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Russia’s Human Stem Cells Institute Plans SPO for Autumn 2016

Moscow – August 5, 2016.  PJSC HSCI – The Human Stem Cells Institute (“HSCI”, MOEX: ISKJ), one of Russia’s leading biotech companies, announced its plans to raise capital for growth by holding secondary public offering (SPO) on the Moscow Exchange in autumn 2016.

HSCI’s Board of Directors has decided to increase the Company share capital from RUB 7,500,000 to RUB 9,300,000 through an additional issue of ordinary shares in the amount of 18 000 000, each with a par value of RUB 0.1, to be placed by public subscription.

In addition, the Resolution on the additional issue of shares and the Offering circular have been adopted.

The price of placement of additional shares including the price of placement of additional shares to persons holding a pre-emptive right to purchase the placed shares shall be determined by the Company’s Board of Directors within the period starting from the end of the period for a pre-emptive right exercise and no later the date of the share placement.

CEO of HSCI Artur Isaev commented on the plans to raise funds for scaling the business:

«In recent years, the Сompany has made a huge fruitful work in R&D and market launch of its own technologies, products and services, and today we have good prospects for their promotion in Russia and in the international markets.

HSCI is entering a new stage of business development. We have already passed key milestones for the company value growth – I am speaking about the stages of R&D, receiving marketing authorization, getting market access and product launch. Right now the management efforts as well as investments should be put in the boost of sales, broadening the market and bringing our existing products and services to the new markets throughout the world.

We have developed and introduced into medical practice Neovasculgen® – the first-in-class gene-therapy drug for the treatment of atherosclerotic Peripheral Arterial Disease (PAD), including Critical Limb Ischemia (CLI). Neovasculgen®, launched in the Russian market in the end of 2012, now is included in the List of vital and essential drugs for its proven clinical efficacy and healthcare economic efficiency (cost-saving effect). As drug’s action mechanism - therapeutic angiogenesis - introduces a new approach to treating ischemia (the use of an evolutionarily programmed process of blood vessel creation and growth), we plan to implement new clinical trial protocols to expand the range of indications for applying Neovasculgen®: we aims to work in the therapy of Ischemic Heart Disease and Diabetic Foot Syndrome. There is also an interest from abroad to distribute the drug or to conduct its development outside of Russia. Setting up new powerful GMP-manufacturing, widening the drug’s use in the practical healthcare, sales increase in the domestic market and bringing Neovasculgen® to the new markets – these are the areas we are going to invest.

Speaking on our Genetico project, I should say that we see high growth rates demonstrated by of our services in the field of genetic diagnostics and reproductive medicine. Moreover, we observe how this market is developing throughout the world and, therefore, can predict the trends and size of the Russian market as well as an expected return in the nearest 3-5 years: revenue is increasing in double-digits annually, with the creation of new market segments and their speed development.

In these promising markets it is very important for us to support growth while raising margins and profitability. In addition, we should grow geographically - expand sales in Russia and launch our services abroad. For this purpose, we plan to invest in the new state-of-the-art genetics lab equipment and facilities, including for manufacturing localization and import substitution to reduce prices, in the development of new products and services, in the expansion into new markets outside of Russia. We expect these investments to have a substantial impact on the Company top line performance and margins as well the size of our market share in the nearest 3 years. To facilitate the Genetico project development we have already attracted a long-term loan from IDF (Russian State Industry Development Fund) with an interest rate of 5% per annum – a good leverage, increasing HSCI’s investors ROI, among other things.

We would like to take an advantage from these fast-growing markets – to capture a majority marketshare and then capitalize on the market growth, for our leadership to serve a base for the Company sustainable development in the long-term.

We had in our history such an example: I am talking about our first successful business - Gemabank®, the largest private cord blood bank in Russia and CIS, which has been generating stable cash flows since 2004 giving the Company an opportunity to develop into other perspective areas.

To implement our investment program for ensuring the planned growth rates, we need to attract up to RUB 400 million (USD 6 million) – in addition to our own funds and IDF loan. We expect to invest the money raised within 2 years.

We see Russian stock market potential and consider SPO as a good opportunity to address to a wide circle of investors of different types, various groups and activities. In addition, we can increase our free-float and, therefore, the liquidity level.”


 Full Version of the Press-Releasse 

05 August 2016