StemCells Inc. is a biotechnology penny stock that performs stem cell research and development and hopes to commercialize the results. The company was founded in 1988, operates out of Newark, CA and has 58 employees. StemCells Inc. produces stem cell therapeutics to treat a wide variety of maladies. Specifically, StemCells Inc. develops HuCNS-SC cells to treat a variety of brain disorders. It is also working on SuCNS-SC cells to treat chronic spinal cord injuries and age induced macular degeneration.
Furthermore, StemCells Inc. creates and commercializes technologies for stem cell research. The industry is growing and there are plenty of organizations and researchers interested in the field’s emerging technologies. Academicians and researchers at universities, biotechnology companies and pharmaceutical companies rely on StemCells Inc.’s technology, tools and research.
The company sells a diverse group of proprietary cell cultures, antibody reagents and research grade cells. Its successful proprietary cell cultures include Ndiff N27, RHB-Basal, GS2-M, GS1-R and iSTEM. Its popular antibody reagents are STEM123, STEM 24 and STEM 101. These are critical for cell identification, seclusion and characterization. More information about the company can be found on the StemCell Inc.’s website.
Financial For this Biotech Penny Stock
StemCells Inc. stock (STEM) is trading around $1.10 a share, at the low end of its 52 week average. According to Yahoo! Finance, the stock’s 52 week high is $2.43 and the 52 week low is $1.02. Yahoo! Finance lists company revenue at $1.22 million, a 2013 gross profit of $886,064, total cash of $17.85 million, total debt of $15 million and an operating cash flow of minus $27 million. The poor operating cash flow is a cause for concern and highlights the fact it needed to raise more money within the next year to fund operations. The company has limited revenue and it is far from gaining FDA approval from the drugs in its clinical pipeline.
On July 18, 2014, StemCells Inc. announced a common stock offering in which the company sold a total of 11,299,435 units to two well recognized institutional biotechnology investors. StemCells, Inc.’s chief financial officer, Greg Schiffman, noted “Two sophisticated investors approached us to provide $20 million of capital based upon the strength of our interim clinical data, and our ongoing translation agenda”. The transaction will provide $20 million in 2015. This will suffice as the capital required to finance the company’s 2015 operations during which it will have the results of key Phase I/II spinal cord and age induced macular degeneration clinical programs.
NASDAQ Biotech Penny Stock Information
StemCells Inc. (STEM) is a biotech penny stock traded on the NASDAQCM (Capital Market). The company is required to produce more financial reports and company information compared to the lightly regulated penny stocks traded on the OTC Pink. The company provides updates related to its clinical development program and files the SEC forms as required. However, there is little information coming from the company because few Wall Street analysts cover the company and there aren’t many clinical trial updates.
A Biotech Stock Penny Stock with High Expenses and Limited Revenue Growth
Thestreet.com reports that STEM’s revenue growth is projected to be -12 percent for the year, -2.90 percent over the next three years and a solid + 20.57% over the next five years. The website reports that revenues are on a slight upswing. The company pulled in $312,600 in the final quarter of 2013 and earned $339,500 in the first quarter of 2014.
Stem Cells Inc. is a development stage biotechnology company with limited revenue which is mostly comprised of sales to other institutions involved in stem cell research. The company pulled in 312,000 in sales last year with a projected $1.1 million and $1.12 million, in 2014 and 2015 respectively. Expenses will remain high as it funds clinical trials and the company is expected to reported annual losses for many years to come.
The prospects for revenue growth are muted until it can receive FDA approval. Stem cell therapies are an unproven technology and the FDA will need reassurance that the stem cells do not promote neoplasms or other adverse side effects in patients. Furthermore, Stem Cells Inc. is in the early stages of clinical trials for treating spinal cord injury and it will be many years before it can apply for FDA approval and even then FDA approval is not guaranteed. Positive news regarding its clinical trials will be positive catalysts for this company. Investors may view this a biotech penny stock to buy in anticipation of these trial results.
Biotechnology Company Management
Mr. Martin M. McGlynn, 68, has been CEO of the company since 2001. He also acts as the President and Director. Mr. McGlynn was the CEO of Inflabloc Pharmaceuticals and President of Anaquest prior to joining StemCells Inc. The company recently appointed Alan Trounson, Ph.D. to its Board of Directors. Dr. Trounson last served as President of California’s Institute of Regenerative Medicine, the leading global funding organization of stem cell research.
Stem Cells Inc. management is steering the company towards developing cures for spinal cord and eye injuries. They eagerly anticipate the clinical data results from its Phase I and II studies, the first ever test of nerual stem cell transplantation in chronic injury. When current trials are completed to determine the safety and effectiveness of stem cells placement into the retinas of patients with age related macular degeneration, the company will have a better idea of its direction. The success of the company will also hinge on gaining FDA approval for its products.
Stem Cells a Biotech Penny Stock To Watch
Stem Cells Inc. currently trades for around $1.20 a share. Yahoo! Finance reports a one year target estimate of $3.90 for STEM. This would constitute more than a tripling of the stock’s current value. The latest analyst upgrade/downgrade was an upgrade to “Market Outperform” by Brinson Patrick with a price target of $7. Before this upgrade, the last analyst’s change of opinion came from Ascendiant Capital Markets which rated the stock as a “Buy” on October 17, 2012. There is very little Wall street coverage and analysts provide very few updates or opinions. This makes investing in STEM difficult because of sparse trustworthy third party information. Overall, there are three strong buys and one buy analyst recommendations for the stock. Investors should consider STEM a biotech penny stock to watch, even though there are high price targets it will likely be years before there is any chance of the stock jumping to these levels. The stock price of STEM will likely oscillate based on clinical trial updates. Another clinical update is not expected until mid 2015 so the stock will likely drift lower and trade in anticipation of any clinical trial news.