The Swiss Trader

Long/short equity, growth, long-term horizon, biotech
The Swiss Trader
Long/short equity, growth, long-term horizon, biotech
Contributor since: 2012
Weren't you an OSIR cheerleader just two months ago? You are seriously discounting the fact that biotechnology companies are valued on clinical progress and likelihood of success. All of these companies dilute shares, but if any of its products work, then gains will still be robust.
Especially in this biotech market -- You get REGN-like growth with DNDN-like multiples.
High inventory doesn't bother me when sales are growing this rapid. The world is a big place, and UA has barely scratched the surface.
Every trial consumes cash, even Baxter's. I am not suggesting that Baxter will purchase NBS tomorrow. I am suggesting that "if" PCT proves "not" to be NeoStem's most valuable asset then Baxter would likely be attracted to the marketing synergies of AMR-001 and its own CD34+ therapy. I think Baxter is keeping a close relationship, and if data is good then I think they will acquire NeoStem.
Is Baxter not pretty preoccupied with the Gambro acquisition at this point, such that buying something new would be a dangerous distraction ?
NeoStem would be later down the road.
Is the departure of Dr Losordo actually a sign that the Baxter product is not doing so well and that they are happy to let him go elsewhere to pursue his interests ?
Losordo was a scientist and physician before he agreed to help Baxter develop the product. I don't think he ever intended to stay long-term. He is good at coming in with research and then developing a technology to have potential.
How much of the value of PCT is represented by contracts being performed for other clients, some of whom may be competing or may compete in future with Baxter ?
Dendreon had three facilities to manufacture one product. All products need manufacturing. Baxter could either use PCT as a company facility to cut down on company costs or it could keep business open to other companies/organization...
What is the value of AMR-001 to Baxter given that it already has a similar product in development ?
They are similar, but treat two different diseases. Baxter's has already proven to be effective, and the structural similarities is what makes the case strong for the success of both products. Baxter's alone has peak sales potential of a billion. AMR-001 has peak sales of $1.3 billion. The acquisition would make Baxter an instant leader in regenerative and cardiovascular medicine.
I disagree. I think it will happen in the first or second quarter of next year. At that point, NeoStem will have a lot of leverage, if data is positive.
Yes, they are competitors. It is an interesting dilemma. In many ways they are already partners. I do think that if AMR-001 data is good that we will see a full acquisition. The marketing synergies between the two products would be worthwhile. Both manufactured the same say, treat conditions of the heart, and would be marketing to the same cardiologists.
NeoStem has five segments. It is possible that Baxter would not want all of the assets that come with NeoStem. It makes sense that a partnership could appear more favorable to Baxter.
I think the key is patience on behalf of Baxter. I don't think they would show any interest in PCT until their Phase 3 data is read. I don't think they would show any interest in AMR-001 until its data is read. Then, if both Baxter and NeoStem's data is positive, we might see an acquisition, as Baxter might then want NeoStem's pipeline.
I think the outlook depends on how Baxter views cell therapy as an industry
Should be a significantly higher stock price. I don't think it would happen until after the company's data early next year. If AMR-001 meets its goal, NeoStem will see a 100%+ jump. The outlook for the company will be completely different.
I am looking forward to an earnings beat from Freeport. Where do you see near term share prices in the next 3-6 months?
I did not hear his comments. This was written on Monday night. But that is great news for the company.
The warrants are $1.90. The .5 warrant represents the number of units so I am not sure where you are getting "$1.35"
It won't complete Phase 3 trials but it will give the company enough cash to get through interim results. By that time we will know a lot more about the company, If interim results are good GALE could be a $5-$10 stock and will have its choice at partners. If the trial is good then I don't see any more rounds of financing
It wants to raise $24 million, which would give it more than enough cash
I have heard no such details. Why don't you provide a link?
yogisteve, you make very good points and hopefully you are correct. But your reasons for continued growth are speculative and are based upon proper "execution". If you look back at Spectrum's sales for the last two years you can clearly see that Fusilev is loosing some momentum. I don't know that it will last but with generic competition and the company allowing for charge backs and discounts I think they might see that Fusilev could face challenges. I am not suggesting that the company will not grow, but I think the days of 40-50% Fusilev sales growth are over. The company needs Zevalin and needs to execute on the synergy between its three products and then it can continue to grow. But this article is not about Fusilev, nor is it a bear perspective, but there is a reason that Spectrum trades at 7.5 times earnings. The immediate short-term trend of this company is in question, but the long-term performance is most likely solid. Zevalin sales growth is required and who knows when or if it will happen.
weissflog, those are excellent questions and no doubt on the minds of many investors, some of which on mine. I think those would be good questions to address in an article at a later time. Perhaps I could arrange a conversation with Robin Smith?
The two questions that really strike me as important are numbers 5) and 6).
5) I do believe that PCT will continue to grow and will prevent future financing. 100% sales growth is incredible. The company has IMUC, BAX, and SOTIO that are all in late stage trials, at least 700 patients between the three. All just recently began studies, and I doubt are fully enrolled, which means revenue should continue to climb. Also, the company did just recently sign SOTIO, don't count out more clients in the coming months. SOTIO is proof that one client can add substantial revenue. In regards to clients leaving PCT, I don't think it will be a problem, DNDN is living proof, and the company can use the experiences of DNDN as a good selling point.
6) BAX and NBS products are very similar, and BAX has already shown positive results in a large study on a cardiovascular disease. I expect the same for AMR-001. I suspect that NBS will provide some level of preliminary results as soon as possible. The stock should be much higher, and in time it will.
Bergerac, it is important for you to realize that this was not intended to provide an overview of the space, but rather a look at recent announcements.
The reason that these companies are talked about with oneanother is because they are all in the cell therapy space, and have similiarities, including valuation.
I understand and respect that you are CUR bull, but the risk/reward ratio to valuation and potential isn't even close. CUR is a preclinical phase company and its products are equal to NBS' VSEL Technology.
Then NBS also has manufacturing and a late stage clinical development segment. Plus take a look at the income statement and balance sheets of both companies.
NBS creates revenue and is closing the gap of losses. NBS operating cash flow was ($0.85) million compared to CUR's ($4.54) million last quarter. Keep in mind, NBS is much more active with a more complex business. Take a look, break it down, and compare the two. I used the words "conclude" and "best" because in my opinion it is the obvious truth.
Yes I read it. It was a complete bear point-of-view that ignored all of the positives. GALE is a $100 million company, his points would be relevant if GALE was a $1 billlion company. All of the risks have been priced into the stock.
I believe I made a very clear case within the article as to why I feel NBS is the best investment choice in the sector. You are a long holder of CUR, I am a long holder of NBS; in the long run we will probably both do well with our respective choices. I write articles on companies that I own and fully disclose my position. You just seem to comment negatively on anything to do with companies not named Neuralstem.
In my opinion and from some technical indicators, I believe the current price to be a support level. I am accumulating currently because I believe that the positive data that has been recently released will trump any effects of the fiscal cliff talk. The pessimistic market sentiment I believe is hitting overvalued large cap stocks more than smaller companies. Only time will tell. Good luck with your portfolio.
Momintn, that is a great point that not many people are talking about. Nice comment, thanks for reading
Jim Long, I agree with your assessment, and I think the most important factor moving forward is the investigation into the business practices of the company. I suspect that this could be a long and drawn out process, and until we know for sure what they are investigating and the outcome I don’t see investors being too bullish. It is undervalued compared to current fundamentals, but who knows what next year will be like.
Acthar does have many indications but, like we’ve seen with Aetna, it is possible that not all insurance companies will support the many indications. However, the stock is undervalued, but I am not sure that it will trade to new highs, or back over $40 because of fear among investors. We simply don’t know what will become of the investigation. If it’s found that Questcor is in fact marketing the product in an illegal manner then it could be a huge blow to this company. Questcor needs to acquire or develop a pipeline with its cash position for security and to build shareholder confidence, in my opinion.
Very good analysis. Also should be noted that Cantor Fitzgerald reiterated its BUY rating and $4.00 price target.
That is quite a macro level that you are looking at, however that theory has held true. Adult stem cell research does not have the negative or "morally objectionable" stigma attached to it that embryonic research does. NBS has its focus on adult stem cell research and has even entered into a relationship with The Vatican to further educate and develop the technology.
Good catch----Japan is incorrect, it should read Korea. Thank you for reading.
My best estimate would be interim data Q3-Q4 this year, with final data Q2 2013.
Based on their last presentation, 8 of the 16 patients from phase I are still alive. Since the trial only began in 2007, they probably have most patients with 4 year survival and not many have reached 5 year mark yet. However, that is just a matter of time.
Thank you for reading Luke. I think we need to bear in mind that less than 5% of patients treated with the current standard of care are disease free at 3-4 years. The fact that ICT-107 has 38% patients disease free at 3-4 years is too large a delta to be explained by the selection bias. Also, it is virtually impossible to pick patients who will survive for that long if they have confirmed grade 4 GBM, which was the case for all patients treated in phase I. Selection bias can come from a few different sources: best surgeons, aggressive treatment, and only picking younger patients where the entire tumor has been taken out.

One of the things IMUC has done to address this selection bias is to compare the phase I trial versus another tumor lysate trial (at Cedars-Sinai) with similar patient population in terms of age, level of surgery and KPS score (measures overall health of patients) conducted at the same time. Patients were selected for vaccine trial and given either ICT-107 or tumor lysate dependent on certain markers on white blood cells to make sure ICT-107 would be immunogenic in those patients. ICT-107 had 20 months longer median survival compared to tumor lysate vaccine (see the company’s website), which was statistically significant even with such small number of patients.
I do agree we need to see data from a randomized, controlled trial, whether these results hold up. The current phase IIb study underway is the gold standard of trial designs, with over-all survival as the end point, which is a very objective assessment of this trial. If the trial shows even a 6 months of survival benefit, as opposed to 20 months from phase I, this has a high likelihood to be approved based on phase II alone because of the large unmet medical need.

The best historical work (from 2009) is based on Dr Stupp’s trial in Europe on Temodar and the abstract is linked below. If you read this you will realize how dismal the prognosis is for this disease and how rare it is to find patients disease free for that long. There are no subgroups one can find that live anywhere close to ICT-107.

http://1.usa.gov/IXYHtL
Very good analysis. After spending some time doing my own research after reading your article I agree that the company is considerably undervalued at this time.