Scimitar Equity Blog

International Stem Cell Corporation (NASDAQ:ISCO.OB) is a biotech focused on therapeutic and research products.

• ISCO.OB develops pluripotent stem cells that are comparable in function to embryonic stem cells from which cells for human transplant are derived; and techniques to cause those cells to be differentiated into the specific cell types required for transplant, as well as manufactures protocols to produce these cells without contamination with animal by-products.

Focus: ISCO.OB creates human cells for the treatment diabetes, liver disease, corneal disease, and retinal disease through cell transplant therapy, as well as engages in the development of therapeutic products.

• Research products include Fibrolife, a human fibroblast medium available as a serum-free or low serum formats; human fibroblast cells for use as feeder layers to grow human embryonic stem cells, which eliminate contamination from mouse cells; VascuLife VEGF-Microvascular and VascuLife EnGS.-Microvasular, the low serum human endothelial medium; human endothelial cells form blood vessels and DermaLife, the human serum-free keratinocyte medium for the culture of human epidermal,
• Its research products also comprise human epidermal keratinocyte cells for use as a model to study healing, toxicology, or basic cell biology; adult neural stem cells to produce neurons that survive in low-oxygen and low glucose conditions, a product useful for the discovery of drugs for the treatment of strokes  and NeuralLife ags NSC expansion medium kit and NeuralLife ags NSC differentiation medium kit, the medium for the culture of the adult neural cells.

Market Opportunity: ISCO.OB’s scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells with minimal immune rejection after transplantation into hundreds of millions of individuals of differing sexes, ages and racial groups.

• This … could … offer the potential to create the first true stem cell bank, UniStemCell™ while avoiding the ethical issue of using fertilized eggs,
• ISCO produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology.

Financial: For Q3/09, recognized $298,661 of product revenue with cost of sales was $191,466.  G&A expenses for Q/3/09 were $1,479,349 and R&D expenses were $560,063; the increase in research and development costs is primarily due to onetime relocation costs of the research facility in Russia to Oceanside, Cal.  Marketing expenses for Q3/09 were $126,046.  At 9/30/09, ISCO.OB had an increase in cash resulting from $4,319,231 M provided by financing activities, $3,546,736 M cash used in operating activities and $767,787 used in investment activities. Net cash provided by financing activities of $4,319,231 for the 9 months ended September 30, 2009 was attributable to closing a Series D Preferred Stock financing round totaling $3 M.

Bottom Line: ISCO.OB’s core technology, parthenogenesis, results in the creation of parthenogenetic human stem cells from unfertilized eggs (oocytes). Like embryonic stem cells (ESCs), hpSCs are pluripotent (i.e. have the capacity to become almost any cell type in the body), yet avoid ethical issues associated with use or destruction of viable human embryos.

• ISCO scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells with minimal immune rejection after transplantation into hundreds of millions of individuals of differing sexes, ages and racial groups;  offering the potential to create the first true stem cell bank, UniStemCell™, while avoiding the ethical issue of using fertilized eggs,
• ISCO.OB signed up the first two in vitro fertilization (IVF) clinics. Both clinics provide clinical care for egg donors and IVF patients.  California Center for Reproductive Medicine and Acacio Fertility Center currently provide a US source of oocytes for the creation of the first clinical grade hpSC (human “parthenogenic” stem cells) lines,
• ISCO.OB has results in methods of making human pluripotent stem cells;  this … could …enable the establishment of a “bank” containing a manageable number of stem cell lines that will be immunological matches for large patient populations of different ethnic origin,
• International Stem Cell states its scientists have also derived a type of cell found in the human eye from parthenogenetic stem cells that may have application in treatment of macular degeneration,
• ISCO.OB’s trades at $1.35 (52 week range of $0.33 to $1.36) with a market cap of $72.77 M, an enterprise value of $72.80 M with 53.90 M shares outstanding, a 26.49 M share float… $387 K in cash, $414.51 K debt,  0.779% of shares are held by Insiders,
• ISCO.OB has scheduled a conference call for 2/5/10 at 10:00 am.  Chairman Mr. Kenneth Aldrich will discuss both the present status of the company and its vision for the coming year. The dial-in number for participants is 1 (800) 774-6070 and the pass code ID is 8273 225#,
• Low on cash and needs a financing for sustainability and viability.