Investing in Cell Therapy
Dear Friends of Aastrom,
Discovering, developing and launching new medicines is a challenging enterprise, often requiring more than a decade of pre-clinical and clinical research and an investment in the tens or hundreds of millions of dollars. And the harsh reality is that only about one in ten drugs that reach clinical stage development eventually win FDA approval. Despite these long odds, the biotechnology industry has continued to flourish, even though many traditional sources of capital, such as venture firms, are shrinking and new sources of capital are needed. What does all this mean for the future of cell therapy and companies like Aastrom that are focusing on promising but complex cell therapies?
Many of the risks inherent in drug discovery and development are magnified in cell therapy because the field is relatively young, the science behind it is still emerging and few cell-therapy products have been approved. However, with each clinical and regulatory success, the therapeutic potential of cell therapy becomes more apparent and investor sentiment improves. As a result of recent progress, interest in regenerative medicine is now growing steadily, the number of cell-therapy clinical studies is increasing and capital is flowing toward a few companies with the most promising and late-stage development programs.
Aastrom has benefited from these trends and emerged as a leader in cell therapy because we have focused on compelling applications of our proprietary technology in terms of medical need, clinical rationale and commercial opportunity. This has been supported by extensive research into the underlying causes of chronic cardiovascular diseases, the activities of the cells we administer, rigorous development of clinical protocols to ensure high-quality study results and conservative market analysis to support investment in our programs. It has also required a commitment to transparency and candor about our business – both in terms of the status of our programs and the results of our research.
As investors get to know our company and industry better, we hope they will evaluate carefully the information we and other companies report, especially related to clinical results. To paraphrase a famous advertising slogan, “an educated investor is our best customer.”
Here’s my advice on how to be an educated investor in cell therapy:
- Learn the differences among open-label, compassionate-use and fully controlled clinical studies – not all clinical trials are designed to the same standards and goals.
- Follow the data – are preclinical and clinical study results presented in well-regarded, peer-reviewed publications and scientific meetings, or only in companies’ press releases? When data are not presented in peer-reviewed settings, it can be difficult to assess progress in both preclinical and clinical research.
- Focus on companies with experienced scientists and managers with track records of success in the pharmaceutical and biotechnology industries – is the team solid, with the full range of experience necessary to bring a product to market?
- Study the balance sheet – well-capitalized companies have usually earned the support of smart, diligent investors.
Finally, make sure you understand the company’s strategy for getting its product approved. Is it built on anecdotal data from small clinical trials or robust evidence of safety and efficacy from large well-controlled studies? Are there precedents for its clinical and regulatory strategy? Are qualified independent medical experts advising the company? As the former CEO of a leading biotechnology company once said, “The longest route to approval is a short cut.” Educated investors understand that there are no short cuts in developing innovative new therapies and there are no shortcuts to successful investing in cell therapy.