Frost & Sullivan Publishes Q1 Update on Kadimastem

Continues its plans as expected; Ministry of Health approval for central experiment; financing is required to continue operations at the beginning of 2020; received Orphan Drug Designation from the FDA; target price unchanged.

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Summary of Highlights (read the full report here)

The Company reports using the "small company" model and therefore does not publish financial statements for the first quarter.

In our opinion,the change in managment in the company is not expected to affect the company's operations.

In Frost and Sullivan's immediate report on October 10,2018 we present the company's latest raise of capital:

$5.15 million in capital was raised at a price of NIS 0.65. In addition warrants were realized providing an additional NIS 3.6M to the company.

The Company raised $5.15 million,through private placement,from a number of investors,including the controlling shareholders of the company,Prof. M Revel and Mr. J Rogery (who invested a combined $1.1 million out of the total).

To our understanding,the fact that controlling shareholders,who are well aquainted with the company's activity,invested a relatively significant amount compared to the total investment,attests to their belief in the company. Funds were raised from the controlling shareholders at NIS 0.65 per share,a slight discount compared to the trading price of the company's shares at the time (NIS 0.68).

Kadimastem is included in the TASE Indices

On November 27,2018,Kadimastem received an announcement from the TASE,that it will be included in the TASE Growth Index,the TASE Biomed Index and the TASE Global BlueTech Index. The company will be included in the indices starting December 6,2018.

During 2018,the Company had no income; loss amounted to NIS 24 million compared to the corresponding period in 2017,in which loss amounted to NIS 21.5 million

An increase in research and development expenses of NIS 1.7 mainly due to an increase in expenses in related to the promotion of the Company's main clinical trial.

The Company has a cash balance at the end of the year of NIS 11.1 million,while the cash flow used for operating activities amounted to NIS 20.9 million during 2018,meaning that the Company needs to continue financing around the beginning of 2020 at the latest.

The Company has a capital deficiency of NIS 6.7 million as at December 31,compared to NIS 4.3 million as of December 31,2017.

The Company's auditors gave it "going concern" company status.

Clinical Developments:

The FDA has granted the company's leading product orphan drug status in the United States,which is granted for the purpose of promoting the development of medical treatments for rare diseases. The economic implications of this status are: a longer exclusive marketing period (7 years versus 5 years),tax benefits,and benefits along the clinical trial pipeline.The clinical implications of this status are an affirmation of the company's medical potential.

On April 18,2019,the Company announced that it had received approval from the Ministry of Health to continue cell transplantation in five additional ALS patients recruited for the second experimental group. Results for the second experimental group are expected to be received by the end of 2019. The clinical trial was conducted in the Department of Neurology at the Hadassah Ein Kerem Medical Center,and is expected to include 16 patients in addition to five already treated in the first experimental group. The Company estimates that results for the second experimental group are expected to be received at the end of 2019.

The company has won several awards and its research has been published on major platforms,affirming the scientific basis of the company's technology.

The company received an international cooperation grant with a company from the State of New South Wales,Australia,to test additional technology in the field of encapsulation. The expected project budget is NIS 3.3 million for two years,with the Company's share in the first year being NIS 1.1 million,of which the Authority's participation in innovation will be half.

We maintain the company's value in NIS 97M; Target price range remains between NIS 1.03 and NIS 1.21,an average of NIS 1.12.

Read the full report here.

About the company

Kadimastem Ltd. (hereinafter "Kadimastem" or "the company") is a clinical stage biopharmaceutical company that specializes in regenrative therapies and that has two stem cell based therapies in research phase: 1. AstroRx (astrocytes- support cells of the central nervous system) for the treatment of ALS and 2. Encapsulin (insulin secreting cells) for the treatment of diabetes. Both products were developed on the back of the company's embryonic stem cell differentiation platform which has the potential to treat additional diseases.

About Frost & Sullivan

Frost & Sullivan,the Growth Partnership Company,works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years,we have been developing growth strategies for the global 1000,emerging businesses,the public sector and the investment community. Contact us at equity.research@frost.com