New Analyst Review, Aastrom Biosciences (ASTM)
Scimitar Equity continues to rank ASTM with a BUY ranking and believe the current market pricing is finally actualizing the share price’s potential having previously valued it at $3.69
Investment Thesis: Q1/11 has been achievement driven as well as with the recent appreciation to $3.67.
Scimitar Equity derived its current valuation by using a Blended Price Valuation Table which includes a Sum of the Parts (SOTP) analysis, a direct comparable analysis layered with a sector comparable analysis.
- Our SOTP scenario is extremely conservative (with a 10% discount) and details a Sum of The Parts value of $7.59 and when merged with a direct comparables analysis of $2.90 reinforced by a stem cell sector perspective of $4.75 implies a blended valuation of $5.08 given the current shares outstanding of 28.25 M with a fully diluted number of 38.17 M;
- The Avg. Blended Price Valuation of $5.08 is significantly above this stocks current price of $3.67 and the trading range of $1.32 – $4.04;
- We note the average market capitalization of designated comparables is $82.03M or about 0 .79 X the implied multiple of ASTM’s market cap of $103.68M;
- In a review of their overall sector stem cell companies, ASTM has a 1.3 X multiple and a fair value of $4.75.
Q1/11 has been achievement driven:
- ASTM launched an extension study for control patients from ongoing open label Phase 2 IMPACT-DCM surgical clinical trial in patients with dilated cardiomyopathy. This extension study offers control group patients the opportunity to receive treatment after completing at least 6 months of follow-up. ASTM started the study after a positive review of the interim data by the IMPACT-DCM Data Safety Monitoring Board for the first 20 patients who had participated in the trial and after receiving approval from the amended protocol by the institutional review boards affiliated with the study. ASTM completed enrollment of the control patients now in this open label extension study;
- ASTM has continued enrolling patients in the Phase 2 Catheter DCM study to determine the safety and tolerability of expanded autologous cell therapy administered via catheter to patients with heart failure due to DCM; which will complete enrollment by 12/10 and ASTM is planning to report 6 month interim data from this study in mid-2011;
- The interim analysis of the Phase 2 IMPACT-DCM surgical trial will be presented at a scientific meeting in 1/11.
The Critical Limb Ischemia (CLI) continues to advance. ASTM filed for and received fast-track designation from the FDA which allows submittal of parts of the biological license applications (BLA) on a rolling basis which makes the submission process potentially faster, more efficient and could expedite the FDA’s review of this application.
- Submitted in 6/10 to the FDA, the requested CLI Special Protocol Assessment Applications (SPA) describes the proposed clinical protocols for the initiation of the Phase 3 trial to ensure (FDA) consensus on the design and execution, clinical endpoints and the methods of analyzing the data prior to launching the Phase 3 program;
- The SPA response from the FDA should be forthcoming (timing: approximately 1 month);
- Another round of meetings are needed to finalize protocol (timing: early Q2/11);
- Currently reviewing investigative sites and CROs;
- Cost could be approximately $20-40K per patient and guides to $15-20M for trial;
- Concerns of trial design is end-point of amputation-free 12 month survival data which includes denovo gangrene, doubling of wound size and/or death;
- Enrollment period: 12-18 months.
Looking to the future, partnering is all about meaning full data which would give ASTM a more solid bargaining status. However, the wild cards could be Aldargen (VC funded) in Durham, NC and Harvest Technologies, a private company located in Plymouth, Ma. Harvest Technologies has been focusing its commercialization efforts in the EU to support clinical research for the treatment of Critical Limb Ischemia (CLI). Harvest® Technologies’ BMAC™ (Bone Marrow Aspirate Concentrate) System (device) is currently being used in the EU to treat vascular, orthopedic and cardiovascular diseases. The use of a clinically effective quantity of cellular compositions from a small aspirate of autologous bone marrow includes a large quantity of adult stem cells, derived from a patient at the point-of-care in just 15 minutes. The question arises does Harvest have enough clinical data to focus a regulatory filing under a device labeling versus a BLA.
Review can be found at:http://www.scimitarequity.com/upload/ASTM-Q1%202011246774.pdf
