For patients with certain blood cancers, a stem cell transplant can often be a curative treatment. However, it is also a complex process riddled with severe toxicities and high rates of relapse or failure. These issues are at least part of the reason why only about 60% of cancer patients, a third of genetic disease patients, and 5% of autoimmune patients who are eligible to receive a stem cell transplant actually receive one. It's not hard to imagine that should a safer, more efficient process exist, the market could potentially expand. Enter Magenta Therapeutics (MGTA 4.25%)

The clinical-stage biotech's lead compound, MGTA-145, has the potential to revolutionize the current standard-of-care transplant process for both patients and donors, making it faster and safer for all parties.

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Focusing on donors

When you donate stem cells, on average it takes five or more days to collect them. This is an inefficient process for a donor because it requires daily injections of medication called G-CSF, which boosts the release of stem cells from bone marrow into the bloodstream for collection. These daily injections cause significant bone pain and a handful of other side effects. To make matters worse, about 15% of donors will need multiple collection attempts, which mean further daily G-CSF injections. Perhaps it's not surprising that about 50% of registered donors decline to donate when they are called to do so.

Patients receiving a stem cell transplant, meanwhile, first have to undergo G-CSF treatment to boost their stem cells' release from bone marrow, then undergo chemo and radiation to try to get rid of any bad or cancerous cells originating in the bone marrow before they get their transplant. That's a lot of steps, a lot of time, and a lot of potential side effects.

Magenta is working to streamline this process, and MGTA-145 has the potential to become the first medicine approved for this mobilization of stem cells in both donors as well as transplant recipients. (While G-CSF is commonly utilized by clinicians off-label for the mobilization of donor stem cells, the drug is actually not explicitly approved for that usage.) Phase 1 studies demonstrated a threefold increase in the number of stem cells collected from healthy donors when treated with MGTA-145 compared with G-CSF, and amazingly, 88% of donors infused with MGTA-145 were able to have their stem cells collected that same day, compared with zero for the G-CSF group. Lastly, there was only a 1% rate of grade 2 to grade 4 side effects with MGTA-145; that rate is 38% for G-CSF.

Data from two phase 2 trials are expected in the second half of 2021. One trial is looking at MGTA-145's effect on stem cell mobilization and collection, as well as the ever-important progression-free survival rate, in cases of multiple myeloma. The other is examining MGTA-145's effect on stem cell mobilization, collection, and disease outcomes for acute myeloid leukemia (AML), acute lymphocytic leukemia (ALL) and myelodysplastic syndrome (MDS).

How green can Magenta get?

So far, MGTA-145 appears faster, safer, and requires fewer collections from donors than the current standard of care, with no competition on the horizon. So what's the addressable market look like?

One place to start measuring is with Sanofi's (SNY -1.17%) plerixafor, which is currently given to approximately half of patients who undergo stem cell treatment for certain blood cancers. That drug had sales of $200 million in 2019.

However, because MGTA-145 makes donation less of a hassle, it's no stretch to imagine that the drug could work as a catalyst to increase the number of stem cell transplants performed annually. Management estimates that they can grow the market from today's about 90,000 worldwide to more than 175,000. Magenta has also begun to explore MGTA-145's utility in the gene therapy market, having already partnered with Beam therapeutics (BEAM 5.33%), bluebird bio (BLUE 16.80%), and AVROBIO (AVRO 1.56%) to more efficiently mobilize stem cells for their gene therapies. Partnered phase 2 trials are already under way.

Should future MGTA-145 trials continue to be positive, which I think is likely, $200 million would likely be just the beginning of the addressable market. It could easily be more than double that when you account for the potential increase in donors and procedures, as well as the gene therapy market. With a current market cap of about $500 million, and other promising candidates in the pipeline, Magenta is well positioned to add some green to healthcare investors' portfolios over the coming years -- not to mention making a difference for tens of thousands of patients and donors.