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HSCI Presents Strategy and Business Plan for 2013-2017

Moscow – 30 April 2013. The Human Stem Cells Institute (“HSCI”, MICEX: ISKJ) held a public presentation of the company’s strategy and business plan for the period from 2013 to 2017. The presentation for the investment community and press was held as a part of the Moscow Exchange’s event: “Public Biomedical Companies in Innovation & Investment Market Sector: Results of the Year andOutlook.” Presenting HSCI’s Results and Strategy for the Next 5 Years: Outlook to 2017, HSCI General Director Artur Isaev covered in detail the dynamics of the company’s development, projects now in progress and also key operating and financial targets. Last year the company began operating according to a five-year business plan which was presented to the investment community in February 2012. HSCI’s strategy, which is focused on the creation of new markets through the introduction of proprietary innovative products, has already produced results. HSCI’s revenues under RAS in 2012 increased by 42% from 2011 and amounted to RUB 286 million. Revenues from new services (SPRS-therapy, Neovasculgen®, Gemascreen and distribution of Cytori products) accounted for 12.5% of total revenues for the year. Based on 2012 results, the company updated its business plan for the next five years, making some changes to the composition and market positioning of certain projects as well as adjusting forecasts.

In connection with the later-than-planned completion of the construction of HSCI’s new laboratory and production complex in the first half of 2013, the timeframe for the launch of number of projects has been changed. Forecasts for the yearly sales dynamics of the innovative drug Neovasculgen® have also been changed in light of the later than anticipated start of sales and also the lack of an opportunity for including it in the Vital and Essential Drugs List starting from this year (the governmental commission responsible for expanding the list was not convened in 2012).

The new vision for phasing the realization of planned projects was reflected in the forecasts for more moderate growth in revenues: up to RUB 3.5 billion for the year 2017 (while the business plan for 2012-2016 forecast RUB 3.6 billion in revenues in 2016). Starting in 2014 sales of Neovasculgen® is expected to become the main source of revenues, with its share reaching 54% by the end of 2017.

Changes in positioning primarily concerned HSCI’s socially significant project for the broad assimilation in Russia of the practice of medical genetics consultation with the aim of early detection and prophylactic treatment of inherited diseases.

HSCI is creating in Russia a network of advanced medical genetics centers under the GENETICO brand. These centers will provide not only genetic diagnostics but also consultations with a personal genetic doctor. It is planned that GENETICO centers will be opened and operating in 19 cities throughout Russia by 2017.

After implementing in 2012 the first test phase of this project – the launch of Gemascreen for Newborns – this year the company has completed the technical and clinical validation of its own DNA array and is beginning to offer ETHNOGENE services based on it to a broad range of consumers. The newly created DNA array allows for the diagnosis of more than 60 monogenic inherited diseases as well as predisposition to 10 widespread monofactorial genetic disorders. The array is unique in that it is designed to target a specific spectrum of diseases most commonly found among the peoples traditionally residing in the Russian Federation and CIS.

Genetic diagnostics and consulting services are intended to foster a preventative approach to healthcare, whereby every person has the opportunity to in a timely manner discover their genetic features and take the necessary measures to maintain good health and also to prevent the coincidental birth in the family of children with serious inherited pathologies.

More detailed descriptions of the projects, evaluations and forecasts can be found in the presentation available on the company’s website (in Russian):

30 April 2013