As Seen In
July 10, 2014 – Alan Leong from BioWatch News Comments on RepliCel in July’s Issues of The Life Sciences Report
Read below for an excerpt from Street Wise Reports on Alan Leong’s comments about RepliCel:
TLSR: You mentioned RepliCel in regenerative medicine. Tell me your growth theory for this company.
AL: RepliCel came onto our radar when we were at the Biotech Showcase and JP Morgan Healthcare Conference back in January. The company is very early in development and caught our eye for a couple of reasons.
One, the cells are derived from cells in the hair follicle. Two, the company is competing in less crowded niches—baldness or alopecia, and tendinosis. It’s very interesting that these hair follicle-derived cells appear to have advantageous properties when applied to healing tennis elbow, Achilles tendinosis and similar complaints. The early results are interesting and positive.
“The day is coming in which we will be able to pick a very specific niche or cluster and provide very effective treatments for more defined diseases.”
RepliCel is going to launch two Phase 2 trials this year. For those thinking of investing, the company is in a low-cash position, and is risky. RepliCel behaves like a private company in a lot of ways, because it is raising money to fund some of the next trials. One of the scientists involved with the technology, Kevin McElwee from the University of British Columbia, has an excellent reputation, not just among scientists but also among clinicians who are into hair restoration. Usually, companies joining the regenerative medicine space target major organs and systems. RepliCel, on the other hand, is going after niche indications that give it a much clearer playing field. There was one direct cell therapy competitor, the Aderans Research Institute, out there in the baldness space, but it abandoned the field a few months ago.
TLSR: RepliCel’s technology is autologous. The cells are harvested from the back of the patient’s scalp, and are expanded and processed ex vivo. The harvest and readministration of these cells by injection for alopecia, given that it is a two-step procedure, is about even in clinical complexity to hair plug therapy. Will this therapy for baldness be superior to hair plug therapy, which we know can be painful for the patient?
AL: All things being otherwise equal, patients will be more sold on RepliCel’s therapy than on the hair transplant procedure. With a hair transplant, the physician typically has to implant thousands of units from one part of the head to another. That requires incredible dexterity and takes several hours. In fact, that is why robotics are getting involved—the physician endures incredible repetitive strain. In addition, physicians are digging out not just follicles but a little bit of muscle, too, and placing that into the patient.
Another thing that makes RepliCel’s therapy attractive is that, if you look at surveys or talk to people who are losing hair, the concept of having these injections is very palatable. This possibly could expand the market. Finally, if you look at surveys, the percentage of men who say they would give up a significant portion of their wealth to have their hair restored is astounding.
TLSR: Back on May 20, the company said its licensing partner, Shiseido Company Ltd., was opening a new cell processing facility at the Kobe Biomedical Innovation Cluster in Japan. Does it make sense to process and expand those cells so far away?
AL: Shiseido, a major cosmetics company, is licensing RepliCel’s hair regeneration technology in the largest parts of Asia. It has more than $7B in revenue. In Japan, companies that get involved in pharmaceuticals aren’t like the ones here. For instance, you have major pharmaceutical companies that also make beer, and cosmetic companies doing major research. Shiseido’s new facility is not just a tiny laboratory. It represents a major cell therapy investment. Shiseido’s investment into the collaboration is a form of validation for RepliCel.
TLSR: In mid-June, RepliCel announced it had closed on the third and final tranche of a nonbrokered capital raising that it originally announced at the end of March. Each unit sold for $0.75, and that includes one warrant that could be exercised for $1/share in the first year and $1.25 in year two. The total of these tranches was only about $3.9M, which is not a lot of money. How much dilution are RepliCel investors in for in the future?
AL: It’s a good question, because the dilution could be serious. RepliCel is trying to raise cash in fits and gulps to get it through the next set of trials and raise the company’s valuation. I think that’s part of the rationale behind why the Phase 2 trials are confined in terms of geography. The company wants to put out strong proof of concept and raise the valuation while still making progress on the commercial side. There’s no doubt about it: There’s a balancing act going on here. RepliCel is also trying to raise money through unconventional sources, including governmental sources of funding. We shall see.
TLSR: Alan, I have read that 11 of 12 patients in the Phase 1 Achilles tendinosis trial had what the company calls “satisfactory outcomes,” but those were with adipose-derived cells and not with cells derived from the patient’s hair follicles, which will be used in Phase 2.
AL: That’s correct. The tendinosis indication has had the Phase 1 proof-of-concept study performed, but the Phase 2 study will incorporate some tweaks to the procedure.
TLSR: Is the lead indication at RepliCel Achilles tendinosis or alopecia?
AL: If you asked the company’s CEO, David Hall, I think he would say he’s looking at both of them. Right now, you would have to pick alopecia as positioned to be RepliCel’s lead indication, because a) it has the Phase 2 data, and b) it has the alliance with Shiseido, which also will be advancing work in its labs back in Japan.
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