NEW YORK (TheStreet) -- Within the biotechnology sector, there are many different niches that investors can look at to generate significant returns. However, one space that has routinely been mentioned as a potential breakthrough area is stem cells. When looking at this space, investors must be careful to identify companies that not only have a strong platform, but also have the financial discipline necessary to survive and prosper in the future.
One company that is really standing out as a potential player within this space is NeoStem (NBS). Based on some recent research, it has become apparent that NeoStem has the potential to derive significant revenue from its platform.
NeoStem is a stem-cell company with three technologies for the treatment of diseases with major unmet medical needs. Investors have enjoyed a 54% return over the past two months after two important decisions were made by management.
First, on July 11, the company announced a 1:10 reverse split. Typically, investors frown upon reverse splits, but that decision appears to have created a significant momentum upswing for NeoStem.Second, on July 23, the company issued a press release that it would begin trading on the Nasdaq on August 5. Although the company had been trading on the NYSE, the move to the NASD allows the company to gain enhanced exposure and potentially receive additional institutional investments. Plus, a Nasdaq listing appeals to investors as it allows for lower-cost trades and faster execution speeds. With the recent 50%+ appreciation in shares, investors are likely wondering if the shares can continue heading higher. After examining the pipeline potential through a sum-of-the-parts valuation analysis, the answer appears to be "yes". The company is pursuing three technologies that include AMR-001 (from NeoStem's subsidiary, Amorcyte), T-cell or Treg therapy (from the subsidiary, Athelos) and VSEL (very small embryonic-like stem cells) technology. The one that appears to have the most potential is Amorcyte's AMR-001 for the treatment of acute myocardial infarction. The company has been enrolling patients in the PreSERVE AMI Phase II trial since January 2012. The goal is to complete enrollment of 160 patients by the end of 2013 and announce the final results during the summer of 2014. in the ballpark of $1.2 billion. So the $250 million is most likely on the conservative side (as it should be). That being said, NeoStem's current market capitalization is $160 million. Based on the potential of AMR-001 for acute myocardial infarction alone, the market appears to be undervaluing the company.
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