Fast-growing Provider of Stem Cell Services
KEY INVESTOR MESSAGES
- A unique provider of comprehensive stem cell services across storage, contract research, medical education and insurance plans
- About to fully enter the commercial stage with an attractive mix of revenue streams from a variety of stem cell related services
- Ongoing international expansion in the key South American, European, Gulf and Asia-Pacific markets
- Current cash in the bank (c. £1mln, CN estimate based on WideCells' half year results as at 30 June 2017) to finance ongoing operations for the next 6-9 months, excluding any income generated by the expected near-term revenues
COMPANY OVERVIEW
WideCells Group PLC ( LON:WDC) was originally set-up in 2012 in Portugal, as a provider of stem cell storage services for the Portuguese and Spanish markets. In 2016 the company was listed on the London Stock Exchange, raising £1.7mln - net of fees, largely used to establish a new research and storage facility in Manchester, UK and to support the ongoing international expansion.
Their business model pivots around three divisions:
- WideCells: storage of umbilical cord blood and related research services. Stem cells are stored in the company owned state-of-the-art facilities, offering research services to academic institutions and commercial parties
- CellPlan: an innovative, global medical insurance policy to cover the future costs of treatments based on the stored stem cells. Logistic and medical costs are covered up to £/$/€1 million per policy (including eligible family members)
- Wideacademy: educating medical personnel (doctors, nurses, obstetricians, etc.) and other interested parties (including families that may store stem cells and relevant insurance professionals), on the benefits of cord blood storage. This allows medical staff to be in a better position when advising families around the world on stem cell treatments and also enables people to make more informed decisions on this growing area of medicine.
Widecells Group PLC ( LON:WDC) is led by a seasoned and highly qualified management team, headed by João Andrade, co-founder and group CEO. He is supported by senior executives with extensive experience in the stem cells, pharmaceutical, healthcare and technology industry.
ADDRESSABLE MARKET
The global stem cell market is forecasted to be worth over US$170bn by 2020.
Within that, the cord blood banking market is growing at high single digit rates and is expected to be worth approx. US$3.6bn in 2020, from US$2.4bn in 2015.
In order to size the stem cell storage market potential it may be useful to start form the number of annual births by region. We then apply the current average storage fee of £2,000; for simplicity we are not considering potential recurrent yearly fees paid during the conservation period.
Although it varies across countries, it is estimated that globally less than 1% of cord blood becoming available every year is stored in a bank. In Western countries this rate is thought to be around 10%.
In the table below we show potential market sizes for cord blood storage, based on different levels of market penetration.
It is estimated that so far approximately 800,000 cord blood units have been stored in public banks and more than 4 million samples in private banks. Cord blood has been used in about 40,000 transplants for several blood disorders.
UMBILICAL CORD BLOOD: CURRENT AND FUTURE USES
Until recently, the umbilical cord was considered medical waste. Then in 1988 cord blood was used for the first time to treat a patient with Fanconi anemia (an inherited blood disease that results in decreased production of all types of blood cells), and it has since become an invaluable source of hematopoietic stem cells. The number of diseases that can be treated using cord blood has been growing rapidly; the list now includes over 80 disorders. Many types of blood cancers, red blood cells disorders and inherited immunodeficiencies are now routinely treated with cord blood allogeneic or autologous transplant.
Many in the scientific community have hopes that in the future a growing number of diseases (cerebral palsy, Alzheimer’s, diabetes, post-ischemic encephalopathy, systemic lupus erythematosus, systemic sclerosis) may be treated using stem cells recovered from the cord blood.
BUSINESS MODEL
WideCells is positioning itself as the first company to offer a 360-degree service for the provision of therapeutic treatments based on umbilical cord blood.
Their holistic business model encompasses medical personnel training, stem cell storage, research and development services and medical insurance plans.
The table below shows WideCells' revenue generation models across the three operating divisions WideCells, CellPlan and Wideacademy.
The company currently operates two fully owned storage facilities, one in Manchester serving the European, Middle-East and Asia-Pacific markets, which is set to become operational later this year, and a second one in Brazil for the local market.
CellPlan insurance policies will be offered globally, directly to families and through business partners.
The Wideacademy educational and training platform will be fully operational in 1Q 2018, and has already 2,000 medical professionals signed up for a three-year period.
UPCOMING MILESTONES
Over the upcoming months we expect WideCells to update the market on:
- The launch trajectory of their services across the three operating divisions, for storage, research, insurance and education
- The potential announcement of further partnerships to increase their access in key markets
- A potential capital raise to support the ongoing international expansion