Israeli stem cell treatment developer Pluristem Therapeutics Ltd. (Nasdaq:PSTI; DAX: PJT: PLTR) CEO Yaky Yanay has sent a letter to investors making it clear that his appointment was not a cosmetic change. He wrote that the change in management, with Yanay become sole CEO after a period of being co-CEO with veteran Zami Aberman, who is now becoming executive chairman, will lead to cutbacks and focus in the company.
The measures include a 25% cut in the salaries of executives and directors, effective until the company's market cap doubles. Pluristem will focus on products whose marketing is imminent, at the expense of R&D involving products that will not be brought to market any time soon. Negotiations with suppliers will be reopened, but no layoffs in the company are planned. Pluristem has 170 employees, mainly in its offices and plant in Haifa.
"We are now focusing on three areas: the critical limb ischemia (CLI) trial for blocking blood vessels in limbs, results from which are due in the first half of 2020; muscle regeneration, in which results of a Phase III trial are due to arrive in the second half of 2020; and a treatment for acute radiation syndrome (ARS), in which we want to reach agreement with BARDA (the Biomedical Advanced Research and Development Authority, an office of the US Department of Health and Human Services, G.W.)." Yanay is aiming at an agreement with BARDA similar to the one it signed with MediWound, in which BARDA is funding MediWound's trials of a product and undertakes to buy a specific quantity of the product if the trial succeeds.
Pluristem has marked these fields as important for it in the coming years. The company has developed in many fields over the years, however, diverting investors' attention with frequent announcements to the stock exchange about progress in early stages of R&D. The market was therefore somewhat confused about what Pluristem's leading growth engines were. "Looking for value in several directions and selecting the best of them is a reasonable policy in a company's early stages, but now it's time to become focused," Yanay told "Globes."
"We want to be a focused company that talks about creating value for investors," he added. Pluristem's share has lost 54% of its value over the past year, pushing the company's market cap down to $88 million.
"Globes": What do you think caused the share price to fall?
"The main reason was financial," Yanay says, referring to the company many fairly large financing rounds in recent years before it had any revenue. "We're now in a better position to go back to creating value for investors, now that we're nearing the market and the trials are nearing completion."
Pluristem's investors have been waiting quite a few years for unequivocal results from the many large and important trials of indications by the company. These trials were delayed so much that the market is inclined to wonder facetiously whether the company was deliberately refraining from conducting trials in order to avoid the risk of disappointing results.
During Yanay's period as co-CEO, however, the company's major trials finally got underway, and it appears that results will be forthcoming next year. Yanay looks ready, willing, and able to deal with the result. "I want to succeed, I want to create value, I want to reach the market," he declares.
You have a period of clinical trials ahead of you, and you hope that marketing will come afterwards, but both of these will require a lot of money. Will you have to continue conducting large financing rounds?
"Following our streamlining, we'll reach results in the two trials with the same amount of cash we have now." The company then expects a rise in value that will enable it to withstand a possible drop in its share price when it conducts another financing round.
Pluristem has a plant founded early in the decade, although it not yet marketing products commercially. The plant consumes resources and requires personnel, which is one of the factors for the company's relatively high burn rate.
Was the plant founded too early?
"I sometimes hear this assertion from investors, but without the plant, we wouldn't be able to conduct all of these trials simultaneously at relatively low cost. Lonza spends $25 million just on buying stem cells from the Lonza manufacturing company."
In his letter, Yanay also wrote, "Pluristem is a company with innovative technology, medical and social vision, and a unique approach to the way we should treat our patients, our families, and our parents. Pluristem is the most talented and committed people of group I have ever met. They strive for excellence in what they are doing in order to bring an innovative drug to the world
"When I joined the company 13 years ago, it was clear to me that I wanted to be part of the next health revolution. Today, more than ever, I'm confident in the determination of rehabilitative medicine and in Pluristem's ability to be in the forefront of the industry. Our bioreactors are raising not only live cells, but also the medicine of the future."
Published by Globes, Israel business news - en.globes.co.il - on July 3, 2019
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