|Pluristem Positioned to Grow as Market Leader In Therapies and Manufacturing|
|By Ray Dirks, Ray Dirks Research|
|Monday, 17 October 2011 04:02|
In our view, Pluristem Therapeutics, ticker PSTI on the NASDAQ, is the only company that has the technology, patent position, and expertise to become the manufacturing leader. Aside from its manufacturing capabilities, Pluristem also has a growing roster of its own proprietary therapies in Phase I and II clinical trials. The combination of intellectual property in both manufacturing and it in its own therapeutics, position Pluristem as the market leader than can cut deals with other biotechs developing therapies in the stem cell space.
Pluristem recently announced it is expanding its manufacturing with a new state-of-the-art facility Israel. The company states this facility is expected to commence operations at the end of 2012 and is expected to have the capacity to produce cells for the treatment of over 150,000 patients annually. The company’s proprietary 3D manufacturing process can produce mass manufacturing of cells in a way that no other stem cell company can, thus making Pluristem the ideal manufacturing partner for other stem cell companies.
As an example of how this might work, investors may look to Pluristem’s first exclusive out-license agreement with United Therapeutics Corporation (Nasdaq:UTHR), for the use Pluristem’s PLacental eXpanded (PLX) cells to develop and commercialize a cell-based product for the treatment of Pulmonary Hypertension (PH). As stated by Pluristem management, this agreement demonstrates the potential of PLX cells to become the "engine" towards the development of many successful cell therapy products.
Pluristem is also a bargain with an approximate market cap of $100 million. In his recent article on Seeking Alpha, analyst Michael Morhamus recently commented on Pluristem’s manufacturing capabilities and wrote about a few other stem companies that have market caps at multiples of Pluristem, while Pluristem holds the patents on the manufacturing that these companies may need one day soon.
In the Seeking Alpha article, companies mentioned included Lonza AG (LZAGF.PK) with a $3.2 billion market cap and Mesoblast (MBLTY.PK) with a $2.7 billion market cap. The article states that Pluristem holds the exclusive patents and essentially has a monopoly on the expansion of stem cells in a three dimensional (3D) manner, no matter where these cells come from.
Further, Seeking Alpha proposes that Pluristem has come up with a way of protecting its IP position in expanding cells in a 3D method – bar coding. Pluristem is able to assay a competitor’s cell product and know if the cells in that product were grown in a 3D or 2D manner. This is very important for Pluristem if the 2D manufactures need to resort to 3D manufacturing to produce the necessary number of cells for their product in a cost effective way.
Pluristem is executing on multiple fronts in an industry that is emerging into a sort of ‘mass market’ for healthcare. Its modest market cap has a lot of room for growth, and that I believe this represents an enormous buying opportunity for Pluristem
For all of the reasons cited in the article above, Ray Dirks Research strongly recommends the common shares of Pluristem Therapeutics (PSTI-NASDAQ) at their current price for Short Term, Intermediate Term, and Long Term Capital Appreciation.