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In the future, cell based medicine will hopefully be the standard of care for many serious medical conditions. Currently the potential may look a bit murky, with various degrees of successes and failures being reported by the scientific community, but some big players in the pharmaceutical industry are paying attention. With drug development costs proving to be a sizable investment, in the hundreds of millions of dollars, large players may be looking for something that represents a sure thing, or at least something which might lead to that. But the discovery of a therapy, cure, or significant life extender to a substantial disease such as cancer, heart disease, or blindness, is only the beginning. Companies on this playing field have to be nearly flawless at the clinical trial game, have great IP (intellectual property) capabilities, and then master the manufacturing in a manner acceptable for FDA approval. The combination of these sets of expertness is rarely found in one group but some players in the industry are emerging as leaders.

So who will be a leader in the field and a great investment opportunity today? NeoStem is an international therapy company that is focused on transforming the way in which chronic disease is treated through cell based medicines. They have a clinical philosophy based on traditional drug development with state of the art manufacturing and a high level of regulatory expertise.

NeoStem (NASDAQ:NBS) gained its footing through acquisitions, successfully buying two companies for equity in 2011. The first acquisition, Progenitor Cell Therapy (PCT), the industry leader in commercial cell therapy manufacturing giving Neostem east and west coast facilities that has manufactured product for over 6,000 patients worldwide and preparing over 30,000 cell therapy products. This asset included 80% ownership in Athelos which is a company focused on developing T regulatory cell therapies for diseases such as Diabetes, Asthma, Graft vs. Host disease and organ rejection. They also acquired Amorcyte, a leading autologous cell therapy company for the treatment of an acute heart attack. Neostem also has its VSEL™ technology which has regenerative properties with potential indications for bone defects, macular degeneration, and wound healing.

So what is unique about this company? They have revenues from contract manufacturing in the east and west as well as from its family cell storage business. They also have a number of cell therapies in the pipeline.

Resulting from the Merger with China Biopharmaceuticals Holdings, Inc. in October of 2009, NeoStem gained a 51% controlling interest in Suzhou Eyre Pharmaceuticals. Primarily focused on manufacturing and selling antibiotics and anti-infection drugs, Eyre is on track to become one of the largest producers of antibiotics in Eastern China. Although sales were down this quarter compared to last year, due to a strategic decision to reduce some intermediate pharmaceuticals to make room for higher margin products, the future looks good for Eyre in their new state-of-the-art facility which gives the company a competitive edge in the market. Additionally, sales were pushed in a positive direction because of changes to the foreign currency exchange rate.

China’s pharmaceutical market is the third largest in the world, with expectations of doubling by 2013. With the growing market and dedication of the Chinese government to improve the healthcare system, NeoStem’s investment in setting up a good future for Eyre, if needed, could lead to a profitable sale of this company, leaving a large amount of money in NeoStem’s pocket.

The company has over a year reserve and with the successful divestiture of Eyre could advance multiple cell therapy products with a healthy balance sheet.

Neostem’s stock has been on a bumpy decline for the past 18 months, falling over 2.00 since June 2010 to closing at 0.55 on Dec. 2nd, 2011. NeoStem could possibly be just another temporary victim of other biotech firms pulling the market down. Dendreon’s (NASDAQ:DNDN) stock plummeted over 66% on August 4, 2011 due to under performing sales of its prostate cancer drug, Provenge. More recently, Geron (NASDAQ:GERN) announced its exit from embryonic stem cell research which had an impact on the market. Or this decline could be attributed to NeoStem’s decision to raise funds for acquiring Amorcyte with another public offering instead of using its operating cash.

Whatever the reason may be for NeoStem’s decline over the past 18 months, a significant amount of smartly placed key assets and a share price near bottom, NeoStem might be the hidden gem that is too important to ignore.

Source: NeoStem Might Be A Hidden Gem