NeoStem receives reiterated "strong buy" from Life Tech Capital

Life Tech Capital Wednesday reiterated its "strong buy" rating on stem cell technology company NeoStem (AMEX:NBS), keeping its $4 target price on the stock.
In a research note, Life Tech said that through its recent acquisition of Amorcyte, NeoStem gained all rights to Amorcyte's lead development candidate AMR-001, an autologous, bone marrow derived, pharmaceutical grade cell-based product.
The product, AMR-001, is expected to initiate a phase II trial for Acute Myocardial Infarction (AMI) by the end of the first quarter of 2012, as well as initiate a phase I trial for congestive heart failure during 2012.
AMR-001 is 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 AMI 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.
The AMI phase II trial is expected to complete enrollment within 12 months, with top-line data anticipated six months after the last patient is treated or in mid-2013, Life Tech Capital said.
Life Tech said that NeoStem’s recent acquisition activity highlights its management’s desire to transform NeoStem into a leading international provider of cell-based therapies and a "premier stem cell service provider" through its Progenitor Cell Therapy division.
The company is exploring different ways to achieve this transition, including the possible sale of non-core assets such as its majority interest in Chinese generic pharmaceutical company Suzhou Erye Pharmaceutical Co.
At Suzou Erye, pharmaceutical revenues for the third quarter were $15.5 million compared to $16.4 million in the prior year.
The lower sales are reflective of a strategic decision by management to discontinue selling certain pharmaceutical intermediates, in order to create capacity within the existing production lines for higher margin products in the future.
Management expects these decreases in sales to be temporary. It is important for investors to note that management is presently considering multiple strategies in respect to its majority interest in Suzhou, including its possible divestiture.
In other news, in early November, NeoStem co-hosted the first International Vatican Adult Stem Cell Conference in Vatican City.
The event is the result of collaboration between the Pontifical Council for Culture and NeoStem to research and promote the use of adult, non-embryonic, stem cells in medical treatments.
Shares in NeoStem were up 0.44 percent to 45 cents Wednesday morning.
Life Tech Capital is part of boutique investment bank Aurora Capital LLC.