LONDON, May 16, 2016 /PRNewswire/ --
International Stem Cell (ISCO) is an early-stage cell therapy company currently in Phase I/IIa clinical trials to treat Parkinson's disease (PD). In addition, ISCO sells skincare and biomedical supplies to the market, generating $8m in sales and $1.7m in underlying operating profit in 2015. The commercial businesses provide a floor under ISCO's current valuation, creating an essentially free option on the PD candidate.
Using a risk-adjusted NPV model, we value the company at $27m or $9.60 per basic share, using a 12.5% discount rate and a 7.5% probability of success for the PD candidate and a 10% discount rate and 90% probability for the skincare and biomedical businesses. Under the current capital structure, there are c 19m additional shares from convertible preferred stock, options and warrants on top of 2.8m current common shares, potentially leading to significant dilution for minority investors. In addition, the company's convertible preferred shares are subject to anti-dilution protection, creating further dilution potential, and we predict an additional $76m in future financing needs.
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