Stonegate Capital Partners Initiates Coverage on Biostage, Inc.

DALLAS, TX / ACCESSWIRE / June 30, 2016 / Stonegate Capital Partners initiates research coverage on Biostage, Inc. (NASDAQ: BSTG).

Company Description

Biostage, Inc. has developed a proprietary Cellframe™ technology, with three programs in preclinical studies for their ability to promote organ regeneration. Cellframe™ technology uses a synthetic scaffold in combination with a patient’s own stem cells taken from a section of biopsied adipose/fat tissue, seeded in a bioreactor, and then placed inside the body to replace a segment of an organ surgically removed; the patient’s own cells next signal the stem cell niche to begin regeneration of a biological structure. Presently, Biostage is focusing on implants for hollow organs such as the esophagus, trachea, and bronchi. The Company conducted its advanced preclinical testing for its esophageal implant in collaboration with Mayo Clinic and intends to submit an IND with the FDA for its first indication by the end of 2016. The Company was formerly known as Harvard Apparatus Regenerative Technology, Inc., but changed its name as part of rebranding initiative in March 2016 to Biostage, Inc.

Biostage is headquartered in Holliston, MA, and currently employs 21 people.

Summary

Biostage’s Cellframe™ technology brings together cutting-edge science, technology, and functionality in a biocompatible organ implant, and we believe that the Company is well-positioned to succeed for the following reasons, among others:

• The Company has three promising programs in the pipeline — its Cellspan™ esophageal (including pediatric), bronchial and tracheal implants have the potential to reduce complications as well as costs associated with the current standards of care and improve the quality of patients’ lives.

• This regenerative technology utilizes the patient’s own cells taken from adipose fatty tissue, as opposed to the more controversial embryonic cells, and are seeded onto Biostage’s proprietary biocompatible scaffold design that acts like a frame for organ tissue regrowth; the scaffold may be designed to be incorporated into the body, resorbed by the body, or retrieved via endoscopic or bronchoscopic procedures once regeneration has occurred.

• Biostage’s organ implants address life-threatening conditions resulting from cancer, infection, trauma, or congenital abnormalities; its target markets are sizable (revenue opportunity estimated by management in excess of $1.5 billion) with unmet medical needs.

• In June 2016, the Company filed for an orphan drug designation from the FDA for its esophageal implant in the US (and will subsequently file in Europe) and has a goal of filing an IND with the FDA in late 2016, following successful results of extensive animal studies, the most recent of which have been conducted in collaboration with Mayo Clinic. Its HART-Trachea product was successfully granted orphan designation by the FDA in September 2014.

• In addition to focusing resources on medical indications more likely to receive approval in the near-term, Biostage expects to have multiple shots on goal longer-term, also believing that its bioengineered organ implant technology may have applications in broader areas such as gastrointestinal disorders.

• BSTG’s patent portfolio addresses the technology and processes utilized to create its products, and as last reported included 3 issued patents as well as 13 patent applications under review, all expiring beyond 2030 with one exception.

• Biostage had approximately $4.85 million cash on hand as of 3/31/16; an offering subsequent to quarter-end added approximately $5M. In a recent presentation, management disclosed the quarterly cash burn at approximately $2.5M. Biostage has a simple capital structure with approximately 17 million shares outstanding, no debt, and approximately 1.4M warrants, representing minimal dilution potential.

We anticipate 2016 being an inflection year for Biostage. With promising preclinical data, sizable addressable markets with unmet needs, and a solid financial position, our valuation analysis for the esophageal program alone results in an estimated range of $5.58-$6.41/share, with a mid-point of approximately $6. See page 7 of the report for further details.

The full report can be accessed by clicking the following link:
http://stonegateinc.com/reports/BSTG_June_2016_Final.pdf

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high quality investment opportunities.

SOURCE: Stonegate Capital Partners

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