BioRestorative Therapies is a Buy, says Roth

Look for clinical movement in the year ahead for BioRestorative Therapies (BioRestorative Therapies Stock Quote, Charts, News, Analysts, Financials NASDAQ:BRTX), according to analyst Jonathan Aschoff of Roth Capital Partners. Aschoff delivered a transferral of coverage report to clients on Wednesday where he started BRTX off with a “Buy” rating and $15.00 price target, good for a projected one-year return of 362 per cent.

Melville, New York-based BioRestorative is a stem cell therapy clinical stage company with two core programs: its disc/spine program has lead cell therapy candidate BRTX-100, for which the company has received authorization from the US FDA to start Phase 2 trials to treat chronic lower back pain arising from degenerative disc disease. BRTX-100 uses proprietary technology and a patient’s own bone marrow to culture stem cells which are then to be injected by physician into the patient’s damaged disc. In terms of timelines, during the second quarter 2022, BioRestorative announced the selection of ten of the up to 15 centres for the trial, which will involve up to 99 patients. 

BioRestorative’s other clinical line is a metabolic program involving a cell-based therapy targeting obesity and metabolic disorders using brown adipose (fat) derived from stem cells. The company says that initial preclinical research shows that increased amounts of brown fat in animals may be responsible for additional caloric burning along with reduced glucose and lipid levels.

Looking at BioRestorative’s two programs, Aschoff said up ahead for the disc/spine and BRTX-100 will be a data and safety monitoring board (DSMB) meeting, which should come in late Q1 2023 and thereafter support the continuation of the trial. 

“Although the DSMB meeting will evaluate the first four patients, we note that BRTX has already prescreened about half of the trial’s 99 patients, and that the selected sites are headed by KOLs that are highly familiar with stem cell therapy. We also expect BRTX to file its second BRTX-100 IND in 1H23, likely in a cervical, knee, or hip indication,” Aschoff wrote.

On the company’s metabolic program, Aschoff noted that BRTX recently recived a Phase 1 grant from the Eunice Kennedy Shriver National Institute of Child Health & Human Development of the NIH to develop its ThermoStem program in polycystic ovary syndrome (PCOS) in partnership with Temple University, School of Medicine. Aschoff said therapeutic brown adipocyte transplantation is “an emerging and novel therapy” for PCOS and he is expecting BioRestorative to file an IND for ThermoStem possibly later in 2023, which would set up the program for a potential Phase 1 trial in early 2024.

On valuation, Aschoff’s $15 target comes from a DCF analysis using a 45 per cent discount rate applied to all cash flows and the terminal value, which is based on a 5x multiple of his projected 2031 operating income of $429 million.

“We anticipate substantial ramping of BRTX-100 Phase 2 enrolment starting in 2Q23, after our expected favourable 1Q23 DSMB meeting and activation of all sites, and to ThermoStem progression toward IND,” he said.