www.epistem.co.uk
Epistem is a biotechnology company commercialising adult stem cells in the areas of oncology and gastrointestinal diseases as well as cosmeceutical applications. Epistem develops innovative therapeutics and diagnostic biomarkers and provides contract research services to drug development companies. The Group's expertise is focused on the regulation of adult stem cells located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, breast and prostate. Epistem does not conduct research in the areas of embryonic stem cells or stem cell transplantation.
Epistem, ReNeuron and Angel Biotechnology favoured as ‘buys’ in the regenerative medicine sector
Daniel Stewart has highlighted Epistem Holdings (LON:EHP), ReNeuron (LON:RENE) and Angel Biotechnology (LON:ABH) as ‘buys’ in the regenerative medicine sector in a new note this week.
Regenerative medicine is focused on the regeneration and repair of damaged tissue using cells, stem cells, tissues and through the stimulating of stem cells within the human body. “As such,” said the broker, “the sector holds the significant promise of offering entirely new treatment options for diseases and conditions that cannot currently be addressed.”
The broker noted that there are almost 700 regenerative medicine companies worldwide, with the US leading the way. 386 of these firms are based in the country, where the market for regenerative medicine is expected to grow to more than US$8 billion in 2020.
Among UK-listed companies, Daniel Stewart rates Epistem, ReNeuron and Angel as ‘buys’.
Epistem focuses its research on adult stem cells that are located in epithelial tissue, which includes the gastrointestinal tract, skin, hair follicles, the breast and the prostate gland. According to Daniel Stewart, it has a diversified and balanced business model, a profitable contract research business that offsets its R&D costs, and a biomarker research platform that is already generating revenues and growing quickly.
Earlier this month, Epistem reported results for its 2011 financial year. These showed that its revenue increased to £5.75 million from £5.74 million in 2010, while its post-tax profit came in at £385,000 (2010: £290,000).
The firm said it made good progress across each of its three divisions, with its Contract Research Services business seeing its revenue grow by 19 per cent to £3 million.
On the day of Epistem’s results, broker Peel Hunt said that a “key driver” for the firm will be its Genedrive molecular diagnostic device.
This week, Daniel Stewart said that Epistem “presents far less risk than most of its peer group as the company is financially self-sufficient” and that should the group strike another major collaborative research agreement (as it did with Novartis in the past) it would expect a re-rating.
For now, the broker has set a target price of 429 pence each for Epistem’s shares, which were steady at 380 pence each in late-morning trading.
Daniel Stewart describes ReNeuron as “a stem cell therapeutics pioneer” on account of the fact that its lead stem cell therapy for stroke is “getting closer to delivering groundbreaking results”.
It noted that four out of 12 patients have been treated with the therapy to date in its “landmark” PISCES (Pilot Investigation of Stem Cells in Stroke) clinical trial and that no acute safety issues have yet arisen. Meanwhile, the firm is also rapidly progressing its pre-clinical pipeline
Daniel Stewart has set a net present value-derived target price of 13 pence for the firm’s shares. ReNeuron was down 0.73 per cent at 3.4 pence by 11.29am today.
Angel Biotechnology is a contract manufacturing organisation that is “poised to benefit from the growth of the stem cell sector”, according to Daniel Stewart. The firm has a strong relationship with a major Russian pharmaceutical company, Materia Medica, and has recently agreed a joint venture deal that is connected to seven contracts that have the capacity to deliver revenues of around £1.5 million per annum.
Daniel Stewart believes that Angel’s shares should be at 0.47 pence each, which would mean it was trading in line with many similar contract research and manufacturing operations. Angel’s share price was steady at 0.29 pence this morning.
The broker also rates Euronext-quoted Cryo-Save, which it describes as the “undisputed European market leader” in umbilical cord blood storage since it has more than a 50 per cent share in this market. It has set a target price of €6.30 for Cryo-Save’s shares, which currently trade at around €4 each.
Meanwhile, although Leeds University spinout Tissue Regenix (LON:TRX) rates as a ‘hold’ Daniel Stewart noted that its first product has already been approved and that the share could represent a “good market opportunity”.
