Neostem: A Multi-Faceted Stem Cell Sector Play

Sep.24.13 | About: Caladrius Biosciences, (CLBS)

In the stem cell sector, very few companies provide an opportunity to invest in both multiple therapies as well as the entire industry as a whole, yet one company which has managed to provide just this is that of Neostem (NBS). One of the original pioneers in the stem cell space, Neostem's business model encompasses several patented stem cell therapies currently undergoing clinical trials, as well as a contract manufacturing division which produces cell therapy products for many of today's top leading pharmaceutical and biotech companies. With bullish clinical data currently rolling in, a strong financial position on the balance sheet and a stem-cell industry approaching a possible near term inflection point, there appears to be every reason to be intrigued by Neostem's prospects.

AMR-001

Currently underway at Neostem are 5 clinical trials aiming to enter treatment markets for Cardiovascular disease, Autoimmune disorders and tissue regeneration. The company's most advanced program currently in progress is its AMR-001 stem cell candidate which is currently in clinical trials for Acute Myocardial Infarction and Congestive Heart Failure. Being that heart disease is ranked by the World Health Organization as the number 1 cause of death and illness in the world, the market potential for Neostem's cardiovascular therapies cannot be understated. The present market value for Cardiovascular disease is estimated to be roughly $445B annually, yet this cost is expected to reach $1T by 2030. Although clinical trials are still underway for the therapy, data on AMR-001 thus far has shown to have a positive impact on targeted heart conditions with a high safety profile to match. If Neostem's therapy can continue to show the efficacy and safety results as it has thus far, the therapy should - if approved - go on to become a main competitor for treatment in the cardiovascular disease space.

Athelos Platform

As well as cardiovascular disease, Neostem is also currently undergoing clinical trials for Type 1 Diabetes, steroid resistant asthma and has an IND filed to begin a Phase I trial for organ transplant tolerance. The stem cell platform used for these indications utilizes immune system modifying TREG cells which have been previously shown to increase T-cell quantities and functioning. For this stem cell platform the company currently holds 22 patents for use in both the US and international markets. For this particular therapy several catalysts are in store over the next 12 months. The first is the company's plans to advance its Phase II trial for it Type 1 Diabetes therapy in early 2014. For this implication Neostem is working with scientists Dr. Jefferey Bluestone and Dr. Qizhi Tang out of the University of San Fransisco's Diabetes Center and have extensive expertise in the field of Diabetes and regenerative medicine. Further in store is the company's second TREG cell therapy trial targeting steroid resistant asthma which is set to initiate a Phase 1b/2a trial in the near term.

Supplying Stem Cells For Competitors

As well as Neostem's various novel stem cell therapies currently under development, the company is also one of the biggest producers for outsourcing stem cells to the industry. Currently working with over 35 clients, Neostem's cell manufacturing division works to produce therapies for some of the biggest companies on the scene today including Pfizer (NYSE:PFE), Athersys (NASDAQ:ATHX), Stem Cells Inc. (NASDAQ:STEM) and Baxter (NYSE:BAX) to name a few. Being a stem cell developer as well as manufacturer also puts the company in a position to profit on its competitors successes and on the growth of the industry as a whole. As someone who has a highly positive outlook on the future of the stem cell sector in its entirety, I believe Neostem's contract manufacturing division could have just as much potential to generate large revenues for the company as its therapy divisions do.

Conclusion

In looking at the stem cell industry in its entirety, no company appears to offer as much of an opportunity to grow parallel alongside it as Neostem. While the regenerative medicine space is still an upcoming sector in the field of medicine, an inflexion point for the industry as a whole is looming within the next few years and Neostem stands to significantly grow with it if its client's and own company's therapies successfully make it to market. While risks always exists for development stage biotech companies such as unsuccessful clinical trials and potential for future financing, I see the downside for Neostem as minimal due to the company's highly diversified business model and positive trial results thus far.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NBS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.