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NEW YORK (TheStreet) -- Neostem (NBS) shares are falling sharply, down 21.80% to $2.06 in afternoon trading on Thursday, after the cellular therapy products provider announced the pricing of a public offering of 12.5 million common shares at $2 per share.

The company expects to raise $25 million from the secondary offering before deducting fees related to underwriting discounts and commissions. The company granted underwriters an additional 45 days to purchase an additional 1.875 million shares.

Neostem plans to use proceeds from the sale to fund research and explore strategic transactions.

The offering is expected to close on or about June 2.

TheStreet Recommends

TheStreet Ratings team rates NEOSTEM INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NEOSTEM INC (NBS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 40.3% when compared to the same quarter one year ago, falling from -$13.68 million to -$19.20 million.
  • Looking at the price performance of NBS's shares over the past 12 months, there is not much good news to report: the stock is down 50.34%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The revenue fell significantly faster than the industry average of 19.7%. Since the same quarter one year prior, revenues fell by 21.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • NEOSTEM INC's earnings per share declined by 8.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NEOSTEM INC continued to lose money by earning -$1.69 versus -$1.92 in the prior year. This year, the market expects an improvement in earnings (-$1.58 versus -$1.69).
  • You can view the full analysis from the report here: NBS Ratings Report