NeoStem's "market outperform" reiterated by JMP Securities, Baxter trial validates technology

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 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, 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.
NeoStem 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.