August 26, 2012

Pluristem Therapeutics Shoots From The Hip, Moving Toward The Sports Medicine And Muscle Regeneration Markets

Republished from Seeking Alpha

Pluristem's (PSTI) platform technology is moving into a huge, new industry - hip replacement. The company announced last week that the famous Paul Ehrlich Institute of Germany gave it permission to start a Phase I/II clinical trial to test their PLX cells in healing gluteal (buttock) muscles that have been injured after hip surgery. And today anounced it has renewed a five-year Collaborative Research Agreement with the Berlin-Brandenburg Center for Regenerative Therapy.

There are about 300,000 artificial hips implanted every year in the US alone, over 800 per day, with a global market size of $5 billion growing at 6% per year. Obesity and arthritis are the culprits, and in an aging world, they're here to stay.

Hip replacements, for all of their popularity, have problems. Many times, the metal or plastic ball portion of the device slips out of the socket or doesn't sit in the hip well, and patients experience devastating pain and unbearable swelling. Product recalls and lawsuits are common. Zimmer Holdings (ZMH) suspended sales of its artificial hip device several years ago, starting an avalanche of legal action. There were 12,000 of these devices implanted and the friction of the metal hip ball and metal hip socket rubbing against one another caused microscopic shavings that damaged body tissue, leading not only to physical agony, but also to dangerously high levels of metal in the blood.

More recently, Stryker Corporation (SYK) recalled one of its hip implant system because parts were corroding in the body! In what is becoming a huge case facing DePuy, a Johnson & Johnson (JNJ) company, is the worldwide recall of 93,000 DePuy hip replacement devices that started causing pain shortly after surgery when the device became loose. Even worse, the UK released a report saying that up to 50% of patients with this device could be forced to repeat hip surgery. Naturally, the class action lawsuits are piling up.

Like all of Pluristem's clinical trials, this one will be quick and inexpensive - only 18 patients are needed. As they're getting surgery for a total hip replacement the patients will receive PLX cells injected intramuscularly during the procedure. The patients will be followed for one year and observed for pain.

Because of an aging population and the desire for people to stay active longer, orthopedic medical device companies have exploded over the years. Stryker had revenues of $8 billion last year. Zimmer and Smith & Nephew plc (SNN), had $4 billion each. Sales of the other industry giants, DePuy, Sofamor Danek, a Medtronic, Inc. (MDT) company, and Mitek, also part of JNJ, are harder to determine but were bought at huge premiums because of their rapid growth and innovation.

As I have said before in other articles there is always risk in any stock. Share price could linger or lose steam if the management team fails to execute their game plan and reach announced milestones in a timely manner. As with any biotech, regulatory risk is always present. And cell therapy is a new, cutting-edge market which has yet to be adopted. Still, these possible risks are minimal compared to the upside realities and we are not alone in our enthusiasm. Furthermore, we believe the cost-effectiveness of PSTI's products all point to significant future shares in multiple sizable markets. The company is well-funded with approximately $42 million in cash and equivalents reported in their most recent filings, so it does not have the financing risk that we see in a lot of small biotech companies. We always urge investors to do their own due diligence.

The more procedures, the more chance of failed devices and more opportunities for Pluristem to heal damaged tissue. If Pluristem scores with this indication for its platform technology, it could see an entire new industry open up outside of hip replacement pain - the sports medicine market, at a size of $2.2 billion worldwide and, with even more opportunities that haven't been estimated yet - the market for muscular regeneration.


 Hey Pluristem:  there are real live patients involved with these  "failed surgeries" which you are counting on to make your market.  You need a different PR firm releasing your press.  Your press should have been spun differently.  Your agency failed its first test!  Unfortunately, your product was overshadowed by an ultimate bottom feeding mentality.  Try better next time!

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