NeoStem said today it will acquire California Stem Cell (CSC) in a stock-and-cash deal that could total more than $124 million and will add a late-stage technology to the acquiring company’s pipeline. Through the deal, NeoStem will take over development of CSC’s Melapuldencel-T, an autologous melanoma initiating (stem) cell immune-based therapy intended to eliminate the tumor cells capable of causing disease recurrence, beginning with the launch of a pivotal Phase III trial.

NeoStem said Melapuldencel-T was a platform technology that could be expanded into other indications, such as hepatocellular carcinoma and other immune-responsive tumor types.

Founded in 2005, CSC has been focused on the application of high-purity human stem cells and their derivatives, which it can produce, in developing life-changing therapies. These include Melapuldencel-T, the subject of earlier successful trial results for metastatic melanoma.

“NeoStem has been built upon a series of strategic acquisitions that created an infrastructure with strong development, regulatory, and manufacturing expertise in cell therapy. By adding a late-stage technology such as Melapuldencel-T, we enhance our ability to add value for our shareholders,” Robin Smith, M.D., NeoStem’s chairman and CEO, said in a statement. “Adding CSC's advanced immunotherapy technologies to our existing development pipeline and cGMP-compliant cell therapy manufacturing facilities (via NeoStem's contract development and manufacturing organization subsidiary, Progenitor Cell Therapy or PCT) brings us closer to our goal of delivering transformative cell-based therapies to the market to help patients suffering from life-threatening medical conditions.”

The deal, set to close in May, has been approved by CSC shareholders. NeoStem will buy all CSC outstanding stock and options, in return for issuing about 5.33 million shares of common stock, restricted and subject to a holding period.

The closing price of NeoStem stock on NASDAQ stood at $6.40 on April 11, bringing the potential value of an all-stock portion of the deal to more than $34 million. NeoStem also said it will pay at its discretion cash or stock to CSC shareholders totaling an additional up to $90 million toward milestone and royalty payments.

As a result of the deal, NeoStem said, it plans to launch a Phase III trial of Melapuldencel-T, which was approved to enter Phase III with a Special Protocol Assessment (SPA), and received fast-track designation for metastatic melanoma, as well as orphan drug designation.

A Phase II randomized clinical trial of Melapuldencel-T patients yielded successful results, namely a significant improvement in two-year overall survival from 31% in controls to 72% in treated patients with advanced melanoma (recurrent Stage III and Stage IV). The toxicity profile was favorable with no grade IV and only one grade III (allergic reaction) event in the study.

“We believe NeoStem's and PCT's deep expertise in scaled manufacturing, regulatory, and clinical development will advance our programs significantly,” added Hans Keirstead, Ph.D., CSC’s current CEO.

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