Stock Doctor

About the Author Stock Doctor

I am an individual investor who has been actively involved in the healthcare and biotechnology space for over 15 years. I hold a PhD in the biomedical sciences and have worked in both large pharmaceutical and small biotech companies. I make investments based on the fundamentals of a company and if I believe they have a superior technology or products compared to the competition. I'm an investor who believes patience pays off.

Why Caladrius Biosciences (CLBS) Stock Is Significantly Undervalued

Those that follow my articles know that I tend to focus mainly on undervalued microcap or smallcap biotech companies. A lot of my recommendations result in short-term gains as they usually surround clinical updates or upcoming catalysts. However, many take longer to play out and require some patience as drug development and value creation for a small biotech company can be a lengthy process.

The recent re-emergence of Caladrius Biosciences (NASDAQ:CLBS) could very well provide investors a nice return in the coming months. Many will remember the company as NeoStem from a few years ago who rode the wave of stem cell hype. They had put all their resources into a dendritic cell immunotherapy to treat advanced-stage melanoma but although they were seeing promising results and initiated a Phase 3 clinical trial, they discontinued the program when checkpoint inhibitors hit the market and set the bar extremely high for monotherapy response. Of course, the stock tanked and they changed focus to their T regulatory cell therapy for diabetes. Although I find the data for this and other cell therapy candidates in Caladrius’ pipeline intriguing, it was not enough for me to invest in the stock and most investors felt the same as the stock up until last week had been relatively static for the last 2 years.

Sometimes It’s Better To Be Lucky Than Good

In March, Caladrius was able to pick up the global rights to Shire’s late-stage CD34+ stem cell therapy to treat no-option refractory angina. It’s the classic drug development story where the program had been passed down through acquisitions, starting at Baxter then to the spinout Baxalta which was then bought by Shire. As cell therapy was not part of Shire’s primary strategy, their focus and funding shifted to other programs. In fact, Shire has unloaded a lot of its pipeline recently, including its oncology assets, to align more with the recently proposed Takeda merger. The selection by Shire to pick Caladrius, which will only owe Shire milestones based on success, is anything but random. Caladrius has a lot of experience in cell therapy and specifically with the delivery of CD34+ cells with its current pipeline and from its NeoStem days. Probably most important is the connection between Caladrius’ Chief Medical Officer Dr. Douglas Losordo and the therapy. Dr. Douglas joined from Baxter and was the main investigator for the Phase 1 and Phase 2 clinical trials for the CD34+ refractory angina therapy program while there. There’s likely nobody in the world more familiar with the program than him. Both sides win. Caladrius gets a familiar late-stage clinical program which has already accumulated very impressive data and all the accompanying regulatory filings for basically nothing. Shire gets the most experienced and likely partner to be able to bring the therapy to market and receive milestone and royalty payments. For investors, it’s plain and simple, this was the break Caladrius badly needed.

Last Week, Awarded The Elusive RMAT Designation

The good fortune continued last week when the therapy was granted The Regenerative Medicine Advanced Therapy (RMAT) status by the FDA, which is given to therapies that treat serious conditions and address unmet medical needs. This is extremely important as it rewards the company with expedited drug development, special interactions with the agency to discuss endpoints, and the potential for accelerated approval. Earning RMAT status also allows the treatment to be submitted to the FDA for approval without the need for late-stage clinical trials. This is important as I’ll discuss below as the Phase 3 clinical trial was stopped prematurely by Baxter. Being rewarded RMAT designation is a very big deal and not easy. As of last year, the FDA had received 34 RMAT requests and has granted only 11 of them. Justifiably, the stock skyrocketed nearly 200% last week when slapped with the RMAT tag and has since settled back down to a ~70% gain. I began to take notice and started researching the acquired therapy and quickly realized how undervalued the stock currently is.

CD34+ Therapy For No-Option Refractory Angina Clinical Trial Data Impressive

No-option refractory angina, which impacts over a million people in the US alone, is defined as chronic heart pain due to blockage of blood flow to the heart. It is a very serious condition with high morbidity and no effective treatment options. Simply put, to treat refractory angina, you must repair the blood flow to the heart. Enter CD34+ cell therapy. These stem cells have demonstrated the ability to restore microcirculation and enhance myocardial tissue perfusion. The data is mature with preclinical, Phase 1, Phase 2, and partial Phase 3 clinical trials completed by Baxter.

To date, CD34+ cell therapy results have been impressive and consistent in the double-blind, placebo-controlled clinical trials. In total, the studies have included 304 patients with 24 in Phase 1, 168 in the Phase 2 ACT-34 and ACT-34 extension studies, and 112 in the pivotal Phase 3 RENEW study. The Phase 3 trial was cut short not because of safety or efficacy but due to financial considerations by Baxter. Cardiologists from the leading academic institutions in the world continue to discuss and present the data from the clinical trials as some of the best ever for this patient population. The Phase 3 trial was supposed to enroll 444 patients with 200 assigned to CD34+ therapy, 100 placebo, and 100 standard of care, but at time of cancellation had enrolled 112 total patients with 57 in CD34+ group, 27 placebo, and 28 in standard of care.

Dr. Timothy Henry, the director of cardiology at Cedars-Sinai Heart Institute expressed his frustration at the cancellation of the Phase 3 by Baxter at The Society for Cardiovascular Angiography and Interventions Scientific Sessions in 2016:

The trial was working very well and enrollment was proceeding very well. After Baxter made its decision, we tried in the midst of the trial to find alternative sponsors, and there was definite interest.

The primary outcome of the study was to determine the change in exercise time between the CD34+ cohort and the placebo group. Obviously, one’s ability to exercise is heavily dependent on blood flow to the heart. The results did not disappoint. Exercise time in the CD34+ group increased nearly 1 minute compared to the placebo group at 6 months and more than 30 seconds at 12 months. Likewise, angina or severe chest pain was decreased in the CD34+ group at 6 months (RR = 0.57; 95% CI, 0.36-0.92). Probably most interesting is the data at the 2-year follow-up with mortality rate of 3.7% in the CD34+ group and 10% in the placebo group.

Cardiologist Dr. Thomas Povsic from the Duke Clinical Research Institute summed up the promise of the partial Phase 3 data and frustration of Baxter cutting the trial short:

We think it’s particularly attractive to use angiogenic cells in patients with refractory angina whose issue is lack of blood flow,” he said. “We hope someone else will take up the call.

Although the Phase 3 clinical trial was cut short, there is a significant data set already generated when analyzing all of the data together from the 3 clinical trials. Last May, Dr. Povsic presented this data at the 2017 Society for Cardiovascular Angiography and Interventions Annual Meeting. It was also recently published this year in the European Heart Journal. Data for the pooled analysis was very similar to the Phase 3 partial data.

Patients treated with CD34+ cells (n=187) increased total exercise time by 46.6 s [3 months, 95% confidence interval (CI) 13.0 s-80.3 s; P = 0. 007], 49.5 s (6 months, 95% CI 9.3-89.7; P = 0.016), and 44.7 s (12 months, 95% CI 2.7 s-92.1 s; P = 0.065) compared to the placebo group (n=89).

*Image from European Heart Journal, Volume 39, Issue 23, 14 June 2018, Pages 2208-2216.

Improvement in angina was statistically significant at all three time points, 0.78 (95% CI 0.63-0.98; P = 0.032), 0.66 (0.48-0.91; P = 0.012), and 0.58 (0.38-0.88; P = 0.011) at 3, 6, and 12 months in the CD34+ group compared with placebo patients.

*Image from European Heart Journal, Volume 39, Issue 23, 14 June 2018, Pages 2208-2216.

As seen in the Phase 3, pooled analysis showed a very significant decrease in mortality rate in the CD34+ group compared to placebo (12.1% vs. 2.5%; P = 0.0025) at 2 years.

*Image from European Heart Journal, Volume 39, Issue 23, 14 June 2018, Pages 2208-2216

Importantly, there were no safety signals or risks associated with the therapy. The cardiologist from Duke did not mince words when discussing the promise of the therapy:

We believe that this type of cell therapy for refractory angina is particularly promising and may improve both functional status and mortality. It is imperative to explore methods to bring this therapy to patients.

He also foreshadowed the therapy being rewarded RMAT status:

I personally believe this therapy has more data for efficacy and safety than any other therapy for the treatment of refractory angina. There is a new opportunity with passage of the 21st Century Cures Act, where regenerative therapy has a special category called Regenerative Advanced Therapy that allows for a therapy that fulfills a particular medical need to undergo expedited approval. Whether or not these data could be sufficient to allow for consideration of this therapy to be approved… that’s something we would like to explore.

My money is on the doctor.

Financials And Risks

As biotech investors know, big rewards do not come without risks. As with all small-cap biotechs, there are substantial risks that Caladrius may not be successful in bringing their new refractory angina asset to market. It is also unclear how much additional work and therefore, funding will be required by the FDA. Although their newly granted RMAT status should help, it is likely they will still have to complete a Phase 3 study either before or following conditional approval. Further insight following Caladrius meeting with the FDA will be helpful. Cash burn rate fluctuates but is close to $5M quarterly. With ~$54M of cash on hand, management anticipates this will fund the company into 2020. Management has also done a good job at funding programs through governmental research grants.


With a very promising late-stage clinical cell therapy with RMAT status now in their pipeline and over $50M in cash on hand with no debt, I am shocked to see the stock only trading with a $65M market cap. I could easily see the stock doubling from current levels.


Disclaimer: The author holds a Long position in CLBS. The author is not receiving compensation for this article. This article is intended for informational and entertainment use only, and should not be construed as professional investment advice.


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