Stem cell therapy maker Aldagen files for IPO

Business Week, Oct 28, 2009

The adult stem cell company Aldagen Inc, from Durham North Carolina announced today that it has filed a registration with the Securities Exchange Commission for an initial public offering with a potential value of $80.5 million. Details regarding price range or shares to be issues were not disclosed.

Aldagen is one of the adult stem cell companies in advanced clinical trials in the United States. The technology that they are developing is based on intellectual property covering the use of a specific enzyme, aldehyde dehydrogenase (ALDH), as a means of selecting stem cells with higher level of potency from adult sources. Although the particular type of stem cells that Aldagen is selecting for are stem cells that make blood, called hematopoietic stem cells, the company's technology has been shown to select for other stem cells as well.

It's most advanced program, is ALD-101, a purified cord blood stem cell product for treatment of inherited metabolic diseases in pediatric patients. This is in Phase III clinical trials, which means that the safety (Phase I) has been demonstrated, that preliminary efficacy (Phase II) has been demonstrated, and now what remains to be demonstrated is efficacy of the product in a double blind, placebo controlled study (Phase III). Several metabolic diseases have been successfully treated with stem cells from the cord blood. Conditions such as Krabbe Disease, involve defective biochemical pathways in cells that original from stem cells. By administration of new stem cells that express the correct biochemical and genetic components, the functioning cells end up taking over the function of the nonfunctioning cells.

The company is also preparing to conduct a Phase III clinical trial for critical limb using its product ALD-301. This product involves extraction of patient bone marrow, purification of cells expressing ALDH, and re-administration of the purified cells into the muscles of patients with critical limb ischemia. The rationale for this treatment is that patients with critical limb ischemia lack appropriate circulation in their legs and are at risk of amputation. By administration of the patient's own stem cells, the cells are believed to stimulate the production of new blood vessels, which theoretically will reduce the need for amputation. Previous studies using stem cells for treatment of critical limb ischemia have demonstrated successful results in terms of improved walking distance and increased circulation (Kawamoto et al. Intramuscular Transplantation of Granulocyte Colony Stimulating Factor-Mobilized CD34-Positive Cells in Patients with Critical Limb Ischemia: A Phase I/IIa, Multi-Center, Single-Blind and Dose-Escalation Clinical Trial. Stem Cells. 2009 Aug 26), to our knowledge, the proposed Phase III trial will be the first FDA registration trial for use of stem cells in critical limb ischemia.

Additionally, Aldagen is developing ALD-201, which uses the patient's own bone marrow derived stem cells, but instead of administering them into the ischemic leg, they are administered into the heart muscle by means of a specialized catheter. Currently ALD-201 completed a Phase I trial. In contrast to other cardiac clinical trials involving administration of stem cells after a heart attack, this is one of the few trials that is treating patients with chronic heart failure. Essentially the concept is that the stem cells will be able to create new blood vessels, which will help by providing more oxygen to the cardiac muscle, as well as stimulate stem cells that are resident in the heart through the production of various growth factors.

The company is performing several areas of investigation, including purification of cancer stem cells using their technique, as well as expansion into other disease conditions such as stroke and improvement of post-transplant reconstitution.

As with many biotechnology companies, Aldagen is not expected to be profitable in the close future. In the first nine months of 2009 the company spent 9.7 million, while a year ago it spent $13.8 million. The majority shareholder is Intersouth Partners, an early-stage venture capital who invests in companies in the South East US. Intersouth owns 41.6 percent of Aldagen. The underwriters of the IPO are Cowen and Co. and Wells Fargo Securities. A copy of the full S-1 filing may be obtained at the SEC website http://www.sec.gov/Archives/edgar/data/1128188/000119312509215575/ds1.htm