NeoStem's market outperform rating reiterated by Rodman & Renshaw

NeoStem (AMEX:NBS) received Tuesday a vote of confidence as equity research firm Rodman & Renshaw reiterated its market outperform rating for the stem cell company, and a 12 month price target of $3 per share.

Yesterday, the company annoucned that it has closed its acquisition of Amorcyte, a development stage cell therapy company focused on cardiovascular disease treatments.

Amorcyte's lead product candidate is AMR-001, an autologous cell therapy designed to prevent heart tissue damage and further major adverse cardiac events following a heart attack. The treament consists of a patient's own bone marrow cells, which are processed to create pharmaceutical-grade cells that are then re-injected through coronary arteries into damaged areas of the heart, 6 to 11 days after a patient experiences a heart attack. A phase one trial of AMR-001 demonstrated that increasing doses of the treatment reduced the size of the infarct region.

Because the treatment 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.

"With the acquisition of Amorcyte, NeoStem is positioning itself as an all-in-one cell-based therapeutic company with a steady revenue stream to support future pipeline developments," Rodman & Renshaw noted.

In the first quarter of 2012, NeoStem plans to initiate a phase two study of AMR-001, with a primary endpoint of examining cardiac profusion and a planned enrollment of 160 patients.

In addition, NeoStem’s upcoming participation in several high profile events will likely raise awareness of the company in the stem cell therapeutic marketplace, the report noted.

Indeed, the company and the Vatican's Council are due to preside over the International Vatican Conference on Adult Stem Cells at the Vatican next month. The purpose of this event is to raise awareness of adult stem cells, to discuss the latest developments in the field, and to discuss the impact of their use.

CEO Dr. Robin Smith also indicated that in addition to speaking at the Vatican Conference, Dr Mariusz Ratajczak, the inventor of NeoStem's "Very Small Embryonic Like" (VSEL) stem cells technology, shown to have several physical characteristics that are generally found in embryonic stem cells, will be presenting at the American Society of Hematology (ASH) meeting in December.

Amorcyte’s chief scientific officer and NeoStem’s chief medical officeer Dr Pecora will also be attending the American Heart Association (AHA) to meet with collaborators and scientific advisors.

"In our opinion, the press coverage of the high-profile Vatican conference events should increase NeoStem’s visibility as the one-stop shop for cellular therapy. At the same time, NeoStems’ active participation at several upcoming scientific conferences emphasizes the company’s role as a leader at the forefront of stem cell research and development," Rodman & Renshaw said.

In January, NeoStem acquired Progenitor Cell Therapies (PCT), which expanded the company's cell processing capabilities and expertise in stem cell technologies, as well as provided a service business nearing break-even.
Meanwhile, the company also has activities in China - focused on expanding stem cell therapies into the country as well as a 51% stake in generic antibiotics company Suzhou Erye. Any sale of Suzhou Erye would strengthen NeoStem's balance sheet, generating upwards of $35 million, according to recent estimates, which could be used to fund further clinical advancement of its stem cell therapeutic programs.

With a pro forma cash position of $16 million, and an enterprise value of approximately $52.7 million, Rodman & Renshaw considers NeoStem to be an undervalued company in the stem cell and cell-based therapeutic space.

Shares of the company were up 2.3% on Tuesday afternoon, trading around 65 cents.