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Catching Up With US Stem Cell Inc (OTCMKTS:USRM) Ahead Of A Rebalance

Catching Up With US Stem Cell Inc (OTCMKTS:USRM) Ahead Of A Rebalance
Written by
Chris Sandburg
Published on
April 14, 2017
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When we first looked at US Stem Cell Inc (OTCMKTS:USRM), we urged our readers to look beyond the metrics, and to try and form a bias based on what the company was trying to achieve, and in what space. At the time (beginning of March this year), the company was trading for circa $0.03 a share. By the end of the month, US Stem Cell had risen to $0.13, logging gains of 333% in a matter of weeks.We tracked the run with a few updates to our initial coverage (here, here and here).Since our last piece, the company has corrected a bit, and currently trades for around $0.10. Concurrent to the dip, however, we've seen US Stem Cell put out a raft of updates, each of which serve to fuel an extended upside bias.We think that sooner or later, just as was the case at the beginning of March, markets are going to have to catch up on what they've missed, and the company's valuation is going to realign to accommodate the fundamental advances.Here's what's happened, and what it means.So, the first important update was a March 30 press release detailing the company's efforts to pick up what it refers to Regenerative Advanced Therapy (RAT) designation from the FDA. Technically, this designation is called Regenerative Medicine Advanced Therapy (RMAT), but we'll forgive the communicationss team for its oversight. RMAT is an enticing prospect – it would make US Stem Cell's RMAT therapy (the treatment in question is called MyoCell) automatically eligible for use in certain conditions, and would also potentially allow for accelerated approval status in others (which basically means it can get approval on surrogate endpoints).A couple of weeks later, the company announced it had picked up reactivation status for a phase II/III trial of MyoCell, meaning it can start actively enrolling patients again, and that the FDA had given notice that the RMAT application is in review. If MyoCell gets RMAT, it's going to need data that supports application for approval on the above mentioned surrogates in various endpoints. This data will come from the trial that just restarted – that's why this one's important.Finally, on April 13, management put out notice that a private equity firm called General American Capital Partners LLC made a commitment to invest up to $5 million in US Stem Cell going forward. There's a 63 million share issues associated with the raise, so it's far from catch free from a shareholder perspective, but that the company hasn’t dipped too much on the announcement says a lot about how much faith the current base has in this capital being put to efficient use, or on other words, that this capital is going to fuel growth that adds value above and beyond the dilutive impact of the equity dished out to claim it.So what's next?Well, this was a company that just a couple of months ago was struggling for catalyst on the regulatory front, and which was relying on nothing more than the conference circuit to get its word out. With the trial now restarted, and the application in place for RMAT designation on the burner, there's plenty in the pipeline from a regulatory catalyst perspective, and it's this pipeline we're looking to as potentially adding value near term. If we see the FDA get back to US Stem Cell on the status of the application, and it's positive, the company is going to really run. If it's negative, it's not great, but it's far from terminal – it just means the company is going to have to work a little harder to get MyoCell on shelf with an FDA green light, and that adds a little bit of capital requirement risk to the picture longer term.We will be updating our subscribers as soon as we know more. For the latest updates on USRM, sign up below!Disclosure: We have no position in USRM and have not been compensated for this article.

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