This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Neostem

BOSTON ( TheStreet) -- Welcome to the Biotech Stock Mailbag: Memorial Day 2010 edition.

Preston M. kicks things off, asking, " Adam, I appreciate your critical eye when it comes to evaluating drug stocks. What do you think of Neostem(NBS), which seems to be doing quite well these days and is generating a lot of buzz? Thanks."

To learn about Neostem -- and to understand why I'd be wary about sinking investment dollars into the company -- read Neostem's most recent 10-K annual report filed with the Securities and Exchange Commission. Read the SEC filing first -- before you visit Neostem's web site, before you read the company's press releases, and before you visit the stock message boards.

Neostem runs a money-losing adult stem cell collection business. Basically, this service harvests stem cells from the blood of healthy adults and stores them for later personal medical use. Think of this business as a cord-blood bank for adults -- except smaller and less successful. Outside of bone marrow/stem cell transplants for blood cancers, there are no approved medical uses for adult stem cells. No one has yet figured out a way to trick adult stems cells into growing new heart tissue or curing diabetes. Adult stem cells aren't remotely close to stopping Alzheimer's or Parkinson's disease.

Accordingly, Neostem generated only $178,400 in revenue from the stem-cell banking business in 2009, according to its annual report.
ASCO Stocks to Watch
13 ASCO Stocks Presenting New Clinical Data

Neostem is looking ahead to day when scientists might figure out a way for adult stem cells to play a broader role in disease cure. Towards that end, Neostem licensed some early university research involving VSELs, or very small embryonic-like stem cells. These are adult stem cells that appear to have some of the regenerative properties of embryonic stem cells. VSEL research isn't even out of the lab yet, which means any potential drugs or treatments are many years -- and tens of millions of dollars -- away. Read the 10-K; the clinical and regulatory risks and warnings are in there.

The partnership announced this week between the Catholic Church and Neostem to support VSEL research was nothing more than a publicity stunt. Unless divine intervention brings about a scientific miracle, VSELs are just one of numerous, early research efforts using adult stem cells which may or may not work. For investors, it's nothing more than a lottery ticket. Need a reminder of the risk? Look at Neostem adult stem cell competitors Cytori Therapeutics (CYTX - Get Report) and Osiris Therapeutics (OSIR - Get Report). Placing any significant market value on VSELs seems foolish to me.
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ONXX $0.00 0.00%
CYTX $0.24 -0.87%
GILD $85.86 0.30%
NBS $0.52 -25.71%
OSIR $4.75 -5.20%


Chart of I:DJI
DOW 17,639.18 -12.08 -0.07%
S&P 500 2,048.09 -3.03 -0.15%
NASDAQ 4,716.4350 -9.2040 -0.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs