Edison Issues Initiation on International Stem Cell

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.

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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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All reports published by Edison are available to download free of charge from its website http://www.edisoninvestmentresearch.com.

About Edison: Edison is an international equity research firm with a team of over 110 analysts, investment and roadshow professionals and works with both large and smaller capitalised companies, blue chip institutional investors, wealth managers, private equity and corporate finance houses to support their capital markets activity. Edison provides services to more than 420 retained corporate and investor clients from offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

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For more information please contact:

Beth Senko, Edison Investment Research, +1-646-653-7026

Maxim Jacobs, Edison Investment Research, +1-646-653-7027, [email protected]

SOURCE Edison Investment Research

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