Although cash burn for International Stem Cell Corp. (OTCQB:
ISCO) currently stands at over $0.5 million per month, a number likely to
increase with the progression of its clinical trials for Parkinson’s disease
(PD), risks have been mitigated thanks to the company’s commercial operations.
ISCO is an early stage biotechnical company developing biomedical, therapeutic,
and cosmeceutical applications for its proprietary form of pluripotent stem
cells known as human parthenogenetic stem cells (hpSCs). Although ISCO is
carrying out intensive research to develop a stem cell therapy treatment for
PD, the company reduces any financial risks with the more commercially-oriented
side of its operations.
ISCO’s commercial operations are made up of Lifeline Skin
Care (LSC) and Lifeline Cell Technology (LCT). LCT develops, manufactures, and
commercializes over 130 human cell culture products. These cells are sold
through International Stem Cell Corp.’s website. On the other hand, LSC
develops, manufactures, and markets luxury skincare products through a variety
of channels, including a branded website, dermatologists, plastic surgeons, and
spas, as well as through Amazon (NASDAQ: AMZN) and DermStore. Since 2012,
ISCO’s biomedical business has grown by 19%, a rate nearly three times the
industry’s rate. This branch of the company grew by 15% between 2014 and 2015,
and the operating margins rose to 31% from 21.7% in 2014 and 12.4% in 2013.
LSC, however, is still a small player in the global skincare market. That said,
the skin care brand still saw revenue grow at a CAGR of 17% in recent years and
reported total revenue of $3.5 million in 2015.
Although there are still sensitivities relating to
therapeutics products developed by ISCO, these are not insurmountable. In the
International Stem Cell report by Edison (http://nnw.fm/T8LoT), sensitivities
were addressed accordingly. Valuations done by Edison found that ISCO’s skin
care business is estimated to grow to sales of $4.8 million by 2025, while its
biomedical business is expected to reach $10.5 million in sales in the same
amount of time. Although both businesses still hold a number of risks due to
the nature of their markets and the fact that they are still relatively small
and growing companies, these risks have been highly mitigated to minimize loss
and maximize long-term profits.
For more information, visit www.internationalstemcell.com
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