Cryo-Cell: A Deep Dive On An ‘Off The Radar’ Micro Cap Name – Seeking Alpha

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Today, we look at a microcap name someone inquired about in one of my previous posts. I had never encountered this concern before even if it is based out of my home state of Florida. A full investment analysis follows in the paragraphs below.

Cryo-Cell International (OTCPK:CCEL) is an Oldsmar, Florida-based private cord blood bank that IPO'd in 1991. The firm is actually the world's first private cord blood bank. Thus far, over 500,000 parents from 87 countries have used Cryo-Cell. The Company engages in cellular processing and cryogenic storage. More specifically, they focus on the collection and preservation of umbilical cord blood stem cells for future medical use. Cord blood is the blood that's found in the umbilical cord and placenta post-delivery. The cord blood at the time of delivery is a superlative source of stem cells and other cells of the immune system. Cord blood is stem cell rich due to a maternal-fetal transfer of cells to boost the immune systems of both the mother and baby in preparation for labor. Cryo-Cell International has a market capitalization of roughly $55 million and trades for around $7.50 a share.

Business

As mentioned, cord blood is the blood that remains in the umbilical cord and placenta post-delivery. The blood is drawn from the cord into a collection bag using a surgical needle. The result is the collection of millions of a specific type of the adult stem cell that can go on to form the blood and immune system. These stem cells are isolated, extracted, and preserved for later use.

Source: Company Presentation

Cryo-Cell International's business stems from Cord blood's and cord tissue's utility. Cord blood is exceptionally useful medically due to the high-quality stem cells and other cells of the immune system. Cord blood is currently approved by the FDA to treat roughly 80 diseases with many more currently in clinical development. Leukemias, lymphomas, anemias and inherited metabolic disorders are just some examples of diseases that are treated with cord blood. Additionally, the company strongly believes in and provides services for the cryopreservation of cord tissue. Cord tissue is the insulating material surrounding the vessels of the umbilical cord. The umbilical cord itself is a densely rich source of a different type of stem cell, which provide different benefits from cord blood. Some of the unique benefits of cord tissue include the ability to inhibit inflammation following tissue damage, the ability to secrete growth factors that aid in tissue repair, and the power to become one of many cell types. This means that cord tissue may be capable of being a powerful regenerative therapy in the future. For example, it may be able to repair scarring that happens to a person's heart after they have a heart attack. Furthermore, mesenchymal stem cells, found in cord tissue, are currently being evaluated in clinical trials to treat advanced conditions like autism, cerebral palsy, diabetes, eczema, multiple sclerosis, Alzheimer's disease, and Parkinson's disease. Thus, cord blood and cord tissue are powerful therapeutics that can treat a vast array of diseases and conditions.

Adding to the value of cord blood and cord tissue is that they can benefit the entire family. Siblings have a 25% chance of being a perfect match and a 50% chance of being a partial match. Additionally, Parents have a 100% chance of being a partial match. Furthermore, even extended family members can potentially be a match. This is a big deal because graft-versus-host disease is a big problem post-transplant. The body's immune system is wired to attack foreign invaders, so stem cells and other cells of the immune system cannot be transfused into any random person. The stem cells being transfused need to match the cells of the patient completely or to a certain degree.

Source: Company Presentation

Given the power of Cord blood and cord tissue, naturally there's a needed role for a firm to process and store the material. Cryo-Cell's services span from pre-delivery to long-term storage. More specifically, the company makes its money in two primary ways: processing and preservation for new customers and recurring annual storage fees. The company's collection kits are sent to expecting families and goes with the parents to the delivery center. From there, the healthcare provider will do the collection and a medical courier will come collect the kit. Upon arrival at Cryo-Cell, the blood and/or tissue collection then undergoes processing. The company's premium processing method is called PrepaCyte-CB, which yields the highest number of stem cells while showing the greatest reduction in red blood cells. The company charges $1,675 for the standard kit and $2,025 for the premium kit. As far as storage, the firm offers a one-time payment plan for 18 years of storage and a lifetime payment plan. Prices for storage, depending on duration selected and plan type, range from $4,650 to $6,100. Keep in mind that if you do not do cord blood and tissue banking, and ever want to reap the benefits of such therapeutics, you will have to spend over $40,000 to retrieve a match from a public cord bank if there even is a match available for you.

Source: Company Presentation

As of August 31st, 2020, Cryo-Cell had a cash position of $8.1 million, compared to $6.5 million on November 30th, 2019. Selling, general and administrative expenses were $3.3 million in the quarter, compared to $3.5 million in the same quarter of 2019. Overall, the company generated a profit of almost $800,000 in the quarter.

The company hasn't had any analyst recommendations over the past year.

It was quite fascinating to research this small cap company. I learned a lot about a niche I had not looked at before. That said, I don't think there is enough data or analyst commentary to merit any sort of investment rating. The stock also has a microcap of just over $50 million. So I am passing on it, but I am posting this research as I have seen some comments on this name in the past and there is next to no research posted on this name.

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Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Cryo-Cell: A Deep Dive On An 'Off The Radar' Micro Cap Name - Seeking Alpha