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StemCells (STEM) PT Cut to $3 at Maxim Group

December 23, 2015 12:18 PM EST
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Price: $2.19 --0%

Rating Summary:
    11 Buy, 10 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Maxim Group analyst Jason Kolbert lowered his price target on StemCells (NASDAQ: STEM) to $3.00 (from $5.00) but maintained a Buy rating after the company suspended the phase II AMD (Radiant) study to focus on the spinal cord injury (SCI) trial.

  • Stem's management announced the decision to focus on the spinal cord injury (SCI) trial. Management will suspend the company's phase II AMD (Radiant) study. These changes should reduce cash expenditures up to $20M over the next two years.
  • We are eliminating AMD revenues from our model and lowering our 2016 and 2017 R&D burn rate assumptions (~$30M to ~$20M). Management also highlighted expectations that they will complete enrollment in the SCI trial by YE-2016.
  • Focusing on the Positive: How should we value a product for spinal cord injury? If Stem's HuCNS-SC cells work, even moderately, (we think they do and we believe the trial will show such) what is the potential market size? Its large certainly a "blockbuster" indication. As such the upside to the company may be significant. The key question then, is when will we have definitive proof of concept that it works? It depends on how good the results are, but that data isn't expected unto 2017 (some time after the last patient is treated). As such we believe reducing expenditures while the company works across this trough period is prudent.
  • Factoring in these changes (reduced burn rate but AMD program shifts to the backburner) drives a reduced price target: to $3 from $5 for 2016 as the company manages their way across a data trough.

For an analyst ratings summary and ratings history on StemCells click here. For more ratings news on StemCells click here.

Shares of StemCells closed at $0.47 yesterday.



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