NeoStem to drive shareholder value, says Rodman & Renshaw
Seeking Alpha Analyst Since 2009
NeoStem (AMEX:NBS) said Thursday that equity research firm Rodman & Renshaw re-iterated the multi-faceted stem cell company's market outperform rating, based on "multiple milestones to drive shareholder value".
Since starting out as a provider of adult stem cell collection and storage services, New York-based NeoStem has since branched out into cell therapeutics, focused on using stem cells to help cure disease.
In January, the company acquired Progenitor, which has cell therapy manufacturing facilities, as well as processing and storage facilities for stem cells collected from the umbilical cord at birth, located on the east and west coast of the US. Progenitor has performed over 30,000 cell therapy procedures and has processed and stored over 18,000 cell therapy products.
According to Rodman, the Progenior acquisition unlocks significant upside potential. In the first quarter NeoStem reported pro forma revenues of $1.5 million from its stem cell-related business, $1.4 million of which was attributable to Progenitor.
As a result of the acquisition, NeoStem can also now develop stem cell therapies in-house, placing it in a solid position for future growth in the field. Revenues from Progenitor are estimated to reach $9 million by 2013, said Rodman.
But aside from this, the company is benefiting significantly from its Chinese pharmaceuticals business, reporting pharmaceutical revenues of $18.1 million in the first quarter, a 15% growth over the year-ago period. NeoStem owns a 51% stake in Chinese generic pharmaceutical company Suzhou Erye.
In addition to the 160 marketed products focused on antibiotics, Suzhou also has a number of drugs in the pipeline, with plans to launch omeprazole, a widely used drug for acid-induced inflammation, in the third quarter, as well as an another product in the following quarter.
With this growing pipeline to fuel future growth, Rodman & Renshaw project a revenue growth rate of 20% during 2011-2013, with the potential to reach $119 million in pharmaceutical sales by 2013.
NeoStem has also just formed a third lucrative partnership with a hospital in China for its stem cell therapies. In each case, the company has built an in-hospital laboratory, with the rights to conduct an autologous adult stem cell-based treatment for orthopedic indications.
Going forward, NeoStem anticipates securing a total of six collaborations with hospitals by year end, and could generate revenue of $2 million from this business by 2013.
Rodman & Renshaw noted that NeoStem, with $9.4 million in cash and equivalents at first quarter-end, has enough to sustain itself through the fourth quarter. The company also has an additional $18 million equity line of credit.
Based on all these developments, the equity research firm gave the company a 12 month price target of $3 per share, up from its current trading price of $1.59.
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