StemLife banking on local cell market

The Star STEMLIFE Bhd, en route for listing on the Mesdaq market this month, plans to grow its business locally before expanding abroad.
Set up in 2002, StemLife is the first homegrown Malaysian biotechnology company to provide stem cell banking or storage to about 7,000 subscribers, mostly locals.
Managing director Sharon Low said stem cell banking was not new and the process of storing human cells for future use had been practiced for over 40 years in mature economies like the United States, parts of Europe, Japan and Hong Kong.
“We believe the business of stem cell banking has good growth potential in South-East Asia, including Malaysia,” she told StarBiz.
Low said in some developed countries, the number of subscribers in stem cell banking could be as high as 40% to 50% of the people under private healthcare.
“Based on the current level of subscription in Malaysia, there is still a lot of room to expand,” she said, adding that with growing public affluence and education, stem cell banking was expected to become more popular.
The company also hopes that demand for stem cell banking, especially for infants, would increase in tandem with increasing birth rates, which currently stood at about half a million a year.
Low said there were two types of stem cell banking: adult stem cell and umbilical cord blood stem cell storage.
She said when the company started about five years ago, there was no such facility in the region, except Singapore.
“We want to make stem cell banking more affordable to the public,” she said, adding that it was still cheaper in Malaysia than in most countries.
The initial outlay for stem cell storage per person is about RM2,500 and an annual fee of RM250 to keep them frozen.
The cost of the initial outlay includes testing and processing of the stem cells for storage.
Low said StemLife started with funds of RM2.5mil from partners and later managed to get additional funds of RM1.8mil through the MSC fund.
“It was very challenging in the early years. We had to manage our cash flow, besides managing the business, which was still relatively new in the country.
“Slowly but surely, we were able to attract more subscribers and revenue started improving until we managed to double our revenue each financial year,” she said.
Asked if she had planned for the listing, Low said: “Not really. We were just focusing on growing our business year-to-year and realised that StemLife was able to fulfil the Securities Commission and Bursa requirements for Mesdaq listing.”
Low said the company also realised that it needed to tap public funds to expand its business faster.
“Most of the funds from the listing will be used to expand our operations in Malaysia,” she said, adding that funds would be used mainly to buy equipment, technology and hire individuals with special skills.
Low said StemLife was optimistic that its plans and future strategies, together with opportunities provided by the initial public offering, would not only propel the company to new heights but also enable it to take stem cell banking and related-therapies to the next level.
She said besides the MSC funding in the early stages of the company's development, StemLife had depended solely on the investment of its partners and business revenue to grow. “We are looking at other options seeing that we are now better profiled,” she said, noting that the Government was also supportive of the Malaysian biotechnology industry.
The Government announced in Budget 2007 that a special fund worth RM100mil would be set up to promote the industry.
Low said the company was encouraged by the Government's support for the industry via grants, special loans and/or tax exemptions.
“But we will also do our part to expand by tapping into public funds as well as boost revenue streams through greater efficiency and introduction of new health products and services,” she said.
On overseas expansion, Low said it was important for StemLife to establish a stronger brand presence and market share in the country before making a regional play.
While the company had expanded its operations to Thailand last year via a joint venture, she said StemLife would still focused on strengthening its Malaysian operations.
Low said StemLife would be more aggressive in marketing its business through seminars and educational programmes as well as working with related parties to provide stem cell therapies.
Recently, the company announced that 9,717 applications for 103,628,700 shares were received from the public for a total of 8,250,000 shares available for its public subscription, representing an over subscription of 11.56 times.
For the half year ended June 30, 2006 StemLife posted an after-tax profit of RM1.49mil on revenue of RM5.6mil.