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Chardan Initiates Asterias Biotherapeutics At Buy On Potential Cell Therapy Competitiveness

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May 23, 2016 11:46 am
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Chardan Capital Markets has started coverage of Asterias Biotherapeutics Inc (NYSE: AST) with a Buy rating and $5.50 price target, saying the company “has the potential to become a significant competitor in the emerging fields of cell therapy and regenerative medicine.”

“Asterias is developing novel stem-cell based therapies in neurology and oncology, with three clinical-stage product candidates targeting cervical spinal cord injury, acute myelogenous leukemia and non-small cell lung cancer,” Chardan explained.

“We believe that Asterias’ key advantage in developing its cell therapies is its access to the extensive knowledge about the unique properties of human pluripotent cells through its relationships with Geron and BioTime,” analyst Keay Nakae wrote in a note.

Catalysts

According to the analyst, the following events should act as catalyst for the stock over the next year:

  • 1. “Interim efficacy data at six months from the second patient cohort in the Phase 1/2a clinical trial in cervical spinal cord injury around the end of 2016;
  • 2. “Regulatory approval to begin a Phase1/2a clinical study of AST-VAC2 in non-small cell lung cancer patients in the UK around the end of 2016;
  • 3. “Interim efficacy data at 12 months from the second patient cohort in the Phase 1/2a clinical trial in cervical spinal cord injury around mid-2017; and
  • 4.”Obtaining a SPA from the FDA for the proposed Phase 3 study of AST-VAC1 in AML patients around mid-2017.”

Related Link: Asterias Biotherapeutics Prices Its 5.15 Million Public Offering

Risk Factors

Nakae noted that the risk factors include financial losses, need to raise additional capital and possibility of termination of CIRM and CRUK agreements if milestones are not met. The company also faces risks in the form of possible government restrictions over the use of human embryonic stem (hES) cell and competition from StemCells Inc (NASDAQ: STEM) Neuralstem, Inc. (NASDAQ: CUR) and Invivo Therapeutics Holdings Corp (NASDAQ: NVIV).

In addition, a few “promising” drugs have recently gained FDA approval for non-small cell lung cancer (NSCLC), including Keytruda (Pembrolizumab) from Merck & Co., Inc. (NYSE: MRK) and Nivolumab (Opdivo) from Bristol-Myers Squibb Co (NYSE: BMY).

According to TipRanks, Nakae has a success rate of 25 percent with an average return per recommendation of -26.8 percent. The analyst is ranked 3,771 out of 3,929 analysts.

At the time of writing, shares of Asterias were up 5.11 percent at $3.29.

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