Bioheart: A risky stem-cell company boosts its IPO hopes

(UPDATED: See below.)

Sunrise, Fla.-based Bioheart thinks enough of its stem-cell treatment for heart disease that it has just boosted its expected IPO take by $10 million, to $45 million. A close reading of its latest SEC filing, however, raises a fair number of questions for would-be investors.

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Bioheart’s leading therapy candidate is MyoCell, a treatment designed to reverse heart-attack damage. MyoCell consists of myoblasts — a kind of muscle stem cell — that are removed from a patient’s own thigh muscles, cultured for roughly 21 days, and then injected into the scar tissue surrounding the individual’s heart in a minimally invasive procedure. If all goes well, these myoblasts then engraft into the scar tissue, transform into normal skeletal-muscle cells and then, in some still-mysterious fashion, restore some muscular activity to damaged portions of the heart.

So far, so good, even if Bioheart can’t explain why the transformed cells might bolster the heart, since they don’t appear to “link up” with chemical signals that direct the heart’s cells to beat in unison. The company does offer several theories, including the possibility that the injected cells somehow “stretch,” channel electrical currents, fuse with or otherwise “acquire” properties of existing heart-muscle cells, or release proteins that inhibit scar formation.

Unfortunately, two early clinical trials so far haven’t demonstrated that MyoCell significantly improves heart function, and some data suggest the therapy might even be dangerous. The first test, a 20-patient safety trial called Myoheart, provided no statistically significant evidence that the treatment helped patients walk farther, improved their quality of life or bolstered their hearts’ efficiency (as measured by a parameter called left ventricular ejection fraction). To be fair, Myoheart wasn’t designed to provide proof of efficacy. Still, two of the 20 patients died, possibly because of MyoCell, and four experienced irregular heartbeats thought to be related to the cell therapy.

A larger 40-patient trial in Europe called Seismic also turned up cause for concern. Although this trial compared heart patients who received MyoCell with others who didn’t, it still hasn’t generated any statistically significant data suggesting the stem-cell treatment helps patients. (Only interim data is available, although the company says it doesn’t expect to see significant data for several months.) More disturbing, however, is the fact that the MyoCell patients actually saw their heart efficiency decline, on average, almost four times faster than the untreated group in the six months following the procedure. One patient died from multiple organ failure, possibly attributable to MyoCell, and eight others had irregular heartbeats possibly linked to the therapy.

The Seismic data also aren’t statistically significant and may well be skewed if, by chance, the MyoCell group included especially sick patients or if healthier people dominated the control group. Still, it’s not exactly an encouraging sign, so it beats me why the company thinks its IPO chances have greatly improved all of a sudden, particularly in a market environment that has recently been fairly dismissive of biotech offerings.

One other interesting fact that would-be investors might want to consider: Bioheart’s primary patent on MyoCell expires in 2009, which is when the company is expecting to see final data from a pivotal U.S. trial. That could crimp commercialization of the treatment even if it is approved, to say the very least. (The company does say it thinks it can win a five-year extension of the patent, but even that isn’t very much.)

Bioheart’s original SEC filing, in case you’re curious, is here. (Hat tip: VentureWire, subscription required)

UPDATE (10/12/07): Bioheart slashes its offering price, effectively halving the company’s value. I gloat about it here.

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