NeoStem receives bullish price target from Maxim Group

NeoStem (AMEX:NBS) received a bullish outlook from equity research firm Maxim Group on Friday, after the stem cell-based therapy company announced yesterday its plans to acquire Amorcyte.

On the back of the news, Maxim re-iterated its buy rating for NeoStem, and assigned the company a 12 month price target of $5.00, more than triple its current trading price.

Amorcyte is a development stage cell therapy company focused on cardiovascular disease, whose lead product is AMR-001, currently about to start a phase two study for the treatment of acute myocardial infarction (AMI).

The acquisition, in exchange for 6.8 million NeoStem shares and warrants for another 1.9 million, would be positive, noted Maxim in its report, with encouraging clinical data from AMR-001's phase one trial.

About 800,000 people in the U.S. suffer an AMI each year, and 20% of them remain at risk to experience progressive deterioration in heart muscle function and thereby an increase in major adverse cardiac events (MACE), like heart attacks.

A phase one study of the AMR-001 therapy found that it significantly improved perfusion, or the delivery of arterial blood around the body, versus placebo, and 'rescued' heart cells from hibernation and death.

The data was based on a resting hypoperfusion score six months following treatment. Maxim also said the study identified an optimal therapeutic dose of more than 10 million cells needed.

AMR-001 is derived from bone marrow and uses CD34+CXCR4+ cells to act as a natural repair mechanism. The therapy works by infusing these cells into a patient's heart six to eleven days after an AMI to compliment the patient's natural rescue cells.

Because it is autologous, meaning cells are taken from the same individual that they're transplanted into, it has no risk of rejection and can provide support for an extended period of time.

"Although several companies, such as Athersys, Mesoblast/Cephalon, Cytori and Baxter are currently conducting cell-based AMI clinical studies of varying development stages, we believe AMR-001 remains very competitive," added Maxim.

Indeed, NeoStem plans to begin a phase two trial later this year to further test the therapy, in a placebo-controlled, double blind study, potentially enrolling around 150 patients. The main objective of the trial would be the hypoperfusion score, while secondary goals would consist of multiple functional and physiological measurements.

The cell-therapy company expects potentially reporting its top-line results 18 months after the start of the study, which could cost an estimated $8 million. NeoStem is also scheduled to start testing AMR-001 for the treatment of congestive heart failure in a phase one trial next year, supported by non-dilutive government funding.

With multiple stem cell operations in China and the US, as well as generic antibiotic revenues from its stake of a pharmaceutical company in China, NeoStem shares "remain undervalued", Maxim concluded.

Since starting out as a provider of adult stem cell collection and storage services, New York-based NeoStem has since branched out into cell therapeutics, focused on using stem cells to help cure disease.

In January, to enhance its portfolio of services, the company acquired Progenitor Cell Therapy (PCT), which has cell therapy manufacturing facilities, as well as processing and storage facilities for stem cells collected from the umbilical cord at birth, on the east and west coast of the US.