Edison says shares in StemCells are below fair valuation

Investment research company Edison says shares in US biotech company StemCells (Nasdaq: STEM) are ‘well below’ its fair value calculation, especially as the company moves into Phase II trials.

In April, StemCells dosed the first cohort of patients in its Phase II PATHWAY study of its proprietary human central nervous system stem cells in cervical spinal cord injuries, with data being available by year end, and full results in 2017. A Phase II study will also soon be underway in dry age-related macular degeneration, and top-line data from the study is expected in 2017. Partially based on these events, Edison has said it believes StemCells’ shares offer considerable value on a current price of $0.74, below Edison’s risk-adjusted fair value calculation of $1.95 per share.

Due to the novel nature of its pipeline, Edison analysts assign a conservative 25% probability of success for dry age-related macular degeneration and 20% for spinal cord injuries. It estimates peak sales of $290 million in 2026 in the spinal cord injury indication, and models peak sales to reach $2 billion in the dry age-related macular degeneration.