WideCells Group signs landmark deal to distribute stem cell insurance in Asia (WDC)

By Richard Mason

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WideCells Group (LSE:WDC) has signed a landmark deal that will see its stem cell insurance product, CellPlan, sold in Asia. The business has signed the deal with Cryoviva Group, an established cord blood storage facility with operations in Thailand, Singapore, and India. The launch gives WideCells exposure to a high growth area, with the Asia-Pacific stem cell market expected to have a compound annual growth rate of 14.6pc from 2017 to 2025, ahead of the global market.

CellPlan will be launched to Cryoviva’s customers on a phased basis, beginning in the second half of 2018, providing staged revenue increases. Cryoviva has almost 250,000 inspected cord blood samples stored to-date and expects to store around 25,000 new samples every year.

For an average cost of £170 a year, CellPlan provides families who have stored stem cell-rich cord blood up to £1m worth of medical, travel, and accommodation expenses and access to stem cell specialists. WideCell’s share price fell 0.9pc, or 0.1p to 11.5p on today’s news.

WideCells Group’s chief executive, João Andrade, said, ‘This strategic agreement with Cryoviva will enable us to launch CellPlan in one of the fastest growing stem cell markets where there is clear demand for stem cell services.  By implementing a staged roll-out model, we are able to ensure the stable growth of our operations in each country and provide a solid base for continued growth.’

Dr. Chaitanya Nerikar, the group chief executive of Cryoviva, said, “We strongly believe that our agreement with CellPlan will allow Cryoviva to continue to be the premium provider of services related to stem cell banking to its clients.’

Investment case

As we wrote earlier this month, it might be worth having a punt of WideCells before the wider market catches on. The firm is already generating revenues and intends to significantly increase turnover over the next three years.

CellPlan has been generating revenues since June 2017 and is currently being rolled out throughout the UK. Of the £170 charged, £50-£75 is kept by WideCells as revenue. If a client uses the plan for 20 years, which qualifies them for a 50pc discount, WideCells put their lifetime value of around £500. The business is targeting 100,000 CellPlan clients in three years. If all these clients reached lifetime value, CellPlan’s revenues could hit £50m over this period in the conservative case scenario.

What’s more, the firm is planning to expand its storage division, which is responsible for storing and processing the cord blood sample. This division charges an average of £2,000 to store cord blood in the UK, with the firm holding on to around £1,200 as revenue. WideCells hope to reach 5,000 clients here in three years.

Finally, the company is currently rolling out an education platform called Wideacademy. Here, it hopes to get 6,000 doctors subscribing to the service within three years of launch and 2,000 study modules sold by the end of 2018.

With a clear plan for increasing revenues, and the weight of a growing international market behind it, WideCells Group could be on the path to profitability. Its current £7.3m market cap could soon look cheap.

Author: Daniel Flynn

Disclosure: The author of this piece does not own shares in the company mentioned

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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