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Insider Buying at NeoStem ($NBS) supports a Solid Therapeutics Story build on a Manufacturing Platform- PCT

There is nothing we like to see more than insiders putting their money with shareholders. We took note of several insiders from Neostem (NYSE AMEX: NBS) including CEO Dr Robin Smith, CMO Dr Andrew Pecora, and VP Business Development, Jason Kolbert, all making inside purchases.

NeoStem has been popping up on a radar screen a lot these days. First with the acquisition of Progenitor Cell Therapy earlier this year, and now the acquisition of Amorcyte (P2 asset for AMI). This trial is expected to enroll its first patient in Q1-2012 and according to management is ready to go. We expect the trial to enroll the target 160 patients within 12 months with data read-out 6 months afterwards.

We do know that the Amrocyte product is differentiated. It is an enriched cell population, bone marrow derived of CD 34+ cells, and that the company established a biologically effective threshold dose that must be met (>10 mln cells) to show efficacy. NeoStem talks in great definition about the mechanism of action, the dose, the biological (angiogenesis) and clinical effect they intend to measure, perfusion. There is ample historical evidence to suggest that CD34+ cells are potent ones for neoangiogenesis. A recent paper published by Baxter principal investigator and thought leader, Dr. Douglas Losordo suggests that among all the cells types, CD34+ are the most potent. (Baxter is moving forward in a P3 trial with a CD 34+ cell) for cardiac ischemia. The Baxter trial harvests the cells from peripheral blood after delivering a mobilizing agent (GCSF). Our understanding is that these cells are not as effective at homing, but that fine as Baxter delivers them locally using direct injection to the heart itself (where NeoStem injects into the infarct related artery) and allows the cells to home along the ischemic (oxygen starved) gradient travelling to where they are needed. We believe that the historical literature does not lie and that Baxter offers proof of concept for NeoStem.

Some question if the autologous model is viable in the wake of Dendrion. We would remind folks that NeoStem acquired both Progenitor Cell therapy (PCT) and Amorcyte for a 1-2 punch. PCT did the majority of clinical autologous manufacturing for Dendrion's Provenge. So PCT knows how to manufacture. We also know that autologous has lots of advantages over allogeneic.

While Bears are quick to point out the advantages of pills in a bottle model (allogeneic) the data suggests that only autologous cells (your own cells) will truly integrate into the target (your own heart) and continue to modulate neoangiogenesis. NeoStem has publically declared that they plan to divest their majority ownership in the China generic company they own. That should be a catalyst for the stock too. So by comparison to the rest of the field we see NeoStem with a solid manufacturing base of operations in PCT (several contract manufacturing clients in Phase 3, Phase 2 and Phase 1 generating revenues and creating options for commercial manufacturing down the road as one of the better positioned companies in the space. Apparently the insiders agree.

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