Will The Asterias (AST) Stock Bull Stampede Next Tuesday?


Asterias Biotherapeutics Inc (NYSEMKT: AST)

On Tuesday, January 24, 2017, Asterias Biotherapeutics may be waking up its bovine friend, with potential news that can cause its resting bull to run rampant in the trading pits. On this day, AST has set a conference call to discuss new data evaluating the efficacy results six months after implantation of 10 million AST-OPC1 cells in patients with complete cervical spinal cord injuries in the ongoing SciStar clinical trial.

Now, while I don’t tend to read too much into a company setting up an unscheduled announcement to release some preliminary results, that does not mean that I do not take notice. For AST, the interim results, if positive, can be a watershed moment for the company.

What AST Investors Are Looking For On Tuesday

First off, AST is not a company that has gone completely unnoticed by investors. In fact, AST has received awards and grants from very prestigious institutions that are associated to the advancement of treatments and therapies in the spinal cord injury space. Rolling with a grant of over $14MM dollars from the California Institute For Regenerative Medicine, AST has already been able to provide some extremely encouraging data.

AST is advancing its AST-OPC1 trial, and while the phase I/IIa trial was serving to prove safety and tolerability, the results went well beyond showing the treatment to be safe, with five patients that were enrolled in the trial showing at least one motor level improvement and AST met an additional efficacy target of at least two of the patients achieving a motor skill improvement of at least two levels. On Tuesday, it is likely that AST will add additional color to what this all means, but as I wrote in a prior AST article, a two motor level improvement is extremely significant in improving quality of life for patients that have suffered a severe spinal cord injury.

While a one motor level improvement is certainly significant, a two motor level improvement is a huge milestone. The two level increase is correlated with significant increases in functional ability and can provide independence for patients, allowing them to care for themselves by being restored hand and arm function.

During the January 24th call, if AST demonstrates that its treatment has either maintained or increased function from these motor levels, I expect that the stock will be greeted with an enthusiastic reception.

The Market For SCI

For AST investors, strong data can make a huge difference in both how the company is valued today, and may lead to additional interest by large companies that would rather partner into the SCI space instead of trying to build out its own program.

Spinal cord injury affects an estimated 17,000 patients per year, and the lifetime cost for treatment can be in excess of $5 million dollars. That market makes the potential for AST enormous, as there are no approved therapies on the market. And, if additional supporting data is presented on Tuesday, AST may be sitting in the cat birds seat and set themselves into an enviable position to treat a significant portion of that lucrative market.

AST expects that it can treat over 9000 patients per year affected by SCI, 4000 directly and an additional 5000 through product label expansion. This market represents an over $2 billion dollar per year opportunity for AST, and this amount does not include the opportunity for label expansion or the benefit from their two additional on-going trials to treat AML and lung disease.

Expectations For Tuesday

While I won’t set my hopes to be met for my highest expectations, based on the data already published, I expect that the likelihood for consistent and positive data will continue for the trial. Therefore, while I still look forward to AST progressing into the 20 million dose cohort, which they believe will provide the optimal results, I do expect that the company has been able to reinforce prior results, increasing motor level’s in patients and having them maintain the improvement.

Investors have every right to be optimistic, but holding on to a bit of caution is prudent as well. With the stock still trading at a relative discount to the market potential, even mediocre news should not cause the stock too much negative impact.

If the news is strong, though, I expect that investors following this story will take advantage of these share price levels and accumulate on the news.

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Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.

While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: I am long AST and may purchase additional shares within the next 72 hours.

[Image Courtesy of The Blue Diamond Gallery]


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