Another poorly timed purchase (CCEL)
This is getting to be a habit -- I buy some shares at a price I find reasonable, and they almost immediately dip. Of course, when we're talking about little OTC companies like this that's to be expected to some degree, and it shouldn't matter given my long time horizon on most of my investments, but it's still irritating.
I felt fine about the price I paid a week ago when I actually put this order through, but now that I see how the shares have cratered again ... arg.
But anyway, I bought more Cryo-Cell (CCEL -- click to register for free RT streaming quote), and now have what I consider to be a full position with an average cost of $3.80 a share.
Did I mention that it's down to $3.40 as I type this? That is, by the way, exactly what happened when I made my first purchase of CCEL, too -- I need to get better at predicting the future.
Long-term, I am not worried about differences of a few pennies in the price. CCEL is trading at a very reasonable price right now, even though they face a large number of challenges.
I wrote more about CCEL back before I made my first purchase as well as immediately after I bought, and touched on them again when I did my annual checkup, but here's what's right about Cryo-Cell, an umbilical cord blood bank:
They only process and bank stem cells. They don't have a risky research arm, like Viacell, that puts them in the red with very unpredictable and expensive clinical trials.
They sell at a competitive price and have a very solid competitive position in general -- their advertisements online compare them favorably to the other large banks on price, technical capabilities and certifications, size, and long-term support for families who actually need to withdraw and use the stem cells. As far as I've seen, no other bank makes this kind of comparative marketing pitch, and I think it's effective.
They have a product which no one else will have -- placental stem cell banking. If you're going to make this investment, one would expect that you'd want to go all the way and get the best product. CCEL is the sole licensee of what is, as far as I know, the only placental stem cell handling and storage process in the market. The combination of their lock-in pricing for annual storage fees and this placental cell product provide the only significant product differentiation in the market, to my eye. And P.S. -- those placental stem cells are the ones that appear potentially to be a diabetes cure ... at least for mice.
They're expanding overseas with franchises -- latin america, india and other areas are ripe for this business as their middle classes develop, and CCEL has a low-risk exposure to that through these franchised businesses.
And they should, in all likelihood, relist on a major exchange sometime this year -- they're just waiting to get their stock price up to the required range. With earnings continuing to increase and solid guidance for 2006, I expect that to happen sooner rather than later.
And here's what's wrong with CCEL, or what could go wrong.
They might have a bad quarter, which would delay their relisting if it kept the stock price down.
There are lots of competitors out there, more every day -- few have the solid foundation of CCEL, but there are several strong competitors. I expect this market to grow fast enough to lift all the strong companies, and I am confident in the product differentiation CCEL is developing, but I could be wrong.
Technology could interfere with their business model -- if researchers eventually come up with a way to develop stem cells from adult cells that have all the flexibility of embryonic stem cells found in the umbilical cord, then CCEL's business model is in danger of collapse.
Stem Cell donation might become so wildly popular that no one feels the need to bank their own cord cells, relying instead on public banks. I think if this happens there's some likelihood that CCEL could do contract work to help manage some of the government supported banks that are starting to crop up, but there's no guarantee of that. I also think that the recent press about a few states building public donor banks should help, not hurt, the private banks by continuing to increase awareness. Preservation of cord cells is still extremely uncommon, whether done privately or for donation -- an increase in the market size could make up for any drop in market share to the public donation system.
In the end, I think of this company as a relatively lower risk bet on the future use of stem cells to cure disease. If research continues on the trend it is on today and cures for diabetes and other dreadful diseases do prove to be viable using stem cells, every parent in the country will want to buy this extra insurance for their family.
If my thesis holds, good news for stem cell treatments means good news for CCEL in the long term -- but with a huge and growing customer base and a very predictable revenue stream, the risk is somewhat lower than for a discovery-based biotech play in this sector.
I felt fine about the price I paid a week ago when I actually put this order through, but now that I see how the shares have cratered again ... arg.
But anyway, I bought more Cryo-Cell (CCEL -- click to register for free RT streaming quote), and now have what I consider to be a full position with an average cost of $3.80 a share.
Did I mention that it's down to $3.40 as I type this? That is, by the way, exactly what happened when I made my first purchase of CCEL, too -- I need to get better at predicting the future.
Long-term, I am not worried about differences of a few pennies in the price. CCEL is trading at a very reasonable price right now, even though they face a large number of challenges.
I wrote more about CCEL back before I made my first purchase as well as immediately after I bought, and touched on them again when I did my annual checkup, but here's what's right about Cryo-Cell, an umbilical cord blood bank:
They only process and bank stem cells. They don't have a risky research arm, like Viacell, that puts them in the red with very unpredictable and expensive clinical trials.
They sell at a competitive price and have a very solid competitive position in general -- their advertisements online compare them favorably to the other large banks on price, technical capabilities and certifications, size, and long-term support for families who actually need to withdraw and use the stem cells. As far as I've seen, no other bank makes this kind of comparative marketing pitch, and I think it's effective.
They have a product which no one else will have -- placental stem cell banking. If you're going to make this investment, one would expect that you'd want to go all the way and get the best product. CCEL is the sole licensee of what is, as far as I know, the only placental stem cell handling and storage process in the market. The combination of their lock-in pricing for annual storage fees and this placental cell product provide the only significant product differentiation in the market, to my eye. And P.S. -- those placental stem cells are the ones that appear potentially to be a diabetes cure ... at least for mice.
They're expanding overseas with franchises -- latin america, india and other areas are ripe for this business as their middle classes develop, and CCEL has a low-risk exposure to that through these franchised businesses.
And they should, in all likelihood, relist on a major exchange sometime this year -- they're just waiting to get their stock price up to the required range. With earnings continuing to increase and solid guidance for 2006, I expect that to happen sooner rather than later.
And here's what's wrong with CCEL, or what could go wrong.
They might have a bad quarter, which would delay their relisting if it kept the stock price down.
There are lots of competitors out there, more every day -- few have the solid foundation of CCEL, but there are several strong competitors. I expect this market to grow fast enough to lift all the strong companies, and I am confident in the product differentiation CCEL is developing, but I could be wrong.
Technology could interfere with their business model -- if researchers eventually come up with a way to develop stem cells from adult cells that have all the flexibility of embryonic stem cells found in the umbilical cord, then CCEL's business model is in danger of collapse.
Stem Cell donation might become so wildly popular that no one feels the need to bank their own cord cells, relying instead on public banks. I think if this happens there's some likelihood that CCEL could do contract work to help manage some of the government supported banks that are starting to crop up, but there's no guarantee of that. I also think that the recent press about a few states building public donor banks should help, not hurt, the private banks by continuing to increase awareness. Preservation of cord cells is still extremely uncommon, whether done privately or for donation -- an increase in the market size could make up for any drop in market share to the public donation system.
In the end, I think of this company as a relatively lower risk bet on the future use of stem cells to cure disease. If research continues on the trend it is on today and cures for diabetes and other dreadful diseases do prove to be viable using stem cells, every parent in the country will want to buy this extra insurance for their family.
If my thesis holds, good news for stem cell treatments means good news for CCEL in the long term -- but with a huge and growing customer base and a very predictable revenue stream, the risk is somewhat lower than for a discovery-based biotech play in this sector.
This article posted by One Guy @ 2/10/2006 01:25:00 PM 0 comments
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