Banking on Stem Cells

Legislation that would establish a national registry for umbilical-cord blood is now pending in the Senate. Like human embryos, blood within the umbilical cord of a newborn is full of stem cells and can be frozen and stored for therapeutic applications later in the baby's life. A national registry for umbilical-cord blood, similar to an existing one for bone marrow, would make it easier for patients in need of stem-cell therapy to find suitable donors. Stem cells have the ability to evolve into other cells, a trait that's especially beneficial in the treatment of certain blood and bone-marrow disorders like leukemia.

Several companies stand to benefit from the creation of a national cord-blood registry. Among them is Cryo-Cell International (CCEL), one of the few that's publicly traded. The Oldsmar, Fla.-based company operates the nation's largest private cord-blood bank with more than 100,000 client specimens. It could grow significantly over the next few years as stem-cell technology becomes more advanced and gains more support.

The company is free of debt and expanding quickly. Its third-quarter results, reported Oct. 4, showed revenues increasing 19% to $3.8 million. The stock, which trades now at about $3 a share on the OTC Bulletin Board, was delisted from the Nasdaq Stock Market in July 2003 for failure to maintain the required $2.5 million in shareholder equity. The company hopes to regain its Nasdaq listing in 2006.

Cryo-Cell is also the first national cord-blood bank to develop a method for storing placental stem cells. Placental stem cells have the potential to treat more diseases than cord-blood cells. Although no one has developed therapeutics for the stored placental stem cells yet, Cryo-Cell believes the opportunities are vast and has an exclusive agreement on the storage technology.

SmartMoney.com recently sat down with Cryo-Cell's chairman and chief executive, Mercedes Walton, and executive vice president, Gerald Maass, to discuss the unique marketplace and the company's future.

SmartMoney.com: What are cord-blood stem cells?

Maass: Cord-blood stem cells are a form of adult stem cells that have shown themselves to be present in umbilical-cord blood in sufficient quantities to be isolated, cryo-preserved and used for transplant procedures to reverse upward of 70 relatively rare blood and bone-marrow disorders — leukemias, lymphomas, immune deficiencies, that kind of thing. Increasingly, cord-blood stem cells have been used as a substitute for bone marrow in transplant procedures because they're easier to work with. They're easier to get to, there's no pain or risk associated with their collection and, in fact, they're much more pliable in transplant. One of the difficulties in bone-marrow reconstitution is that the cells have to be matched in order to be used. Cord blood, because of its immature and nonimmunogenic nature, actually lends itself better to matching other people.

That's why there's been this interest in cord blood. But that interest has always been counterbalanced with the fact that the diseases that cord blood has been used to treat, their incidence is relatively low in the population. The challenge has been: Can these stem cells be used for diseases beyond the relatively rare blood disorders? So, it's been the subject of research, and that has obviously driven interest from parents in collecting and banking the cord blood. Not only do you have [treatments for] the known diseases, but you have the potential for other kinds of diseases.

SM: How is Cryo-Cell involved?

Walton: Basically, our service is the collection, processing and cryo-preservation of umbilical-cord-blood stem cells. We are the largest private cord-blood bank in the U.S. for sure — most likely in the world. We have over 100,000 clients world-wide, and we were the first established operation.

SM: How exactly does the service work?

Maass: We enroll the parents and send them a collection kit. In some cases, they can pick that up in their doctor's office or hospital. But more often than not, they're going to get their kit directly from Cryo-Cell. When they get the kit, they're ready to go. They take it to the hospital with them. Upon admission, a small amount of the mother's blood is drawn for infectious disease testing. Then, when the baby is born, the attending health-care professional does the procedure. They clamp and cut the cord and stick the needle in, and blood drains into the collection bag. They label the sample, put the mother's blood with it and hand it back to the parents. A courier is called, and they come straight to the hospital room, pick up the sample and bring it to us. There's a chain of custody from the hospital room all the way to our receiving plant.