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Neostem, Inc. Message Board

  • longnbs longnbs Oct 12, 2013 3:18 PM Flag

    Biotech: Not All Stem Cells Are Created Equal

    Search the above heading...

    Biotech companies are fiercely competing to create the newest and best miracle drugs using stem cell technologies.
    The Life Sciences Report: Vernon, how do you pick investor entry points for the life science firms that you cover for MLV & Co.?

    Vernon Bernardino: It all comes down to evaluating and then articulating whether a company’s stock is still a compelling value. Let’s use my newest report on NeoStem Inc. (NBS:NASDAQ) as an example of how a stock is evaluated. I previously put a lofty price target on NeoStem: Other analysts followed, and the company’s stock performed very well. When I initiated coverage on NeoStem on Sept. 11, 2013, it was up almost 100% from its May lows, and up 70% since January. The stock rose to 52-week highs shortly thereafter, then slid after disappointing data was released from CADUCEUS, a study using autologous stem cells (SCs)—like SCs being tested by NeoStem—as a heart attack treatment, in the Sept. 17, 2013, online issue of the Journal of the American College of Cardiology.

    In looking to see if NeoStem was a good bargain in the wake of the slide, I pointed to the sum-of-the-parts valuation approach I used in my initiation-of-coverage report, which derived a $16 price target. The approach applies because NeoStem has many different lines of business, some stronger than others. The stock remains a long-term play, but should positive results come in from a top-line readout with its lead product, AMR-001, there could be substantial upside to our current target price of $16 to $22.

    TLSR: What is NeoStem’s AMR-001?

    VB: AMR-001 is the company’s flagship product candidate. It is a cell-based product derived from bone marrow stem cells, enriched with a genetic marker called CD34+/CXCR4+ that is relevant to ischemic cardiovascular disease conditions, such as heart attack.

    TLSR: What makes that marker valuable?

    Sentiment: Strong Buy

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    • Hey Stubby Johnson what do you think about the fact that Neostem is on the forefront of a global tidal wave of healing change in medicine?

      Sentiment: Strong Buy

    • Bump this up.

      Sentiment: Strong Buy

    • VB: It is very difficult for anyone to obtain intellectual property (IP) rights on bone marrow stem cells because they have been studied so extensively in many patients. For example, more than 1 million (1M) people have received bone marrow and blood stem cell transplants over the last 50 years or so. But NeoStem was able to obtain IP status with a bone marrow stem cell-based strategy to repair damaged heart muscle that uses the CD34+/CXCR4+ marker. That means other firms cannot copy NeoStem’s specific stem cell therapy, making it more commercially viable.

      TLSR: What was the nature of the non-NeoStem study that impacted NeoStem’s shares?

      VB: The CADUCEUS trial, conducted at the Cedars-Sinai Heart Institute in Los Angeles, used a similar approach to NeoStem’s study regime, but it did not use NeoStem’s AMR-001 product. The CADUCEUS study isolated, cultured and prepared stem cells derived from heart biopsies, known as cardiosphere-derived stem cells (CDSCs), as a treatment for heart attack. The CDSCs were then injected back into the patient’s heart to elicit heart repair and improve heart function. Treatment with CDSCs did result in improved heart function, which is similar to results observed in many other stem cell studies. However, the stem cells studied in CADUCEUS did not result in repair of heart muscle, which was a central thesis with using stem cells for treating heart attacks.

      “A forward-looking firm deploys its cash to create value by advancing the science of its lead product.”

      Some investors jumped to the conclusion that NeoStem’s phase 2 study for AMR-001 would also not show repair of heart muscle. But it is expected that NeoStem’s phase 2 study will actually confirm the company’s phase 1 study for AMR-001, which demonstrated a heart muscle repair signal. The study is called PreSERVE AMI: It is due to complete enrollment by year-end, and due for a top-line readout of cardiac function and other measures in H1/14.

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