2014-01-27

By Jason Napodano, CFA

We recently sat down with Amarantus Bioscience Holdings (AMBS) CEO, Gerald Commissiong. The meeting confirmed our belief that Amarantus is in the midst of a fundamental turnaround and has significant growth potential over the next two to three years. Below we highlight the four key variables with respect to Amarantus future – MANF, LymPro, Eltoprazine, and the balance sheet.

MANF Update

Amarantus is continuing to make progress with translational development and preclinical toxicology work on MANF prior to filing the first investigational new drug (IND) application to being human clinical studies. This work is being headed up by Dr. David A. Lowe, PhD, the company’s most recently appointed Board member. Dr. Lowe comes to Amarantus with over 35 years of experience in central nervous system (CNS) drug discovery and development within the biopharmaceutical industry. He has served in senior roles with various major biopharmaceutical companies, as well as emerging biotechnology companies. Dr. Lowe's has development expertise within the areas of neurology, endocrinology and ophthalmology.

In August 2013, the company announced positive data for MANF in the degenerative disease known as Retinitis Pigmentosa (RP). The study concluded that Intravitreal injection of recombinant human MANF protein protects both rods and cones from retinal degeneration in an animal model of RP. RP is a degenerative disorder of the eye that affects roughly 100,000 people in the U.S., meaning that it qualifies as an orphan disease under FDA guidelines. We think between Europe and Japan, another 150,000 individuals are affected. A little about RP:

RP refers to a group of inherited diseases causing retinal degeneration. The cell-rich retina lines the back inside wall of the eye and is responsible for capturing images from the visual field. People with RP experience a gradual decline in their vision because photoreceptor cells (rods and cones) die. Scientists believe this is due to significant endoplasmic reticulum stress and protein misfolding. Symptoms include a progressive degeneration of peripheral and night vision as well as the degeneration in color perception and central vision; night blindness is one of the earliest and most frequent symptoms of RP. RP is typically diagnosed in adolescents and young adults. The rate of progression and degree of visual loss varies from person to person. Most people with RP are legally blind by age 40. It is estimated that the market opportunity for Retinitis Pigmentosa exceeds $10 billion annually.
Orphan indications represent an attractive opportunity for Amarantus because they potentially speed the path to market while reducing costs to develop. Large pharmaceutical companies have also demonstrated keen interest in orphan drugs over the past few years. The preclinical data with MANF in PR is encouraging. Back in 2012, an abstract was presented by Wen et al from the University of Miami's Bascom Palmer Eye Institute at the Association for Research in Vision and Ophthalmology annual conference in 2012. The results show that recombinant human MANF significantly protected rod and cone photoreceptors from degeneration. The MANF mechanism of action, protection of the endoplasmic reticulum, facilitation of protein folding, and reduction of cell apoptosis seems ideally suited for RP, or other eye diseases such as macular degeneration. We anticipate the filing of the Orphan Drug application for RP late 2014 / early 2015. We expect the IND in RP will follow shortly thereafter.

Amarantus tells us there are additional orphan indications planned for MANF. According to CEO, Gerald Commissiong, the company has entered into several non-disclosure agreements with potential development partners on MANF in new orphan indications. Dr. Lowe believes that MANF represents “breakthrough biology” in areas of neurology and ophthalmology, but we’ve also heard the company speak recently about metabolic disorders, such as Type-1 diabetes. One potential Orphan indication in this regard is Wolfram’s Syndrome (WS), an ultra-rare disorder resulting from pituitary gland dysfunction and a shortage of insulin in the body. Symptoms include high blood sugar levels (diabetes mellitus) and progressive vision loss due to degeneration of the nerves that carry information from the eyes to the brain (optic atrophy). People with Wolfram syndrome often produce excessive amounts of urine (diabetes insipidus), hearing loss caused by changes in the inner ear (sensorineural deafness), urinary tract problems, reduced amounts of the sex hormone testosterone in males (hypogonadism), or neurological or psychiatric disorders. Amarantus believes that conducting small clinical studies and generating proof-of-concept data in an Orphan designation such as WS may facilitate partnering opportunities in Type-1 diabetes.

With respect to MANF in Parkinson’s disease, we remind investors that back in October 2013, Amarantus entered into a letter of intent with Renishaw PLC for the use of Renishaw’s proprietary implantable neurosurgical products and systems, including the neuromate® stereotactic robot, neuroinspire™ surgical planning software, and neuroinfuse™ - intraparenchymal delivery system for the delivery of MANF in Parkinson's disease and other neurological conditions. Over the course of the next 12 months, the companies plan to collaborate to conduct certain feasibility studies to ensure the long-term viability of delivering MANF using Renishaw's product line to key brain structures. If successful, the companies expect to enter into a definitive agreement to support human clinical studies and commercial use.

In the next few months we are expecting privately-held MedGenesis Therapeutix Inc. to release Phase 2a results of GDNF in Parkinson’s disease. In this trial, MedGenesis is delivering GDNF via convection enhanced delivery (CED) to patients with Parkinson’s disease. The Phase 2a trial is being funded by a grant awarded by the Deutsche Parkison Vereinigung e.V. We believe if this Phase 2a trial is successful, it fares well for Amarantus given all the existing preclinical data showing MANF’s superiority to GDNF, specifically with respect to increase dopaminergic nerve terminal reinnervation of striatum, increased dopamine concentrations in the brain, and reduced behavioral deficits. More importantly though is the data showing that delivery of GDNF is safe and feasible via CED. With CED safety and feasibility confirmed by the MedGenesis study, we believe Amarantus will be able to move forward with MANF in similar fashion.

Finally, we remind investors that back in September 2013, Amarantus hired F. Randall Grimes as Director of Sponsored Research. Mr. Grimes has been focused on working with Amarantus' scientific team, Board of Advisors and outside collaborators to support the acquisition of non-dilutive funding from disease foundations, non-governmental and governmental organizations to advance Amarantus' pipeline. According to the company (as of the third quarter update conference call on November 18, 2013) the company is aggressively pursuing grants and a number of applications have been drafted.

LymPro Update

In October 2013, Amarantus announced positive analytical performance data for the LymPro Test. The data produced by the Custom Technology Team at Becton, Dickinson and Company (BD) demonstrates that CD69 was increased in response to mitogenic stimulation with both pokeweed mitogen (PWM) and phytohaemagglutinin (PHA) across all control samples. Amarantus is now in a position to embark on long-term stability controls of the assay to ensure commercially-acceptable reproducibility, as well as enter into agreements with leading clinical sites to obtain additional clinical performance data for LymPro. Ultimately, we believe it makes sense to try and develop an ELISA-based version of LymPro instead of the mitogenic stimulation assay. However, what the analytical performance data tells us is that the cell cycle hypothesis and previous data generated from the 2005 (n=88) study published in Neurobiology of Aging (Volume 33, Issue 2) holds true.

Results from the Phase 1 study show the scoring model was able to differentiate between AD subjects and other demented subjects (e.g. with PDD or MCI) with co-positivity (sensitivity) up to 91% and co-negativity (specificity) up to 92% relative to the clinical diagnosis of AD.

Between AD subjects and non-AD subjects we found a co-positivity of 88% and a co-negativity of 82%. The separation between AD and OD was particularly apparent, with a SI score at 0.55. This can be seen in the graph below where red bars represent patients with probably AD and the blue bars represent patients with another form of dementia (in this case Parkinson’s disease dementia). The study investigators also found a 95.6% correlation on AUC relative to clinically diagnosed AD compared to OD. Source: Stieler at el; Neurobiology of Aging 33 (2012) 234–241



A comparison of the LymPro results with the Mini Mental Status Exam showed independence from dementia severity. The study investigators concluded that this was logical because the defect measured precedes the dementia and continues throughout the course of the disease. The R-squared value indicates that the LymPro score and the dementia severity are 90% independent.



Amarantus tells us they are now in the process of going back and doing a 7-year follow-up analysis of the 88 patients studied in the Phase 1 trial above. This will be an incredibly important longitudinal analysis for the validation of LymPro. Investors need to understand, the “Gold Standard” for Alzheimer’s disease diagnosis is an autopsy. Obviously this limits data validation while the patient is still alive. Therefore, data from the Phase 1 study was compared to the physician’s diagnosis. The 88 patient Phase 1 study was conducted in subjects with mild-to-moderate dementia previously diagnosed as having probably AD (n=32) or dementia with PD (n=26), vs. a healthy control (n=30). In-between the initial physician’s diagnosis and autopsy (patient death) are follow-up examinations. LymPro compared well to the physician’s initial diagnosis. However, actual real-world follow-up data from the 58 subjects diagnosed with AD or PDD will give a definitive answer to the question, “Does LymPro work?”

Investors previously believed that Amarantus will seek a development partner for LymPro shortly after the preparation of the analytical performance package. However, Amarantus now plans to analyze the data from the 7-year longitudinal analysis prior to forming a developmental partnership because confirmation of the impressive accurate [(sensitivity x prevalence) + (specificity x 1-prevalance)] of LymPro represents a major valuation inflection for the company. We agree. Why partner LymPro in the second quarter 2014 before this 7-year data validation, when validation means a partnership at multiples of what LymPro is worth today?

Once the data has been validated, the next step is to establish long-term analytical performance to support commercial launch in 2015 (note: management guidance is “second half of 2014”). Amarantus expects to be in a position to submit the necessary data package to CLIA to support the intended use statement: "Aid in the diagnosis of Alzheimer's disease," and commercial launch of LymPro as a Laboratory-Developed Test (LDT) through CLIA. Following clearance under CLIA, Amarantus will focus on gaining U.S. FDA approval for multi-lab use. This could occur in 2015. Once enough clinical utility data has been generated, Amarantus can approach the Center for Medicare and Medicaid Services (CMS) and gain reimbursement for broad-scale use. This is an important step, especially in light of the fact that CMS has denied reimbursement for Eli Lilly’s Amyvid given a lack of clinical and pharmaco-economic evidence.

Amarantus believes it has identified CPT codes relating to cell cycle dysfunction and Alzheimer’s disease that might facilitate reimbursement for LymPro under CLIA or commercial sale. This would be an enormous advantage for the company, and something worth looking deeper into by management. This is yet another reason to push partnering talks out a quarter or two because progress added significant value.

The ultimate goal for Amarantus with LymPro is to gain approval as a companion diagnostic paired with a therapeutic for the treatment of Alzheimer’s disease. However, as noted on the most recent conference call by the CEO, therapeutic developments for the treatment of Alzheimer’s disease are the rate-limiting step. Therefore, we believe Amarantus has the right strategy in pursing CLIA approval in late 2014. We think CLIA approval can be achieved with as little as $5 million investment.

We see a significant market need for an Alzheimer's diagnostic product like LymPro. Specifically, the goal of any Alzheimer's disease diagnostic should be to distinguish between patients with Alzheimer's disease and other degenerative dementias, such as Parkinson's disease dementia (PDD) or psychosis, and mild cognitive impairment (MCI) or age-related memory loss (AAMI). A simple and economical test that can accurately and reliably do such would have a number of benefits, including:

1) Significantly expedite diagnosis, allowing for earlier treatment in the primary practice setting.
2) Significantly simplify the diagnosis process, allowing for meaningful economic savings to the healthcare system.
3) Improve outcomes by allowing for a more focused treatment based on the type of cognitive impairment, and
4) Distinguish between patients for clinical trials and therapeutic development.

For additional detail on LymPro, we encourage investors to read the company’s LymPro White Paper outlining the history and clinical data to data published in October 2013.

Eltoprazine Update

On January 14, 2014, Amarantus announced that it has entered into a licensing agreement to acquire the rights to eltoprazine from PGI Drug Discovery LLC (formerly PsychoGenics Inc.) in return for cash and future undisclosed cash and stock milestones. Amarantus intends to push eltoprazine forward in a Phase 2b clinical study during the second half of 2014 for the treatment of levodopa-induced dyskinesia (LID), a common treatment-related adverse event that develops in patients with Parkinson's disease (PD). This is a keen area of interest for the company, and one that we wrote extensively about in the past.

Eltoprazine is a selective 5-HT1A/1B partial receptor agonist previously studied for the alleviation of involuntary movements, including dyskinesias, in Parkinson's disease patients who experience side-effects of their levodopa medication. In fact, the Michael J. Fox Foundation (MJFF) has funded human clinical proof-of-concept studies with eltoprazine as recently as 2012. The National Institutes of Mental Health (NIMH) in Cognitive Impairment Associated with Schizophrenia (CIAS) has also funded work on eltoprazine. Clinical data also shows statistically significant effects in adult ADHD patients. Biotech investors may be familiar with the success that Alcobra Pharma has had pursing adults with ADHD.

In June 2012, PsychoGenics Inc. announced positive results from a clinical study of eltoprazine in Parkinson's disease levodopa-induced dyskinesia (PD-LID). The trial was a double-blind, randomized, placebo-controlled, dose-finding study conducted at two sites in Sweden, the Lund University Hospital and the Karolinska Hospital Huddinge. In the study, twenty-two patients were given single doses of eltoprazine or placebo along with a challenge dose of levodopa at each of the five treatment visits and assessed for parkinsonian and dyskinesia symptoms over a period of three hours post-treatment. The assessments were video-taped and scored by two independent blinded raters.

Eltoprazine met the primary objective of the study by exhibiting a statistically significant reduction in LID at the 5 mg dose (p = 0.0007) and the 7.5 mg dose (p = 0.0467), without adversely affecting levodopa efficacy. The primary efficacy was measured using the Clinical Dyskinesia Rating Scale (CDRS) and the Unified Parkinson's Disease Rating Scale (UPDRS). Secondary endpoints included the Rush Dyskinesia Rating Scale and evaluation of the patients' mood using the Hospital Anxiety & Depression Score (HADS) and Montgomery-Asberg Depression Rating Scale (MADRS). Eltoprazine was also well tolerated in this study and there were no serious adverse events.

According to PsychoGenics, pre-clinical data from multiple models of PD show that eltoprazine effectively reduces LID. Chronic administration of eltoprazine for 45 days suppressed symptoms of LID with excellent tolerance. The drug even demonstrated protection from development of further dyskinesias. With might be suggestive of utility in early-stage disease. In addition, other preclinical and clinical data support the use of eltoprazine to treat the non-motor symptoms of PD such as cognitive impairment and depression.

The MJFF has made a concerted effort to repurpose drugs for the treatment of Parkinson's disease, and one of the drugs they list in their December 2012 presentation (slide 13) on this subject is eltoprazine. This is not the first clinical trial to show efficacy of eltoprazine in this indication. The MJFF has funded additional work testing eltoprazine in combination with other candidates for PD-LID, including amantadine. We have found evidence that eltoprazine has been studied in several clinical trials to date and has amassed safety data in several hundreds (the news release from Amarantus says 700) of subjects without serious adverse events, with doses tested up to 30mg (note the best dose for LID looks to be around 5mg). We see no safety issues that would impede future development in LID or ADHD.

The drugs' preclinical data is also extensive, with a safety database goes back over two decades. The MJFF has made a concerted effort to repurpose drugs for the treatment of Parkinson's disease, and one of the drugs they list in their December 2012 presentation (slide 13) on this subject is eltoprazine.



In June 2013, we wrote an article discussing Parkinson's disease and the problems that exist for patients as the disease progresses, including psychosis and the development of levodopa-induced dyskinesia. One of the companies we highlighted in the article was Addex Therapeutics and their Phase 2b ready drug candidate, dipraglurant, for LID. We encourage investors to view that article for a background on the PD-LID market opportunity. In brief, LID is a major side effect of levodopa use. The figure below is a fantastic representation of these issues (source).

LID is characterized by hyperkinetic movements, including chorea (abnormal involuntary movement), dystonia (sustained muscle contraction, abnormal posture), and athetosis (involuntary convoluted movements). It is most common at times of peak levodopa plasma concentrations (peak-dose dyskinesia), although it may also occur when plasma concentrations rise and fall (diphasic dyskinesia) or during off-time (off-period dystonia).

There are no approved treatment options for LID. Approximately 50% of PD patients will experience LID after 4 to 6 years on levodopa therapy. The number rises to 90% after 10 to 15 years. It is a significant problem for patients and physicians seeking treatment for PD. In fact, a survey of key opinion leaders in the Parkinson's treatment space showed that dyskinesia is the most important unmet medical need in the treatment of PD after a disease modifying agent (Datamonitor 2011). In the U.S., there are an estimated one million people with Parkinson's disease.

On May 22, 2013, Amarantus entered into a letter of intent to in-license a Phase 2 drug candidate in levodopa-induced dyskinesia in patients with Parkinson's disease from an undisclosed third party. Today is the realization of that strategy by the company with the licensing of eltoprazine. In our view, this shows good execution by management. Coupled with the recent progress on LymPro and Amarantus seems to be efficiently executing on its business plan since we started following the company in early 2013.

Below we highlight some of the competition for Amarantus in this new venture:

Amantadine: Amantadine is a generic antiviral that is used off-label for the treatment of LID. Its utility in the treatment of LID has been studied in a series of small clinical trials, many of which were open-label or lacked a control arm. A randomized double-blind trial in 18 patents with LID concluded that it reduced the duration of dyskinesia episodes by 60% and improved quality of life. A second study found that amantadine reduced dyskinesia symptoms by 45%, but that the duration of the effect was only 8 months and patients experienced a rebound of symptoms upon ceasing therapy. The utility of amantadine in the treatment of LID appears to result from its activity as an NMDA antagonist. Privately-held Adamas Pharmaceuticals recently completed an 80 subject Phase 2/3 trial of their extended release amantadine product, Nurelin. In June 2013, they announced that the trial had met its primary endpoint of reduction in LID as measured by the MDS-Unified Parkinson's Disease Rating Scale (MDS-UPDRS). Whether an extended release product will be seen by physicians and patients as adding value is difficult to assess, as the pharmacokinetics of immediate release amantadine are compatible with once daily dosing.

Mavoglurant: Mavoglurant (AFQ056) is an antagonist of the glutamate receptor mGluR5 being developed by Novartis for several CNS indications, including LID. In a 31 patient Phase 2 trial in patients with moderate-to-severe LID, 15 patients were randomized to 25-150 mg mavoglurant twice daily and 16 patients were randomized to placebo. Patients in the active drug group experienced a significant reduction in symptoms as measured by the Lang-Fahn Activities in Daily living scale without negative impact on the effectiveness of the anti-Parkinson's efficacy of their ongoing dopaminergic therapy. Similar effects were seen in the second study, which examined the efficacy of mavoglurant in 28 patients with severe LID and used the Modified Abnormal Movement Scale to measure efficacy. Novartis reports being in Phase 3 studies for PD-LID with mavoglurant.

Dipraglurant: Addex Therapeutics is developing dipraglurant, an oral negative allosteric modulator (NAM) of the metabotropic glutamate receptor 5 (mGluR5), for the treatment of PD-LID. Dipraglurant was examined in a randomized, double blind, placebo controlled Phase 2a trial in 83 subjects with moderate-to-severe Parkinson's disease. Results show that dipraglurant was safe and well tolerated with the most important side effects being vertigo, blurred vision, and a drunk feeling but none of these was severe. Results on the modified AIMS scale showed statistically significant improvement on days 1 and 14, with clinically relevant reductions in the dipraglurant group on all three periods tested (days 1, 14, and 28). We note Addex has specifically been looking to out-license dipraglurant for the initiation of a Phase 2b study since 2012.

Eltoprazine's advantage over amantadine may be its duration of action and improved safety and tolerability. Amantadine has been associated with several central nervous system side effects, likely due to the drug's dopaminergic and adrenergic activity, and to a lesser extent, its activity as an anticholinergic. CNS side effects include nervousness, anxiety, agitation, insomnia, difficulty in concentrating, and exacerbations of pre-existing seizure disorders and psychiatric symptoms. Mavoglurant and dipraglurant are similar drugs that may offer competition to Amarantus in the future. However, Novartis looks to be several years ahead of Addex with mavoglurant development and Addex has been unable to secure a development partner for dipraglurant for the past few years. Addex underwent a major restructuring of its organization in 2013 and dipraglurant looks to be on the back-burner until a partner funds future development. We believe potential dipraglurant partners are keeping a close eye on Novartis' efforts with mavoglurant.

A potential major competitive advantage for Amarantus and eltoprazine is the drugs' secondary benefits, which include potential improvements in cognitive function as seen in the PyschoGenics Phase 2a study noted above. The drug also seems to reduce the onset of future dyskinesia. Eltoprazine has been studied in general anxiety disorder, depression, and aggression. The mechanism of action is well-understood and if Amarantus can confirm these secondary improvements in severely-ill Parkinson's patients the drug has blockbuster potential in our view. Upside potential comes from potentially expanding development into ADHD or cognition, where a non-stimulate / non-scheduled product could have major advantages over generic methylphenidate.

We think the acquisition of eltoprazine is a game-changer for Amarantus. The company now has its first clinical-stage asset with statistically significant proof-of-concept generated in a potential billion-dollar market like PD-LID. Amarantus picked up eltoprazine cheap, only paying $100,000 to PGI Drug Discovery. PGI Drug Discovery has recently made the decision to partner its clinical drug candidates and focus future efforts on the CRO business. The deal was no-doubt brokered by former PsychoGenics Chief Scientific Officer and current Amarantus Board member, David A. Lowe, PhD.

We expect Amarantus to look to push into a Phase 2b clinical trial with eltoprazine during the second half of 2014. Given the history and interest of the molecule by the MJFF, we would not be surprised to see Amarantus pursue grant funding to help off-set the cost of this study. Based on plans we’ve seen from Addex and Novartis, Amarantus should be able to move into Phase 2b targeting ~150 patients for around $5 million all-in. Management is currently in the process of identifying centers and selecting a principal investigator for the study. IND’s have already been filed on eltoprazine in ADHD and schizophrenia, with clinical trial agreement (CTA) and medical products agency (MPA) agreement filed in Sweden for PD-LID.

Amarantus will take ownership of method-of-use patents for eltoprazine, and we suspect the company will look to sure-up the intellectual property (IP) around the drug by enhancing the formulation and/or filing new applications in the near future.

Balance Sheet / Financials Update

On November 18, 2013, Amarantus Biosciences Holdings, Inc. (AMBS) reported financial results for the third quarter 2013. The company reported no revenue for the quarter, as expected. Total operating expenses in the quarter were $679K, comprised of $288K in R&D and $390K in G&A. Both expenses came in well below expectations in the quarter, as the company focuses on reducing costs and executing on near-term objectives with respect to the pipeline. Interest expense in the quarter totaled $518K, primarily due to the convertible note financings consummated early in 2013 that included amortization of debt discount. The company also record $829K in change in fair value of warrant and derivative liability.

Net loss for the quarter was $2.025 million, or $0.00 per share based on 478.9 million average shares outstanding during the quarter. Actual cash burn during the quarter totaled only $980K, as amortization of debt discounts, stock-based compensation, and change in fair-value of warrant and derivative liability are all non-cash expenses.

Cash at September 30, 2013 totaled $1.015 million. During the quarter, the company received $1.928 million in cash from financing activities. Transactions entered into during the quarter include:

August 19, 2013, the company entered into a securities purchase agreement, Series-D 8% Convertible Preferred Stock financing, with Dominion Capital, LLC to issue an aggregate of 1,300 shares of Series-D convertible preferred stock (stated value $1,000 per share) in exchange for Dominion assuming certain former trade payable obligations of Amarantus $1.169 million. The shares are initially convertible at $0.03 per common share which equals 33,333 shares of common stock for each share of Series-D convertible preferred stock. Dominion received a 10% original issue discount and will receive an 8% annual dividend payable quarterly.

September 4, 2013, Amarantus entered into a Securities Purchase Agreement with certain investors pursuant to which the company issued and sold an aggregate of $1,544,443 in principal amount of 8% Original Issue Discount Senior Convertible Debenture due September 2014 and a common stock purchase warrant to purchase 38.611 million shares of common stock. Net proceeds from the offering were $1.390 million.

Subsequent to the close of the quarter, on October 2, 2013, the company received gross proceeds of $1.610 million in connection with a second private placement built off the September transaction noted above. Amarantus issued an aggregate of $1.789 million in principal amount of 8% Original Issue Discount Senior Convertible Debentures due October 2014 and common stock purchase warrants to purchase 44.722 million shares of common stock.

Based on the above three transactions, Amarantus should be sitting on an estimated $2.625 million in cash prior to factoring in operating burn for the fourth quarter. Assuming the company burned roughly $750K in the fourth quarter 2013, we believe Amarantus exited 2013 with roughly $1.875 million in cash on the books. Although net working capital remains negative, Amarantus has seen a net $2.5 million improvement in its financial position since the beginning of 2013.

Included in the September and October transaction was 100% warrant coverage at $0.06 per share. These warrants are currently in-the-money, and callable by Amarantus if the stock trades above $0.10 for twenty consecutive business days. The warrants equate to an infusion of $5.0 million in new capital to Amarantus. Given that the stock currently trades at $0.10 per share, we believe the company will encourage warrant exercises prior to the potential calling of the warrants in February 2014. For example, it would behoove warrant holders to enter into an exchange transaction with the company in order to swamp existing warrants – and cash to Amarantus – for new warrants that higher strike prices. Given the run in the stock, we believe investors are under-estimating the ability of the company to not only fund operations, but drive MANF, LymPro, and eltoprazine forward.

Final Thoughts

We believe fundamentals are improving at Amarantus Bioscience, both with respect to the development of MANF and LymPro, and on the balance sheet. These improvements are the primary reasons why we believe investors should buy the stock today. Yes, the company still has significant challenges with respect to clinical development of its products and in securing long-term financial flexibility, but stock prices tend to follow fundamentals, and right now the fundamentals are pointing to a potential breakout in 2014. Our target is $0.25 per share.

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