Later this week a little biotech named Capricor Therapeutics is set to begin a Phase II study of its new stem cell therapy with about $20 million in support from the California Institute for Regenerative Medicine (CIRM). And this morning Johnson & Johnson ($JNJ) is stepping up with a $12.5 million upfront to buy itself an option and a front-row seat on the program--marking a rare Big Pharma gamble on a field that is trying hard to mount a comeback.
J&J inked the deal after a lengthy inspection into every nook and cranny at Capricor ($CAPR) as well as a broad review of the stem cell arena, says CEO Linda Marbán, who has mapped out a goal of developing a world-class regenerative medicine platform at a "fully functional" biotech. "After a full year of due diligence they decided to make the bet," she adds.
Capricor shares shot up 22% this morning on the news.
According to Capricor, J&J will have 60 days following delivery of the 6-month follow-up to Phase II to decide whether it wants to take control of the program and carry it through late-stage studies. And if J&J takes the next step, it will be committed to a $325 million package of milestones, plus royalties on any sales.
J&J was won over by a company that's been steadily working on new technology originally developed by Marbán's husband, Eduardo Marbán, at Johns Hopkins. Initially the work centered on the potential for autologous cells extracted from the patient to be cultivated into a regenerative treatment for damaged hearts. But Capricor switched to off-the-shelf allogeneic stem cells from donors that promise to make the commercialization and treatment process much simpler. Investigators will now test this approach in two patient populations--one group 30 to 90 days after a heart attack and another, sicker group 30 days to a year after a heart attack. And they're hoping to see the kind of reduction in scar tissue that enthused researchers in the Phase I trial.
Marbán has enough cash from CIRM to complete the Phase II study. But this deal is about much more than beefing up their bank account.
"One of the reasons why I was motivated to work on this deal is because of the statement it makes in the field," says the CEO. "It says, OK, somebody very large and powerful is taking a look at this technology and saying there's something there, and that's the most exciting thing for me."
This isn't the first time J&J has made a foray into the stem cell field, notes a spokesperson. "We have had other deals and we also have research ongoing internally in stem cells," she adds. "In terms of deals, we signed one with Evotec and Harvard Stem Cell Institute in the April time frame. Also, as you may recall from our May analyst day meeting, we have some other programs in stem cells. We have BetaLogics and a program in AMD (advanced macular degeneration)."
Capricor raised $4 million from angel investors back in 2006 to start exploring the commercial potential of heart stem cells. Eduardo Marbán did the initial lab work at Johns Hopkins, investigating how stem cells could repair damaged heart tissue. Linda Marbán, his wife, headed up the company.
Eduardo Marbán was named the director of the Cedars-Sinai Heart Institute in 2007, continuing a high-powered career in cardiology that has helped distinguish Capricor. The move also forced a jump to the West Coast that made Capricor possibly the only biotech to be based in Beverly Hills. Then, late last year, the company went public on the over-the-counter market with a reverse merger with San Mateo, CA-based Nile Therapeutics, giving Capricor a public listing with two clinical-stage products. That's a rarity in the stem cell community, where the glow of the early promise of stem cell technology crashed against the bleak prospect of a long hard slog through the clinic before any product approvals could be expected.
Phase II should be done in the middle of 2016, says Linda Marbán, when J&J will know whether its gamble warrants an even bigger bet on Phase III.
- here's the press release