NeoStem (AMEX:NBS) has been the subject of many analyst research reports as of late, with several giving a bullish outlook on the stem cell research company, including Life Tech Capital.
In early August, Life Tech gave NeoStem a "strong buy" rating, along with a $4.00 price target, way up from the company's current 70 cent trading price.
The upbeat forecast was based on several new developments, namely the receipt of new funding from the Department of Defense for NeoStem's VSEL (very small embryonic-like) technology, and the recent acquisition of AMR-001, a drug to prevent major adverse cardiac events after a heart attack.
"This funding, combined with NeoStem’s recent funding ($16.5M gross) and the acquisition of AMR-001 heading to Phase II clinical trials early next year, results in a solid buying opportunity for NeoStem shares during the current market weakness," noted Life Tech in its report.
The Department of Defense's peer-reviewed medical research program awarded NeoStem $1.78 million to fund the development of its VSEL technology for its bone building and regenerative effects in the treatment of osteoporosis.
Meanwhile, the company's AMR-001 drug, acquired through the purchase of Amorcyte in mid-July, is progressing at a faster pace than previously planned towards phase two trials.
AMR-001 consists of a patient's own bone marrow cells, which are processed to create pharmaceutical-grade cells that are then re-injected through coronary arteries into damaged areas of the heart, 6 to 11 days after a patient experiences a heart attack.
After positive phase one results, the phase two, placebo-controlled, double blind trial is expected to enroll 150 patients, earlier than the planned beginning of 2012 start date. It has already enrolled its first patient.
In addition to this drug, NeoStem also has several other operations from which it generates revenue. In the US, it provides stem cell collection, processing and storage services through a network of centres in southern California and northeastern USA, acquired through its purchase of Progenitor Cell Therapy in January.
The company, which also has licenses on technology to develop stem cell therapies, including VSEL, allows healthy individuals to donate their own stem cells to be used therapeutically later in life.
Meanwhile, in China, NeoStem has a separate stem cell operation, providing stem cell therapies to a network of hospitals, as well as a generic pharmaceuticals business.
Life Tech is not the only equity research firm that believes NeoStem is undervalued. Just this week, WBB Securities upgraded its rating for the company from a "hold" to a "speculative buy", while Morgan Joseph TriArtisan also re-iterated its "buy" rating.
"We believe the Street is underestimating the value of NeoStem's franchises, especially AMR-001, which could be a significantly large cardiovascular drug currently in mid-stage. Therefore, we are reiterating our Buy rating and $3.50 price target," concluded Morgan.