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Cesca Therapeutics Inc. Message Board

  • elmaestro11 elmaestro11 Dec 28, 2010 7:43 PM Flag

    KOOL to $400? Not out of the Question imo.

    Stem Cells

    Stem Cell therapies offer the promise of curing a multitude of previously untreatable conditions. A series of clinical trials are underway worldwide. While there is some ethical opposition, it is regional and unlikely to arrest progress in a field that is truly global. This technology has the potential to be as big and important as biotechnology/genomics. Companies like Geron (GERN), StemCells (STEM) and ReNeuron have all recently announced new trials for treatments using regenerative stem cell technology. This momentum should continue in 2011 and beyond.

    The best way to play a trend in medicine without exposure to a specific treatment’s success or failure is to play the tool suppliers. Thermogenesis (KOOL) is the market leader in tools for the automation of collecting, processing and preserving stem cells other cellular tissues from cord blood and bone marrow. KOOL currently owns 54% of the automated cord bank processing market and has partnerships with companies like General Electric (GE).

    Thermogenesis’ current market valuation is just over $35 million, and trades at a revenue multiple of close to 1x. Management is projecting current year profitability and the company has $10 million in cash and no debt. By comparison ‘picks and shovels’ tool suppliers in the biotechnology/genomics area like Illumina (ILMN) and Life (LIFE) sport market valuations between $7 and $9 billion and an average revenue multiple of 4. Also-ran Affymetrix (AFFX) still sports a market valuation over $300 million or 10x larger than Thermogenesis.

    Should stem cell therapy live up to its potential there is lots of room for Thermogenesis to grow. If KOOL traded 4x current revenue like its biotech contemporaries, the stock would be close to $10/share, a long way from the current price - under $2.70/share. If the opportunity to provide critical tools to stem cell research is anywhere as large as biotech, and KOOL retains its leadership position it could potentially command a market valuation of over $5 billion or 150x higher than today’s price and equal to approximately $400/share.

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