CBMG: Initiating Coverage of Cellular Biomedicine Group; Multiple Cell-Based Therapies to Treat Cancer and Degenerative Diseases…

By David Bautz, PhD



Initiating Coverage

We are initiating coverage of Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) with a valuation of $24.00. Cellular Biomedicine Group is a biopharmaceutical company developing cell-based therapies for cancer and degenerative diseases, with a focus on the Chinese market. In addition to a full pipeline of development products comprised of CAR-T, TIL, and TCR, along with stem-cell based therapies for the treatment of osteoarthritis, Cellular Biomedicine Group signed a collaboration agreement last year with Novartis for the production of Kymriah® in China. CAR-T products targeting multiple myeloma and non-Hodgkin lymphoma are currently being evaluated in clinical trials and we anticipate additional clinical trials initiating in other indications over the next six to twelve months.

Robust Pipeline with Multiple Cell-Therapy Development Products
Cellular Biomedicine Group has a robust pipeline of products derived from in-house discovery and strategic in-licensing including CAR-T, TIL, TCR, and stem cell products for which we anticipate at least six modalities being in Phase 1 clinical trials by the end of 2019.

Investigator-Initiated Trials to Speed-Up Development Timelines
Cellular Biomedicine Group has begun investigator-initiated trials in China for its CAR-T products in patients with multiple myeloma and non-Hodgkin lymphoma, with additional trials starting later in 2019 and early 2020. These trials are intended to quickly evaluate safety and proof-of-concept in a cost-effective manner before moving to larger trials in China and the U.S. We anticipate initial data readouts from the ongoing trials at the end of 2019 or early 2020.

Collaboration with Novartis for Kymriah® in China
In 2018, Cellular Biomedicine Group signed a collaboration agreement with Novartis to manufacture and supply Kymriah® in China. Included in the deal was a $40 million equity purchase from Novartis, which represents a 9% equity stake in the company. Cellular Biomedicine Group will be responsible for manufacturing the product while receiving an escalating single-digit royalty on net product sales of Kymriah® in China, while Novartis will be responsible for distribution, regulatory, and commercialization efforts in China. This deal validates Cellular Biomedicine Group’s cell manufacturing technology and we believe puts them at the forefront of cell therapy companies in China.

First-Mover Advantage in China
The company is leveraging its expertise in the Chinese regulatory environment to establish itself as the leader in the Chinese cell therapy market. Very few other companies have the requisite expertise to handle the various compliance, quality assurance, and regulatory issues inherent in the Chinese market while simultaneously working to improve manufacturing timelines for cell therapy clinical trials and commercial launch.

Proprietary Manufacturing Processes for Cellular Therapies
Through collaborations with GE Healthcare Life Sciences and ThermoFisher Scientific, Cellular Biomedicine Group has developed an automated, closed, integrated cell manufacturing system with complete control of the chain-of-custody. The company maintains manufacturing facilities totaling 100,000 ft2 in Shanghai and Wuxi that meet the quality management systems requirements of ISO 9001:2015, and the facilities of Shanghai and Wuxi sites meet local regulatory standards.

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