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Celgene Corporation Message Board

  • busy26795 busy26795 Aug 20, 2013 1:37 PM Flag

    ICEL Sells the picks and shovels...they develop the stem cells for 130 biotech customers..4 mil share FDA risk

    ICEL is quite different from the stem cell stocks that investors may already be familiar with. ICEL claims to be the first company that is able to manufacture human cells on an industrial scale to precise specifications. This is a potentially game-changing product line, since human cells to-date have not been available to researchers in sufficient quantity or quality. For example, when big pharma companies or research institutes conduct research, they generally have to rely on a limited number of cells derived from human cadavers, donated human cells, or animals (alive or dead). These surrogate cells are limited in quantity, do not do a good job of recreating human biological activity, and/or are not standardized. This situation directly contributes to the very high failure rates in human trials.

    ICEL manufactures and sells four types of human cell products (with seven more in the pipeline), and sells them as consumables. For example, if a pharma company is doing research on a therapy for a certain heart condition, they can order unlimited quantities of pure, standardized human heart cells in order to conduct their research. If a researcher needs heart cells from a very particular patient cohort, ICEL can get that specific stem cell from a blood sample and then manufacture unlimited quantities of human cells that contain the exact properties the researcher is looking for.

    ICEL currently has over 130 customers (and 18 of the top 20 global pharma companies), and their IP is protected by 700 patents and patent applications. Mgmt claims that they are targeting a $10 bln market, where ICEL displaces current consumables used in in vitro R&D, stem cell banking, and soon cellular therapeutics research. Further, the markets that ICEL is currently targeting are not subject to FDA regulatory approval, so there is no FDA risk involved.

    Sentiment: Strong Buy

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    • With 4 products currently on the market, the company does generate operating revenues. That's a key point: while ICEL is early stage in terms of commercialization, it is not your typical pre-clinical/development-stage biotech IPO. Sales growth has been very fast, albeit on very small base numbers. 2012 sales grew +154% to $6.6 mln, and 1Q13 and 2Q13 sales rose +118% and +115%, respectively. One metric the company tracks closely, average revenue per top 10 customer, has been rising sharply since 2011 too. Product gross margins are robust at 67%.

      ICEL is a compelling story stock. I like it because it has a potentially game-changing product in the MedTech sector, and within that segment, I particularly like that it is a consumables company, which tend to have attractive margin profiles. Further, to apply the gold rush analogy, ICEL sells the "picks and shovels" (human cells) to the "miners" (researchers & drug developers), and as such: they can sell to anyone doing research, their products become very hard to displace once ICEL becomes a customer, and ICEL will carry no FDA risk.

      Sentiment: Strong Buy

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