Research

StemCells Inc. (STEM) Note 04-17-14

downloadreportEnrollment Completed for Phase I/II Trial in Thoracic Spinal Cord Injury
Next Steps: Clinical Trials for Cervical Spinal Cord Injury and Dry AMD
Alzheimer’s Disease Pre-Clinical Work Funded by CIRM – IND Early-2016

Download Full 9-Page Note with Important Disclosures: Morning Note 04-17-14 STEM

Enrollment Completes for Phase I/II Trial in Thoracic Spinal Cord Injury: StemCells, Inc. announced today they completed enrollment in the Phase I/II clinical trial in thoracic spinal cord injury. The multi-national, open-label, Phase I/II trial is evaluating both safety and preliminary efficacy of StemCells, Inc.’s proprietary HuCNS-SC® human neural stem cells as a treatment for chronic spinal cord injury. The trial enrolled 12 patients with chest-level injury to the spinal cord. The trial enrolled 7 patients with complete paralysis, no motor or sensory function below the point of injury, classified as complete (AIS-A) and 5 patients with no motor function and limited sensory function below the point of injury classified as incomplete (AIS-B). Six month interim data for the first 6 patients will be presented at the American Spinal Injury Association conference May 14-17 by Dr. Armin Curt of the University of Zurich. Final results are expected mid-2015.

Investors should note that StemCells Inc. has already announced the final 12-month data from the 1st patient cohort (AIS-A) showing that the gains in sensory function observed in 2 of the 3 patients at 6 months persisted for the 12 month period plus an unexpected improvement in 1 patient classified as a complete injury (AIS-A) to being reclassified as an incomplete injury (AIS-B). (see Human Trial of HuCNS-SC® for Chronic Spinal Cord Injury (SPI))

OTHER NEWS:

Controlled Phase II with Cervical Spinal Cord Injury to Begin: In Late-2013, StemCells Inc. received FDA authorization for a controlled Phase II trial including cervical spinal cord injury patients, which represents approximately 60% of all traumatic spinal cord injuries. The trial is expected to begin mid-2014 and complete enrollment in 2015.

Phase I/II in Dry Age-Related Macular Degeneration (Dry AMD) – Enrollment Completing Soon: On March 12, 2014, StemCells, Inc. management indicated that they completed implantation in the 1st cohort of 8 patients (20/400 vision, 4 patients receiving 200,000 cells and 4 patient receiving 1 million cells) in their Phase I/II trial for Dry Age-Related Macular Degeneration (Dry AMD) with interim cohort data expected later this year. StemCells Inc. expects to complete enrollment in the 2nd (final) cohort of 8 patients receiving 1 million cells by mid-2014 as they expand from four sites to a total of five sites.

Controlled Phase II in Dry Age-Related Macular Degeneration (Dry AMD to Begin: Subsequent to enrollment of the 2nd cohort in the Phase I/II Dry AMD trial, StemCells Inc. stated that they expect to initiate a controlled Phase II efficacy proof-of-concept study by year-end 2014 with enrollment completing in 2015. Investors should note that 85% of all AMD patients currently have the Dry form and 100% of patients with the more serious Wet form progressed from the initial Dry form. The dry form can also cause vision loss without turning into the wet form.

Alzheimer’s Disease IND Moved Up One Year: StemCells Inc. announced that they intend to file an IND for Alzheimer’s Disease in 2016, a year earlier than expected. The current preclinical work is being funded with a $19.3M forgivable loan from the California Institute for Regenerative Medicine (CIRM).

We are reiterating a Strong Speculative Buy with a Price Target of $4.50 as StemCells Inc. continues to be one of the most advanced players in the stem cell space. StemCells Inc.’s HuCNS-SC® (purified human neural stem cells) have already shown unprecedented results in human patients for Pelizaeus-Merzbacher Disease (PMD) and for Complete Thoracic Spinal Cord Injury. The company is now progressing with controlled Phase II trials in Cervical Spinal Cord Injury and Dry Age-Related Macular Degeneration (Dry AMD) and they are also expecting to file an IND for Alzheimer’s Disease a year early in 2016 with preclinical funding via a forgivable loan of $19.3M from the California Institute for Regenerative Medicine (CIRM). With their new cGMP manufacturing facility fully operational and a strong management team unlocking the value of HuCNS-SC’s strong science, we believe StemCells Inc. has emerged as a cutting-edge stem cell company with a focus toward commercialization for large unmet medical needs. Our Strong Speculative Buy rating and 12-18 month target price of $4.50 is based on 35x estimated 2020 EPS discounted 50% for cumulative risks in a first-in-class stem cell therapy.

Download Full 9-Page Note with Important Disclosures: Morning Note 04-17-14 STEM

Navidea (NAVB) Note 04-10-14

downloadreportManocept™ Platform Gaining Visibility – Undervalued Asset for Navidea
Multiple Near-Term Catalysts for Lymphoseek® Market Expansion
Alzheimer’s, Parkinson’s and Manocept™ Under the Radar & Undervalued

Download the Full 10-Page Note with Important Disclosures: Morning Note 04-10-14 NAVB

Data from Navidea’s Manocept™ platform was successfully used for identifying affected tissues and lymph nodes in patients with Kaposi Sarcoma (KS) and was presented by the University of California, San Francisco (UCSF) at the 2014 American Association for Cancer Research (AACR) conference. The presentation titled “Kaposi’s sarcoma represents a dynamic pathogenic process involving ongoing macrophage replenishment with both tumor cells as well as macrophages expressing CD206, a target for the recently approved imaging agent, Tilmanocept.

The study presented on April 9th was designed to define macrophage subsets in all forms of KS and determine if the CD206 mannose receptor is present on the tumor-associated macrophages (TAMs) as well as KS tumor cells. The data presented reinforce earlier results in KS and demonstrate in 66 evaluable cases and controls obtained from the AIDS and Cancer Specimen Resource (ACSR) that the CD206 mannose receptor is highly expressed on both TAMs and KS tumor cells, thereby making it an attractive target for precision diagnostic agents derived from the Manocept platform. The researchers concluded “Considering the current inability of clinicians to determine the degree of KS spread beyond the presence of obvious skin lesions, the potential for using Tilmanocept to define tumor burden may allow earlier tumor specific treatment beyond the current use of anti-retroviral therapy alone which is proving ineffective in growing numbers of KS patients worldwide.” Investors can access the abstract at http://bit.ly/1gb77vb

We note that Navidea’s Manocept platform continues to show utility in multiple diseases such as Kaposi’s Sarcoma (KS), Rheumatoid Arthritis (RA) and Tuberculosis (TB) and other macrophage mediated disorders such as Lupus and Crohn’s disease. (see Manocept™ Platform Development Program). We continue to believe the Manocept platform remains under the radar and is an undervalued asset in Navidea’s portfolio.

Download the Full 10-Page Note with Important Disclosures: Morning Note 04-10-14 NAVB

Echo (ECTE) Note 04-09-14

downloadreport

Platinum Gets Serious – Names Nominee to Replace Board Chairman

Download Full 5-Page Note with Important Disclosures: Morning Note 04-09-14 ECTE

Platinum Gets Serious: According to an 8-K filing, on April 3rd, Echo’s Board extended Chairman Robert Doman’s contract to act as interim CEO yet again, this time through June 30th. Presumably in response, Echo’s largest shareholder, Platinum, just filed a 13D with the SEC stating that Platinum is nominating Shepard Goldberg for election to the Board of Directors, specifically for the seat currently occupied by Chairman Robert Doman. We note that Shepard Goldberg is cousin to Michael Goldberg who was recently named to the Echo Board on February 28th.

Background: After a disastrous 2012-2013 when the stock declined over 90% due to multiple poorly executed financings, the CEO Patrick Mooney was terminated on September 27, 2013 with Board Chairman Robert Doman stepping in as interim CEO. After several months, no permanent CEO had been named and on their March 27th conference call it was revealed that the search for a permanent CEO was just getting started and that Mr. Doman intended to remain on the Board subsequent to a new CEO being named.

What this Means to Investors: We believe that Platinum, as Echo’s largest shareholder, is more closely aligned with shareholder interests than current management. The severe decline in stock price, the need to develop a GEN2 system in order to begin U.S. trials and a planned “limited” launch in Europe (limited launches generally cost more than they make), with no permanent CEO named is not conducive to investor confidence. While the addition of Michael Goldberg to the Board was viewed as a solid first step, clearly Platinum is unsatisfied with management, and as a result, is seeking additional Board representation (at the expense of Mr. Doman’s seat).

Maintaining Neutral: We continue to believe in the basic science of the tCGM Symphony system however, this is not enough to generate confidence in Echo shares. The continuing management and governance issues, development delays and poorly thought-out European strategy, all act as dampers on any possible Symphony success in the near-term. Unless and until investor confidence is regained in Echo, we believe the shares will remain relatively flat.

Download Full 5-Page Note with Important Disclosures: Morning Note 04-09-14 ECTE

Echo (ECTE) Update 03-31-14

downloadreports Software & Manufacturing Changes Cause Delay
s Critical GEN2 Fixes & Financing Risks Remain
s Maintaining Neutral Rating – Needs Permanent CEO

Download Full 21-Page Update with Important Disclosures: ECTE Update 03-31-14

Cost Reductions Push Timetable Out 3 Months: Echo reduced headcount by approximately 33% and cash burn by 39% in part by outsourcing software development and switching contract manufacturers. As a result, the GEN2 modifications such as algorithm modifications for consistent Prelude microabrasion, warm-up and calibration improvements and sensor correction for IV acetaminophen are slightly delayed. We are now expecting limited European launch in Q1 2015 and initiation of the U.S. FDA clinical trial also in Q1 2015. (see Symphony™ tCGM Milestones & Events)

Restarting CEO Search: Echo is restarting the search for a permanent CEO, which we consider essential for investment in Echo shares. We do not anticipate investors returning with any enthusiasm due to the continued uncertainty surrounding management and the Board until an experienced permanent CEO is named.

Still Waiting on MTIA Funds: On December 10, 2013, Echo announced a 10-year strategic collaboration agreement with Medical Technologies Innovation Asia (MTIA), Ltd., Hong Kong, for a license agreement and $5M equity investment in Echo. However, as of March 26, 2014, Echo has only received $1.9M of the $5M and Echo is not be obligated to commence the transfer of any technology or other documents, product or information to MTIA until the total $5M has been received. (see Partnerships)

Good Data: As a reminder, the results for the tCGM Symphony trial were very good with a MARD of 12.5%, CG-EGA of 98.2% and CG-EGA A+B of 99.4% in 32 patients (18 cardiac/14 non-cardiac) using over 630 glucose readings with a wide range of glucose values 49-324 mg/dL. This was the first controlled clinical trial using all three components of the tCGM Symphony system (Prelude, Biosensor and Wireless Monitor) and the topline data appears to be clinically acceptable. It also met the primary safety objectives as there were no unanticipated adverse events during the study. (see Clinical Trial Results: CE Mark Trial – Gen1)

GEN2 Fixes Are Critical: The current GEN1 tCGM Symphony system requires several fixes to be commercially successfully. These range from minor fixes such as training and user manual operations to minimize variability among users, to significant issues requiring R&D such as an improved algorithm, more consistent Prelude skin ablation and a more consistent warm-up and calibration schedule. Of particular concern, IV acetaminophen (as used in ICU) interfered with the Biosensors and as a result, 3 patients were excluded from the trial. While management believes they have identified a solution, this is a known issue in the field and would hamper the commercial prospects for the Symphony system. Completion of the GEN2 fixes are critical for the pivotal U.S. FDA trial to begin next year.

Maintaining NEUTRAL: We continue to believe in the basic science of the tCGM Symphony system and that it should ultimately be successful. However, the near-term unknowns, especially the need for a permanent CEO, combined with the anticipated volatility surrounding both the product development and the financings prevent us from modeling Echo with any degree of confidence at this time.

Download Full 21-Page Update with Important Disclosures: ECTE Update 03-31-14

StemCells Inc. (STEM) Update 03-24-14

downloadreports StemCells Inc. to Begin 2 Controlled Phase II Trials
s Next Steps: Cervical Spinal Cord Injury and Dry AMD
s New cGMP Facility Online and Fully Operational
s Alzheimer’s IND Filing Expected 2016 – A Year Early

Download Full 33-Page Update Report with Important Disclosures: STEM Update 03-24-14

Phase I/II Trial in Thoracic Spinal Cord Injury – Enrollment Completes This Month: StemCells Inc. stated that 11 of the 12 required patients have been transplanted in the Thoracic Spinal Cord Injury trial and the company is targeting to complete enrollment in the current trial by March 31, 2014 with final data expected in 2015. StemCells Inc. has already announced the final 12-month data from the 1st patient cohort (AIS-A) showing that the gains in sensory function observed in 2 of the 3 patients at 6 months persisted for the 12 month period plus an unexpected improvement in 1 patient classified as a complete injury (AIS-A) to being reclassified as an incomplete injury (AIS-B).

Controlled Phase II with Cervical Spinal Cord Injury to Begin: In Late-2013, StemCells Inc. received FDA authorization for a controlled Phase II trial including cervical spinal cord injury patients, which represents approximately 60% of all traumatic spinal cord injuries. The trial is expected to begin mid-2014 and complete enrollment in 2015.

Phase I/II in Dry Age-Related Macular Degeneration (Dry AMD) – Enrollment Completing Soon: On March 12, 2014, StemCells, Inc. management indicated that they completed implantation in the 1st cohort of 8 patients (20/400 vision, 4 patients receiving 200,000 cells and 4 patient receiving 1 million cells) in their Phase I/II trial for Dry Age-Related Macular Degeneration (Dry AMD) with interim cohort data expected later this year. StemCells Inc. expects to complete enrollment in the 2nd (final) cohort of 8 patients receiving 1 million cells by mid-2014 as they expand from four sites to a total of five sites.

Controlled Phase II in Dry Age-Related Macular Degeneration (Dry AMD to Begin: Subsequent to enrollment of the 2nd cohort in the Phase I/II Dry AMD trial, StemCells Inc. stated that they expect to initiate a controlled Phase II efficacy proof-of-concept study by year-end 2014 with enrollment completing in 2015. Investors should note that 85% of all AMD patients currently have the Dry form and 100% of patients with the more serious Wet form progressed from the initial Dry form. The dry form can also cause vision loss without turning into the wet form.

Alzheimer’s Disease IND Moved Up One Year: StemCells Inc. announced that they intend to file an IND for Alzheimer’s Disease in 2016, a year earlier than expected. The current preclinical work is being funded with a $19.3M forgivable loan from the California Institute for Regenerative Medicine (CIRM).

Next Step for PMD Pushed Back: In December 2013, StemCells Inc. had a pre-protocol submission meeting with the FDA and received guidance on a Phase II trial protocol for formal submission. However, due to new Phase II trials in both Chronic Spinal Cord Injury and Dry AMD expecting to commence during 2014, a Phase II trial for PMD will likely be deferred due to resource constraints.

New cGMP Manufacturing Facility Now Online: StemCells Inc. announced that they are now fully self-sufficient for their manufacturing requirement of the Phase II trials with their new cGMP manufacturing facility in Sunnyvale. The facility allows StemCells Inc. to secure their own supply chain including process development laboratories, manufacturing, QC/QA and documentation systems.

We are reiterating a Strong Speculative Buy with a Price Target of $4.50 as StemCells Inc. continues to be one of the most advanced players in the stem cell space. StemCells Inc.’s HuCNS-SC® (purified human neural stem cells) have already shown unprecedented results in human patients for Pelizaeus-Merzbacher Disease (PMD) and for Complete Thoracic Spinal Cord Injury. The company is now progressing with controlled Phase II trials in Cervical Spinal Cord Injury and Dry Age-Related Macular Degeneration (Dry AMD) and they are also expecting to file an IND for Alzheimer’s Disease a year early in 2016 with preclinical funding via a forgivable loan of $19.3M from the California Institute for Regenerative Medicine (CIRM). With their new cGMP manufacturing facility fully operational and a strong management team unlocking the value of HuCNS-SC’s strong science, we believe StemCells Inc. has emerged as a cutting-edge stem cell company with a focus toward commercialization for large unmet medical needs. Our Strong Speculative Buy rating and 12-18 month target price of $4.50 is based on 35x estimated 2020 EPS discounted 50% for cumulative risks in a first-in-class stem cell therapy.

Download Full 33-Page Update Report with Important Disclosures: STEM Update 03-24-14

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