Zacks Small Cap Research – BSEM Continues to Post Stellar Results – Technologist

By Brad Sorensen, CFA

OTC:BSEM

READ THE FULL BSEM RESEARCH REPORT

BioStem Technologies, Inc. (OTC:BSEM) is a leading innovator focused on harnessing the natural properties of perinatal tissue in the development, manufacture, and commercialization of allografts for regenerative therapies. The company states its mission is “to discover, develop and produce the most effective regenerative medicine products in the world,” and we believe that the company is well on its way to achieving that goal—providing to investors what we believe is an opportunity to invest in a company that is both providing a vital service to the human population and providing economic value to shareholders when doing so.

Investors are increasingly understanding our positive view of BSEM as the stock has experienced a rapid rise over the past year. The company really gained momentum in the second half of 2023 as BioStem was awarded a valuable Q code for Vendaje AC and AmnioWrap2 by the Centers for Medicare and Medicaid Services and solidified its funding situation. Recently, the company announced that its Healthcare Common Procedure Coding System code for Vendaje AC became effective and that the Center for Medicare Services established national pricing for AmnioWrap2 in all 50 states and territories. Additionally, the company isn’t resting on its success as management recently initiated a clinical trial evaluating Vendaje in diabetic foot ulcers—a market with enormous and growing potential.

These moves are further evidence, in our view, that the medical community is increasingly realizing the benefits and superiority of the BioStem products and increasingly realizing the benefits patients can get from having access to those products. Our belief is that now that BioStem has a solid foothold in that tough to break into community, the acceptance and use of the company’s products will continue to accelerate.

The company also released full-year results for 2023 that showed revenue grew to $16.7 million, rising 143% from the 2022 level. Additionally, the company improved on its already impressive gross margin of 84% to 95%–meaning each additional unit sold is nearly all profit. Management also noted that, now that all of BioStem’s portfolio of products is approved by the US Department of Defense and the Veterans Administration, further growth improvements appear quite likely.

Also, the company addressed a “red flag” mark on BSEM stock on the OTC for stock promotion. Management noted that they are working with the OTC to explain the situation and expect resolution in the near future. We have reviewed the “promotional” material in question and found it to be factual, while perhaps engaging in a bit of cheerleading. We learned that BSEM hired a marketing firm, separate from the company’s current investor relations company, to put out the piece. We don’t believe it’s necessary as the growth BioStem is achieving is increasingly attracting investors, but also don’t find anything illegal or unethical about the material and believe this situation will be resolved soon.

Summary

We reiterate our belief the BSEM is still underpriced even after its recent move higher and continues to represent a good opportunity at recent prices for investors to get in before what we believe will be a more aggressive move higher in the not-too-distant future. The vision management has for the company’s product and the focus they are using to deliver results are encouraging and are now being rewarded by increased demand. As such, we suggest investors with a modestly higher risk tolerance take a look at BSEM.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.