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NeoStem (NYSE MKT: NBS) Q3/12 Achievements And Highlights And Results

A net loss of $8.5 M or $0.06 per share …

Net loss for Q3/12 was $8.5 M or $0.06, compared to $6.5 M or $0.07 in Q3/11.

Revenues were $4.4 M compared to $2.2 M for Q3/11. The increase in revenue was primarily driven by clinical service revenues in the Company's PCT subsidiary, and reflected an increased overall visibility and penetration of PCT into the cell therapy marketplace, along with a general increase in the development of autologous cell therapies in the United States due to enhanced investment and expanded marketing programs in 2012. Cost of revenues was $3.747 M with a gross profit of $686,471. R&D expenses were $2.828 M while SG&A expenses were $5.947 M for a total operating expense of $8.775 M generating an operating loss of $8.089 M. Other income including other expense income, net was $74.8 K and interest expense of $384.1K combined added to $459 K. Thus a net loss was $8.395 M. Losses from continuing operations (non-controlling interests were $59.5 K while the loss from discontinued operations was $74.5 K; so the net loss attributable to NBS was $8.4 M with warrant inducements at $1.012 M and preferred dividends of $67 K. The total net loss to shareholders was $9.49 M. The weighted average of shares which determined the net loss was 148.197 M

  • As of 9/30/12, NBS had cash of $7.9 M and has received an additional $12 M subsequent to 9/30 from the sale of its ownership in Erye, equity transactions and warrant exercises

9 Months Review: The net loss from continuing operations for nine months were $23.5 M, or $0.18 per share, compared to $26.7 million, $0.32 per share for nine months ended9/30/11. NBS' loss from continuing operations for the nine months excluding non-cash charges was $15.6 M. Revenues from continuing operations grew 98% for the nine months compared to the prior year period. Revenues from continuing operations for the nine months $11.6 M compared to $5.8 M for the same periods in 2011. The increase in revenue, representing a 98% revenue growth for the nine months compared to the prior year period, was primarily driven by clinical service revenues in the PCT subsidiary.

Q3/12 and Subsequent Highlights:

  • NeoStem is continuing to enroll patients into the PreSERVE P2 clinical trial in the U.S. for post AMI (acute myocardial infarction) patients and anticipates completing enrolment in 2013 with 6 months initial data readout near the end of 2013.
  • On 11/13/12 NeoStem completed the divestiture of Erye, and received a total of $12.3 M in cash, of which $2.7 M had been received as of 9/30/12. Upon closing, Erye also returned to NeoStem 1.040 M shares, 1.170 M Common Stock options, and 640 K of warrants. In addition, the divestiture bolsters NeoStem's balance sheet by eliminating over $30 M in short- and long-term debt obligations;
  • In 10/12, NBS completed the redemption of all outstanding shares of its Series E 7% Senior Convertible Preferred Stock;
  • PCT's industry role is to be a problem solver (consultant), implementation expert and cGMP manufacturing service provider from product discovery to commercialization for product developers. In its thirteen year history, PCT has supported over one hundred regenerative medicine companies and NeoStem anticipates growth in the United States and abroad by expansion into Europe.

The Bottom Line: Q3 EPS of -$0.06 missed by $0.01. Revenue of $4.4M beats by $0.9M. The opportunity for existing and new NBS shareholders is substantial. In the midst of global economic uncertainty, NBS has assembled a multifaceted business plan that can drive top revenue growth through its PCT CDMO business while investing in dynamic cell therapy development programs.NBS' service business and pipeline of proprietary cell therapy products give a competitive advantage that is unique in the biotechnology and pharmaceutical industries. Supported by an experienced scientific and business management team and a dynamic patent and patent pending intellectual property portfolio, NBS is well-positioned for future success.

In my view, if certain milestones and catalysts evolve … NBS can break the $1.00 + trend line by Q1/13. NBS is up $0.03 or +4.61% to $0.669.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.