Analyst Interview
Zacks Investment Research Senior Biotech Analyst, Jason Napodano, CFA, was interviewed by OneMedRadio where he discussed International Stem Cell Corp. See interview transcript below.
Brett Johnson: Welcome from New York, this is Brett Johnson with OneMed Radio. Today, we are with Jason Napodano who is the Managing Director and Senior Biotech Analyst at Zacks Investment Research. Zacks recently initiated coverage on International Stem Cell Corp, ISCO traded on the OTC. Jason, thanks for joining us today.
Jason Napodano: Thank you for having me.
BJ: So tell us about International Stem Cell, what is the firm’s business and then what’s the outlook?
JN: International Stem Cell is an interesting company from our point of view because, we’re big fans of the stem cell industry and “IS-CO”, as they like to call themselves, has a unique technology that we think could be a meaningful driver for therapeutic product development and potential licensing deals in the future. We initiated coverage with a neutral rating and a $1.50 price target and we can get into the details of the ratings if you like, but I’ll just start with their technology and a little bit of background info.
If you look at the stem cells companies out there, you essentially have two competing technologies. One that utilizes embryonic stem cells and another that utilizes adult stem cells. So real quick, embryonic stem cells are produced from a fertilized oocyte. Fertilization occurs and the cells begin to divide. You get blastocyte, cells that can be turned into embryonic stem cells and these cells are highly pluripotent, they exhibit strong proliferation, enormous potential for application and development of therapeutic products. The downside to embryonic stem cells is that you have the destruction of an embryo. You’re terminating something that could potentially develop into life, into a baby.
To get around the ethical dilemma, companies started working on adult stem cells. Adult stem cells are derived from human, it doesn’t necessarily have to be an adult human, but humans we’re talking far beyond embryos here and there are essentially two ways to get adult stem cells. You can do a liposuction procedure and get it through adipose or fat tissue, which is a rich source of stem cells far greater than bone marrow, but there are kind of questions that remain on how viable these cells are. If you look at bone marrow, well a little bit more difficult to extract. You have to do a bone marrow aspiration procedure, a little bit more complicated and you get a lower yield, but you potentially get far more viable cells than an adipose. Upside to adult stem cells is there are no ethical issues, no destruction of life. The pluripotency is lower and the proliferation is certainly far weaker than embryonic.
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