Updated: Vatican Endorsement Seals NBS's Status as a The Major Play in Regenerative Medicine Print E-mail
By M.E.Garza   
Wednesday, 19 May 2010 08:03

Just as we have speculated in articles and trade alerts for the past few weeks, the Roman Catholic church appears to be getting ready to support Neostem's (AMEX:NBS) stem cell initiatives in a very big way and one can only imagine the types of new headlines this news may generate both on and off Wall Street.

One of the biggest questions now is just how high NBS shares will run on news of the scientific support that would have made Galileo jealous. An easy double? Perhaps easily over $10 or $15 given the fact that the company should be easily trading at $6 per share now without the news? Analysts I spoke to this morning say it's too soon to tell since historic news like this isn't announced very often.

NBS announced this morning that the Vatican’s Pontifical Council for Culture, today announced a joint 5 year initiative between the companies and their charitable organizations to expand research and raise awareness of adult stem cell therapies. NeoStem’s Stem for Life Foundation, formed to create awareness about the promise of adult stem cells to treat disease, and the Pontifical Council’s Foundation, called STOQ International (Science Theology and the Ontological Quest), will work on a variety of collaborative activities with the goal of advancing  scientific research on adult stem cells, exploring their clinical application in the field of regenerative medicine and the cultural relevance of such a fundamental shift in medical treatment options, particularly with regard to the impact on theological and ethical issues. As we understand it, this Vatican has endorsed NBS's method of extraction and storage of autologus(self-derived) adult stem cells as well as the growing number of NBS's proprietary treatments for these cells in the orthopedic,cardiovascular, cosmetic areas.

The Vatican is especially interested in NBS's VSEL technology which we indentified in our friday alert. VSEL, very small embryonic like, adult stem cells have all the characteristics of embryonic stem cells but avoid the rejection issues that occur with using another person's embryonic stem cells. The weight of the Vatican's political,financial and promotional  backing of such technologies clearly makes NBS the leading stem cell play.

The Vatican will exclusively partner with NBS to host a stem cell summit in Rome in 2011 to highlight the practical use of these treatments and will also teach courses at all its universities and hospitals about the scientific advantages of adult stem cells, especially the VSEL, over other non-autologus stem cell treatments.  This ringing endorsement of NBS's science will ensure continuous media attention as it has solved society's ethical dilemma of using non-autologus embyronic stem cells. The Vatican has backed the superior science and has stayed within its mandate of sustaining life. Compared to all other stem cell companies, NBS's treatments will begin to be marketed this year in China.

We anticipate that NBS will generate significant revenues from these treatments beginning in the second half of this year. The key to the fountain of youth is in our own bodies and NBS will get a technology fee on each extraction and application of that product. Thus they are the regenerative and rejuvenation company. We believe that the ability to use our own embryonic stem cells to repair damage or grow replacement parts will dramatically vault NBS's share price. NBS is like a pharma company with several blockbuster products approved at one time. Such companies attain stratospheric valuations. NeoStem, Inc. (NYSE Amex: NBS) bought majority-owned pharmaceutical subsidiary Suzhou Erye (Erye) October 31, 2009. Erye began relocation of its operations to its new state-of-the-art manufacturing facility with the State Food and Drug Administration (SFDA) approval of two production lines at the new plant. Expanded capacity at the new plant will enable Erye to increase its product supply to meet the rising demand in China’s growing pharmaceutical market. Transition to the new facility is on track to complete by 2011 and is expected to significantly expand Erye’s manufacturing capacity. Erye’s development pipeline continues to advance, including SFDA approval to manufacture the sterile active pharmaceutical ingredient of the anti-infective cloxacillin sodium. This new product and the SFDA approved omeprazole for GERD are pending commercialization during the summer of 2010 and are expected to generate additional growth opportunities in the second half of the year. Erye has an additional five products in its pipeline and is working with NeoStem to evaluate opportunities to in-license or acquire new drug opportunities to enhance the long-term growth potential.

First quarter revenues rose 24% over the same period last year to approximately $15.8 million.  Continued growth would put them at over 80m in revenues for 2010. Of major importance to investors should be the revelation in today's 8K filing that NBS has also signed an agreement with AQUA, a large investment fund, to enable NBS to draw down at is own discretion up to $20 million at a slight discount to market without warrants as an equity investment. This firm commitment from one of the premier investment institutions will provide NBS all the funding it needs, at the lowest dilution, to allow it to expand its fast growing Chinese pharma company and to market these proprietary stem cell treatments and benefit from times when there is stock is performing extremely well.

In other words, the company will raise money based on the good news that will be announced at the press conference, but there will not be a Rodman & Renshaw type financing deal that will dillute shares and scare investors. Those shorts who thought NBS was doing a highly dilutive secondary financing have already initiated a bear attack using their usual ploys in order to start to cover. This key revelation should also alleviate those concerns for longs who were sitting on the sidelines waiting to jump in. The company is scheduled to give updates on May 25th at a press conference at the NASDAQ market site and sources tell us that major TV news outlets and newspapers have already begun to confirm their attendance at the event. In addition, we are hearing rumors that the Catholic church may also be planning their own press events and around this major news. This is the stock to own as traders and investors will run the price up in anticipation of those announcements to come in the days and weeks ahead.

Disclosure: Long NBS

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