With $12.2M in CIRM Funding, Caladrius Biosciences Inc. (NASDAQ:CLBS) Takes On Autoimmune Disease in Type I Diabetes

Autoimmune diseases account for the most prescriptions filled in the world. The most prescribed drug in the world today is levothyroxin for Hashimoto’s thyroiditis. Levothyroxin is a hormone replacement for the metabolic regulator thyroxin, normally produced by the thyroid, which comes under attack by the immune system in the case of Hashimoto’s.

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Autoimmunity not only accounts for just the most prescriptions filled. The most bestselling drug in the world today in terms of revenues is Humira (adalimumab), which primarily treats rheumatoid arthritis, another autoimmune disease.

That autoimmune disorders are responsible for both the most prescribed and the bestselling drugs globally tells us a lot about the pervasiveness of the autoimmune problem. From diseases as devastating as multiple sclerosis where the immune system attacks nerves, to as minor an inconvenience as Hashimoto’s, autoimmunity is becoming a more and more serious problem.

It is theorized and generally accepted by the scientific community that a single cause underlies all, or at least most, autoimmune disorders. That cause is an imbalance between T-effector and T-regulator cells. T-effector cells are responsible for the immune attack against pathogens, and T-regulator cells, or “tregs”, suppress or regulate the effectors. Too little Tregs causes the effectors to go out of control and attack one’s own tissues. Restoring this balance may be key to ending, or at least making a big dent in autoimmunity as a disease class.

The fascinating thing is that this imbalance between effectors and tregs is much more prevalent in developed countries where infectious diseases are less pervasive. A theory known as the hygiene hypothesis states that hygiene and autoimmunity are inversely correlated. The logic being that our immune systems have evolved under much less sanitary conditions over millions of years, and now that they have less pathogens to fight, they tend to be overzealous in more hygienic environments, looking for something to attack.

A more functional, genetic way of looking at the problem is that some people are genetically predisposed to producing more t-effectors than tregs. Why is this? Because such an imbalance may have once been advantageous in terms of making the immune system more aggressive to fight invaders, but now that disease is quite controlled in developed countries, it may actually be a disadvantage leading to autoimmune disease.

The biotech industry has only recently begun developing treatments to correct the imbalance. Trials have already reached the clinic and there is preliminary evidence that rebalancing t-effectors and tregs may actually work towards ending or at least mitigating autoimmune disorders in humans.

The most recent evidence we have is from a small biotech called Caladrius Biosciences Inc. (NASDAQ:CLBS). While it is not attempting to cure all autoimmune disorders in one fell swoop, it has seen some significant clinical success with type I diabetes. Type I diabetes, as opposed to type II, is a pure autoimmune disorder. The immune system starts attacking the pancreas at a young age, leading to the death of pancreatic islets and the need for lifelong insulin injections.

But there is a short window of time when the disease can be stopped in its tracks, and this critical concept is what Caladrius has already proven in its early human trials. At the time of diagnosis, 20% of a patient’s islets are typically still functional. If the autoimmune attack can be stopped early enough, insulin independence for these patients can still be achieved.

What Caladrius does is really very simple, at least in concept. It isolates tregs from a blood sample, propagates them, and reintroduces them into the patient, restoring cell balance. Caladrius’s studies have already shown that reintroduced propagated tregs stay around in the blood for a year and perhaps even longer. Even more importantly, in one key study on adolescents aged 5 to 18 with type I diabetes, 2 out of 22 patients achieved insulin independence, essentially a functional cure of the disease. 6 more achieved remission, defined as a daily insulin dose of less than 0.5 units per kilogram. So there is early evidence that the treatment can work, and Caladrius is moving forward to an exciting Phase II.

The Phase II trial began in March of last year, and has already enrolled 111 patients with recent onset type I diabetes. In fact, the California Institute for Regenerative Medicine (CIRM) has just announced a $12.2M grant for the development of this type I diabetes drug. Much of this sum will be used to cover the remaining expenses of the trial. An interim analysis on 50% of enrolled patients is tentatively scheduled for the end of the year, which will be very big for the stock either way. The trial is expected to be fully completed by late next year, at which point Caladrius will be looking for a development partner to take the candidate to the next step.

The treatment, for now dubbed CLBS03, enjoys both fast track and orphan designations, a dual advantage and the first type I diabetes candidate ever to enjoy fast track status. This alone shows the FDA’s particular interest in seeing CLBS03 continue its clinical development.

What’s important to keep in mind here is that CLBS03 does not specifically target type I diabetes patients. It is only being tested on these patients to the exclusion of other autoimmune disease sufferers for the purposes of clinical development. Whichever autoimmune disorder CLBS03 may be applied to in the future, the treatment will be exactly the same in terms of procedure. This means that if interim phase II results at the end of this year show a good level of efficacy, it would show that CLBS03 could potentially be applied to almost any autoimmune disorder, and hopefully with similar results.

The point here is not that Caladrius has the cure for all autoimmune diseases ever in its sites. That would be overstating the case. But from a shareholder perspective, Caladrius is unique in that its flagship treatment is designed not to counter only a single disease, but rather an entire class of diseases. This gives stakeholders a unique advantage, especially with interim data coming up around the end of the year.

Normally, positive Phase II data in a trial like this would show evidence of efficacy in a single disease. That’s big enough news, assuming the market is big. But in the case of Caladrius, it’s much more than that. If CLBS03 works with type I diabetes, which earlier trials have already shown is possible, then it could just as well work with other autoimmune diseases as well. This, of course, Caladrius will have to prove in separate trials, but it is a potential that investors don’t normally see in biotech.

It makes Caladrius a compelling pick as 2017 progresses, and a biotech play that Market Exclusive will keep a very close eye on in the coming months.

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