The rapid growth of cellular therapy offers a glimpse into the paradigm shift in the medical industry. Chemical drugs may soon no longer dominate treatment plans; instead, we are marching into an era of one-time cures from our own cells. Research centers are looking at how stem cells and other types of cells can eradicate tumor tissues and ultimately prevent a relapse. For incurable diseases that have been ignored in our current health-care system, cell therapy offers rays of hope.
Among a small herd of biotech companies venturing into cell-therapy treatment development, few seem to be in a better position than NeoStem to capture the big opportunities. The company is making moves for expansion, chasing deals, and revamping the public image of the mysterious stem cell.
Since 2006, Robin Smith has led NeoStem through six acquisitions and multiple public offerings, and has raised more than $190 million to expand NeoStem’s regenerative-medicine business. The Yale-trained medical doctor grew NeoStem into a cell-therapy company that runs both a research powerhouse and a revenue-generating contract-development and -manufacturing organization. “When the opportunity arose to apply our specific and extensive expertise to a technology platform for the treatment, we felt we had to take it,” Smith says.
One of the company’s products in development is a therapy to repair heart muscle, for which data from its phase two clinical trial was released in November 2014, holding promise to change the lives of six million Americans suffering from severe heart attacks. NeoStem’s success comes at a time when most cell-therapy companies—hamstrung by tough regulation, controversy, and research scandals—struggle with financing new pipelines and fueling their growth. According to an estimate by Cell, a research journal, there are only twenty-five public regenerative-drug companies, while the annual cell-therapy market is expected to hit $8 billion per year by 2020, up from only $230 million in 2013.
The reason for the lack of investment in this vast market is that average people, even the most seasoned investors, know little about cell therapy; the regulatory path to approval; and the unique skill set required to manufacture these cells. When Smith became chief executive officer of NeoStem in 2006, she endeavored to fix these problems by acquiring operations, expertise, and subsequently, exciting technology.
Back in her college days, Smith was intrigued by bone-marrow transplantation that repairs damaged body tissue with stem cells. Later, she went to Wharton, where she became aware of the economic issues in the health-care system and how cell therapy could improve clinical results. A year after she took over NeoStem, Smith launched the nonprofit Stem for Life Foundation to educate the public about the basics of adult stem-cell technology. The foundation has spent more than $2 million in the past few years on education, which includes a program for student ambassadors. “Student ambassadors are strong voices in their communities and universities,” Smith explains. “They are open to new ideas and new ways of thinking about medicine, health care, and science, and are leading the next generation towards advancing the field of regenerative medicine.”
These educational efforts have gone so far as to win support from the Vatican. In 2010, Smith was introduced to Monsignor Tomasz Trafny of the Vatican’s Pontifical Council for Culture. For Smith, it was a rare opportunity to explore the cultural impact of adult stem-cell research and breakthrough technologies. Trafny got very excited about the potential for adult stem-cell therapies to impact millions of people suffering from chronic illness, and the two parties began an effort starting with a $1 million pledge from the Vatican’s donors to collaborate on raising awareness of adult stem-cell research.
Amid the campaign to raise awareness, Smith also continued to map out a bold plan to grow NeoStem by buying commercially viable assets and exciting technology in the cell-therapy space. She was able to excite the company’s board of directors with the concept that acquisition could expedite breaking into and leading the new and exciting market of cellular therapy.
NeoStem, founded by a former executive of StemCyte, one of the world’s largest umbilical cord stem-cell banks, had a core business of stem-cell banking for adults. Revenues were growing slowly, and it became clear that approved therapeutic uses for the cells would be important to drive sales. In 2009, NeoStem acquired a 51 percent stake in Suzhou Erye, an antibiotic manufacturer that churns out generic drugs across south China. NeoStem became one of the few foreign beneficiaries of China’s loosening regulation and burgeoning medical market. Two years later, the Chinese government imposed new policies affecting drug price, and Smith decided to back out of China’s market. By that time, NeoStem had raked in $12.3 million in cash and stock, which Smith later used to finance big projects domestically.
Over the years, Smith developed her unique checklist for M&A deals. “I look at opportunities that target serious diseases and unmet needs, companies that develop late-stage technologies and provide synergy to our programs and capabilities,” she says. In developing multiple product pipelines, NeoStem’s management team has sought to answer a fundamental question in the rapidly changing biotech landscape: how quickly can new technology be adopted, and how can NeoStem expedite the process?
Unlike smaller research houses that concentrate on a single platform, NeoStem invested in all manner of chronic diseases, such as malignant melanoma, ischemia, and immune-system disorders. One of its most promising products under development is the targeted cancer-immunotherapy program. Using a unique combination of tumor cells and dendritic cells, the therapy targets tissues that cause malignant melanoma, the most dangerous type of skin cancer. With abundant funding, NeoStem also made moves into Type 1 diabetes, a disease affecting a group with few treatment options on the table.
NeoStem’s manufacturing subsidiary, Progenitor Cell Therapy, powers the company’s sophisticated pipelines. It became an integral part of NeoStem’s logistic vertical and efficiently lowered the overall cost of the whole operation. “We made the decision that NeoStem would differentiate itself from other cell-therapy companies through the ownership of a subsidiary that could not only produce revenues from its support of the cell-therapy industry, but also create an engine for the efficient development of our own cell therapies,” Smith says.
Smith’s long-term vision is not limited to the domestic market. She is also looking at opportunities in Asia and Europe to take advantage of regulatory changes in the development of cell therapies. “Our ultimate goal is to develop cell therapies safely and quickly so that they may reach commercial sales and be available to those in need of treatment,” she says.
