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Growth in adult stem cells – Finance

Posted in ALL ARTICLES, BUSINESS OF STEM CELLS with tags , , , , , , , on April 2, 2009 by David Granovsky
Nuvasive (NUVA): Growth in adult stem cells
Thursday, 02 April 2009
 “In all the excitement over the new future for embryonic stem cell, it seems investors have forgotten about adult stem cell products,” notes growth stock specialist Dave Dyer.

In his Dave Dyer’s Newsletter, he explains, “In fact, there are adult stem cell products either already on the market or in late clinical trials. We view this as an excellent opportunity.” Here, he looks at NuVasive (NASDAQ: NUVA).

“Stem cells can grow into any type of organ or tissue and the promise is that damaged organs may be repaired or even replaced with spare parts grown from stem cells. This amazing potential could revolutionize the life sciences.

“NuVasive is a rapidly growing company with unique technology for minimally-invasive back surgery; named Osteocel, it is a stem cell-based product used to help with bone grafts done as a part of spinal surgery.

“This is one of the first regular commercial application of a product based on human stem cells. We note that this product is based on adult stem cells from bone marrow, not embryonic stem cells.

“Osteocel, was sold to NuVasive by Osiris in exchange for a stream of payments based on specific milestones. Nuvasive expects Osteocel to provide $28 million of new revenue for NUVA in 2009, up from $10 million in 2008, so this is a serious product.

“The spinal fusion market — NUVA’s focus — is about $4.2 billion per year. They are a small player, with about 6% of the market, but that is up from 4% last year, for a 50% increase in market share. Not too bad.

“NUVA’s products support a type of minimally-invasive back surgery in which small incisions are made in the side rather than large ones in the back. It provides surgeons with a combination of technology, software, and consumables that bring in about $12,000 per operation.

“Many of their products are based on proprietary patent-protected technology. They have 52 U.S. patents issued and 189 pending.

“Overall, their approach results in less time in the operating room, shorter hospital stays, and faster recovery.  That is probably why they are growing so rapidly. For the last eight quarters, revenue has grown between 50% and 70% per quarter.

“While profits have not grown as rapidly, both 2007 and 2008 were profitable years. In addition, they have no debt.

“A long term chart shows that they had a super 450% gain after their IPO in 2004, but were brought down by the recent bad market. There does not seem to be any fundamental reason behind the drop. It appears that NUVA is now moving in the right direction again.”