Small Cap Chinese Stem Cell Stocks to Watch
Small cap stocks China Cord Blood Corp (CO) and EastBridge Investment Group Corp (EBIG) are active in the Chinese stem cell market while and Neostem Inc (NBS) recently exited the market to focus on the US market.
While stem cell research and treatment has attracted controversy in the States, small cap Chinese stem cell stocks or players in the industry likeChina Cord Blood Corp (NYSE: CO), EastBridge Investment Group Corp (PINK: EBIG) and Neostem Inc (NYSEAMEX: NBS) have no qualms about advancing scientific and medical knowledge (Note: Neostem Inc has just sold its stake in a Chinese stem cell company to focus on its US activities). Moreover and given China’s huge and aging population, the Chinese pharmaceutical market is worth $50 billion today; but within five years, its expected to become the world’s second largest health care market. That means opportunities will abound for large and small cap players alike in the Chinese stem cell market, but it should be said that investing in Chinese stocks is never for the risk adverse as even Chinese stocks have been impacted by allegations against the lower quality Chinese stocks. With that in mind, here is a quick overview at China Cord Blood Corp, EastBridge Investment Group Corp and Neostem Inc:
China Cord Blood Corp (NYSE: CO) Counts Kohlberg Kravis Roberts As an Investor
China Cord Blood Corp is a life sciences enterprise dedicated to the storage of umbilical cord blood stem cells. Specifically, China Cord Blood Corp provides umbilical cord blood storage services for parents to save cord blood stem cells on behalf of their children, in China and the Asia Pacific regions. In fact, China Cord Blood Corporation is the first cord blood banking operator to be approved by China’s Ministry of Health. Investors should be aware that back in April, it was reported that Kohlberg Kravis Roberts & Co. L.P. would invest $65 million into China Cord Blood Corp to get access to China’s fast-growing health-care services industry plus to take advantage of low valuations for high quality Chinese companies that have been battered by accusations against the not so high quality companies. The Wall Street Journal’s article about the investment also noted that Mainland China is fairly underpenetrated in terms of stored stem cells to total births with the rate standing at about 1% verses 22% for Taiwan and 15% for Hong Kong. In addition, it should be noted that for the second fiscal quarter of 2013, revenue rose 30.5% to $20.4 million while net income rose 6.2% to $3.9 million. China Cord Blood Corp is up 16% over the past year, but its also down 58.8% since early 2010 due mainly to the fallout from accusations against other Chinese stocks.
EastBridge Investment Group Corp (PINK: EBIG) Is a New Chinese Stem Sell Stock To Watch
The EastBridge Investment Group assists with IPOs, joint ventures and merchant banking for high-growth companies in Asia and in the United States. Recently, the company announced that it has entered into an agreement to merge with Cellular Biomedicine Group Inc. (CBMG) – which offers cell therapies for the treatment of cancer and degenerative diseases. Specifically, Cellular Biomedicine Group has developmental stem cell, progenitor cell and immune cell projects that are the result of collaborative research and development between scientists and doctors from the China and the US. In addition, Cellular Biomedicine Group’s flagship GMP facility consists of eight independent cell production lines that were designed, certified and are managed according to US standards. Under the agreement, which is expected to be completed this quarter, EastBridge Investment Group and Cellular Biomedicine Group will continue to operate as separate divisions with the combined entity planning to apply for a NASDAQ listing as soon as practicable under the ticker symbol “CBMG.” Its worth noting that besides having an experienced team of managers and scientists, Cellular Biomedicine Group has an intellectual property portfolio consisting of in-house developed protocols for regenerative medicine therapies and in-licensed immunotherapy patents and know-how exclusively for Greater China plus the company maintains a pipeline of clinical trials based on US protocols that includes potential treatments for knee osteoarthritis, liver cancer, skin cancer and spinal muscular atrophy. Otherwise and for the first nine months of 2012, The EastBridge Investment Group itself reported revenues of $6,053,828 versus $31,000 for the same period last year along with net income of $4,747,460 verses a net loss of $744,483 – not bad for a small cap trading on the OTC markets.
Neostem Inc (NYSEAMEX: NBS) Has Sold Its Stake in a Chinese Stem Cell Company
Finally, Neostem is worth briefly mentioning as it was active in the Chinese stem cell market from 2009 until late last year. Neostem’s Progenitor Cell Therapy company is a cell therapy contract manufacturing company with licensed, state-of-the art facilities in New Jersey and California for the contract development and manufacturing of proprietary cell therapy products. The Progenitor Cell Therapy company’s 80% owned subsidiary Athelos Corporation is collaborating with Becton, Dickinson and Co. (NYSE: BDX) in the early clinical exploration of a T-cell therapy for autoimmune conditions while Neostem’s subsidiary Amorcyte is developing a cell therapy for the treatment of cardiovascular disease and is enrolling patients in a Phase 2 trial. In addition, NeoStem has been active in China since 2009 when it acquired a controlling interest in Suzhou Erye Pharmaceuticals Ltd., or Erye, which has recently built and validated a new manufacturing facility with double the capacity for higher margin products. However, NeoStem completed the divestiture of its 51% ownership of Erye in November 2012 for $12,280,000 in cash with the deal also removes $30 million in short and long-term debt obligations from the company’s balance sheet. NeoStem will use the proceeds to invest in its cell therapy development and contract manufacturing activities in the USA.
The Bottom Line. Again, there is risk involved when it comes to investing in China and a whole new sector like stem cells, but for investors who can stomach the risks associated with both, China Cord Blood Corp and EastBridge Investment Group Corp are at least worth watching.