JMP Securities reiterated its market outperform rating and $3 price target for NeoStem (AMEX:NBS) on Tuesday, after Baxter International (NYSE:BAX) named the stem cell company's Progenitor Cell Therapy unit (PCT) as the contract manufacturer for a phase three stem cell trial.
Tuesday, Baxter started a phase three, 450 patient pivotal clinical
trial to evaluate the efficacy and safety of an individual's own CD34+
stem cells to increase exercise capacity in patients with chronic
myocardial ischemia (CMI), a coronary artery disease.
CMI is one of the most severe forms of coronary artery disease,
causing significant long-term damage to the heart muscle and disability
to the patient. It is often diagnosed based on symptoms of severe,
refractory angina, which is severe chest discomfort that does not
respond to conventional medical management or surgical interventions.
JMP's analyst, Jason N. Butler, said: "In our view, Baxter's
continued commitment to develop CD34+ cells in cardiac indications
provides external validation of the scientific and mechanistic rationale
for NeoStem's CD34+/CXCR4+ candidate therapeutic, AMR-001.
"Furthermore, Baxter announced that NeoStem's
PCT division will be the contract manufacturer for the Phase III
product, representing approximately $5-10MM in revenue, in our view.
"Our $3 price target is derived through a sum-of-the-parts analysis
including AMR-001, manufacturing service revenue from PCT, and sales
from the company's Chinese pharmaceutical division Suzhou Erye."
Speaking to Proactive Investors, NeoStem chief executive Robin Smith said: "It's really exciting. As our clients progress in phases, revenue goes up dramatically."
In terms of the trial's financial impact, Smith said: "With the
addition of Progenitor Cell Therapy (PCT) in January of 2011, our
revenues have diversified with over 10 percent attributable to PCT.
"As the cell therapy industry progresses and our clients accelerate
through the clinical trial pathways these revenues will rapidly grow."
Smith added: "We are very excited to see the results of the phase III
data when published as the phase II trial provided evidence that
leveraging the body's own natural repair mechanisms can improve exercise
capacity and reduce chest pain."
JMP said in the report that Baxter's trial could also validate NeoStem's
AMR-001, which is an autologous cell therapy designed to prevent heart
tissue damage and further major adverse cardiac events following a heart
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, 5
to 11 days after a patient experiences a heart attack.
The therapy is different than Baxter's in that the cells NeoStem
uses are not injected directly into the heart muscle. These cells are
infused into the infarct-related artery and mobilize to the area of
injury where they are needed.
is an international biopharmaceutical company with adult stem cell
operations in the US, a network of adult stem cell therapeutic providers
in China as well as a 51 percent ownership interest in a profitable
Chinese generic pharmaceutical manufacturing company.
The company is focused on accelerating the development of proprietary
cellular therapies and becoming a single source for collection,
storage, manufacturing, therapeutic development and transportation of
cells for cell-based medicine and regenerative science globally.
NeoStem is currently changing hands at 58 cents on Wednesday afternoon.