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IPO Report: Cellular Dynamics International

By  +Follow July 23, 2013 1:54PM
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Based in Madison, WI, Cellular Dynamics International ($ICEL) scheduled a $51 million IPO with a market capitalization of $204 at a price range mid-point of $13, for Wednesday, July 24, 2013.

Ten other IPOs were scheduled for the week of July 22. The full IPO calendar can be found at IPOpremium.

S-1 filed July 10, 2013
http://www.sec.gov/Archives/edgar/data/1482080/000119312513286414/d559389ds1a.htm

Manager, Joint Managers:  J.P. Morgan
Co Manager:  Cowen; Leerink Swann

Accumulated deficit of $88 million.

Summary

ICEL develops and manufactures fully functioning human cells in industrial quantities to precise specifications.

Large biopharmaceutical companies are placing initial small orders, see ‘customer concentration’ below.  The question, of course, is when and if those companies move from an ‘early adopter’ stage into a full production stage.

The target markets are large and they will, of course, attract competition from the majors, see ‘competition’ below.

Valuation

2.4 times book value is a reasonable price for ICEL.

Conclusion

ICEL is worth a shot on its IPO based on its customer based, large target market and apparently unique product position.  ICEL is, however, not profitable at this stage but sales are increasing a rapid rate, see ‘financials’ below.

Business

ICEL develops and manufactures fully functioning human cells in industrial quantities to precise specifications.

The proprietary iCell Operating System (iCell O/S) includes true human cells in multiple cell types (iCell products), human induced pluripotent stem cells (iPSCs) and custom iPSCs and iCell products (MyCell products).

iCell O/S products provide standardized, easy-to-use, cost-effective access to the human cell, the smallest fully functioning operating unit of human biology.

Customers use ICEL’s iCell O/S products, among other purposes, for drug discovery and screening; to test the safety and efficacy of their small molecule and biologic drug candidates; for stem cell banking; and in researching cellular therapeutics.

Scientists need access to cellular models that accurately represent the human biology they want to study. ICEL’s human cells reproduce, rather than approximate, the operation of the fully functioning human cell

Customers

Customers include biopharmaceutical companies, government research institutions, academic and nonprofit research institutions, clinical research organizations and stem cell banks.

In 2012, ICEL sold products to 18 of the top 20 biopharmaceutical companies (based on worldwide revenue) and grew the customer base to 128 from 60 in 2011

Customer concentration

During 2011 and 2012, three of the large biopharmaceutical customers individually accounted for greater than 10% of total revenue in one or both years.

Eli Lilly and Company (Lilly) accounted for 10% of total revenue in 2011 and 18% of total revenue in 2012. Hoffmann-La Roche Inc. accounted for 13% of total revenue in 2011 and GlaxoSmithKline plc accounted for 11% of total revenue in 2012.

During the three months ended March 31, 2013, Lilly and AstraZeneca UK Limited (AstraZeneca) each accounted for 16% of revenue. Typically customers, including these three customers, purchase products pursuant to purchase orders, or purchase under contracts for specified periods of time and which may be terminated by the customer.

A portion of the revenues attributable to Lilly during the periods described above were pursuant to minimum purchase requirements..

Four different cell types

ICEL’s iCell product line currently includes four different cell types: cardiomyocytes, neurons, hepatocytes and endothelial cells.

ICEL is actively developing an additional seven different cell types, and expects to use its platform to continue to expand the iCell product line.

Consumable

 iCell products are a consumable designed to be used once and then reordered. ICEL manufactures its  iCell products from iPSCs. An iPSC is a cell that has the ability both to replicate indefinitely and to be transformed into any cell type in the human body.

ICEL develops and manufactures its iPSCs from ordinary blood or skin using proprietary techniques that expand upon those pioneered by the founder Dr. James A. Thomson.

Once ICEL produces an iPSC, it becomes a renewable source of starting material for iCell products and stem cell banks.

Target markets

The target markets for ICEL’s products include cells for in vitro drug discovery, toxicity testing and chemical safety; stem cell banking; and in vivo and cell-based therapeutic research.

Total expenditures in these markets were $17.1 billion in 2011 and are expected to increase to $40.5 billion by 2020, according to Adivo Associates.

Cells for in vitro use in drug discovery, toxicity testing and chemical safety

The total spent on cell-based technologies for in vitro use was approximately $10.8 billion in 2011, of which $3.5 billion was spent on cells. By 2020, these markets are expected to grow to $14.7 billion and $5.6 billion, respectively. Customers in this market include: biopharmaceutical companies; government research institutions; academic and nonprofit research institutions; and clinical research organizations.

Stem cell banking

The stem cell banking market was $1.3 billion in 2011, and is expected to grow to $4.4 billion in 2020. Currently, government entities, academic institutions and industry are building banks of iPSCs derived from different genetic backgrounds.

ICEL intends to manufacture iPSCs for this segment of the market.

Stem cell banking grants

In March 2013, the California Institute for Regenerative Medicine (CIRM) awarded ICEL a $16.0 million grant to derive three iPSC (human induced pluripotent stem cells) lines from each of 3,000 different individuals, as required by California’s $32.3 million stem cell banking initiative.

ICEL will also be the primary subcontractor on the $10.0 million grant that the Coriell Institute for Medical Research received from CIRM to store and expand the Coriell iPSC bank.

In addition, ICEL is positioned to augment the product offering of cord blood banks by creating iPSC lines for their existing and prospective customers.

Cells for in vivo and cell-based therapeutic research

The global human stem cell, tissue and organ therapy market was $5.0 billion in 2011 and is expected to grow to $21.4 billion in 2020.

Intellectual property

ICEL owns or licenses a portfolio of intellectual property rights related to its technology that exceeds 700 patents and patent applications in the United States and around the world.

Competition

Currently, iCell and MyCell products face competition from “home-brew,” other pluripotent cell manufacturers and existing cell models.

Home-brew

Currently multiple government, academic and industrial research labs attempt to utilize iPSC technology to make their own stem cell lines and to differentiate them into terminal tissue cells. These labs tend to be small and have not invested in the personnel, industrial capacity, quality control and assurance systems, and intellectual property to permit production of standardized human cells in sufficient quantity, quality and purity.

Other pluripotent cell manufacturers

Some other companies have either announced an interest in or begun to market products based on pluripotent stem cell technology. These companies include Axiogenesis AG, Cellectis, General Electric Co., Life Technologies Corporation, Lonza Group Ltd. and Sigma-Aldrich. These companies have either chosen to base their offerings on human embryonic stem cell technologies or have failed to manufacture cells in comparable quantity, quality or purity as ICEL.

ICEL is unaware of any competitor whose product offerings equal iCell and MyCell products in quality, quantity and purity.

5% Shareholders pre-PO

Tactics II Entities, 42.6
Sixth Floor Investors LP, 13.2%
EGI-Fund (08-10) Investors, L.L.C. and EGI-Fund (11-13) Investors, L.L.C., 7.9%

Use of proceeds

ICEL expects to net $44 million from its IPO.

Proceeds are allocated as follow:

 (1) $20 million for research and product development activities;

(2) $8 million for sales and marketing activities, including expansion of the sales force to support the ongoing commercialization of products;

(3) $5 million for property, plant and equipment, including the build-out of a laboratory in California, and intellectual property; and

(4) the remaining proceeds for working capital and other general corporate purposes.

Results for ICEL
Alfred Jaxon
20 Apr 14 19:26:21
$ICEL Cellular Dynamics Announces Presentat http://t.co/QGsiHWkMqR
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20 Apr 14 13:29:02
$ICEL Cellular Dynamics Announces Presentat http://t.co/NisA4E795u
Calloway Domville
20 Apr 14 07:58:27
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20 Apr 14 06:32:59
$ICEL Cellular Dynamics Announces Presentations http://t.co/6ymc9n68De
Franco Clark
20 Apr 14 01:14:05
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iHangout
19 Apr 14 16:02:38
chartguy89: Stock Charts: ICEL 12.13 Stock Charts $ICEL Cellular Dynamics In http://t.co/ji1D74qVPo
chartguy89
19 Apr 14 15:59:59
ICEL 12.13 Stock Charts $ICEL Cellular Dynamics International Inc. (NASDAQ) ICEL Stock Chart - 1 Month http:// http://t.co/FDldNvozwL
Jaydan Kyler
19 Apr 14 15:43:01
$ICEL Cellular Dynamics Announces Presentations http://t.co/01LZ72laTg
Rey Latimer
19 Apr 14 06:16:26
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Shante Kincaid
18 Apr 14 15:45:34
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Fox Galvan
18 Apr 14 08:29:25
$ICEL Cellular Dynamics Announces Presentat http://t.co/1xy0AHy9Hb
Silvana Orozco
18 Apr 14 06:14:01
$ICEL Cellular Dynamics Announces Presentations http://t.co/AoSB1uXes5
Jaycob Keating
18 Apr 14 05:16:57
$ICEL Cellular Dynamics Announces Presentations http://t.co/ocUbRTi4oj
Deon Carter
18 Apr 14 05:14:10
$ICEL Cellular Dynamics Announces Presentations http://t.co/tE5yPE9gW8
Patty Porter
17 Apr 14 05:46:38
$ICEL Cellular Dynamics Announces Presentat http://t.co/FcuKVJEcMb
Rob McGavern
16 Apr 14 06:03:03
$ICEL Cellular Dynamics Announces Presentations http://t.co/IEIHQvs0y4
Seymour Alberta
15 Apr 14 22:33:14
$ICEL Around Town http://t.co/7Ve65rUzS2
Cammie Filman
15 Apr 14 18:47:36
$ICEL Cellular Dynamics Announces Presentations http://t.co/Lxc8R2U3Qo
Mind Equity
15 Apr 14 15:53:01
$ICEL Cellular Dynamics Announces Presentations http://t.co/RZ7cdKXQs2
Colin Kuberski
15 Apr 14 15:03:10
$ICEL Nasdaq stocks posting largest percentage decreases http://t.co/aWjx8HPuKb
Ford Cadwell
15 Apr 14 11:24:30
$ICEL Cellular Dynamics Announces Presentat http://t.co/m7oBDilEfx
Brice Latimer
15 Apr 14 06:12:17
$ICEL Cellular Dynamics Announces Presentations http://t.co/aJrmwn4BWV
Stock Market News
15 Apr 14 04:24:52
$ICEL Cellular Dynamics Announces Presentations http://t.co/LOnQdzZQpw
Sharice Keegan
14 Apr 14 20:02:39
$ICEL Cellular Dynamics Announces Presentations http://t.co/z8diLpZKdA
Angelena Mosesuo
14 Apr 14 09:14:14
$ICEL Cellular Dynamics Announces Presentations http://t.co/LVH2yMMn4l
North Carter
14 Apr 14 05:22:21
$ICEL Cellular Dynamics Announces Presentations http://t.co/kyq4sU4tXG
Stock Watch
14 Apr 14 01:45:49
$ICEL Cellular Dynamics Announces Presentations http://t.co/x0vBe8Tw79
Mari Keith
13 Apr 14 06:49:01
$ICEL Cellular Dynamics Announces Presentat http://t.co/fXlLy1jh9a
				
				
By  +Follow July 23, 2013 1:54PM
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