Stem-Cell Producer CDI Files to Go Public

Cellular Dynamics is playing in a rapidly expanding market

   

Wisconsin might not seem like the place for a hot biotech company, but its capital, Madison, is home to the headquarters of a top operator in the stem-cell production market, Cellular Dynamics International.

And thanks to a recent IPO filing, it’ll soon be home to a publicly traded Cellular Dynamics.

One of CDI’s co-founders, James Thomson, is a pioneer in the stem-cell field and sports a stunning resume. He currently is the Director of Regenerative Biology at the Morgridge Institute for Research and the John D. MacArthur Professor of Anatomy at the University of Wisconsin-Madison. Some of his breakthroughs include the isolation of human ES and iPS cells, as well as the collaborative mapping of the human epigenome. Throughout his career, he has published more than 150 scientific, peer-reviewed papers and has been granted 30 patents.

All this expertise has been critical for the success of CDI.

The company’s iCell Operating system — protected by more than 700 patents — allows for the reproduction of stem cells for in vitro drug development, in vivo cellular therapeutics and stem-cell banking.

Cellular Dynamics currently boasts 128 customers, including biotech operators, government research organization, nonprofits and universities. CDI also has distribution arrangements with blue-chips like GlaxoSmithKline (GSK), Roche (RHHBY), Eli Lilly (LLY) and AstraZeneca (AZN).

CDI still is in its early stages, but its growth ramp is promising. Last year, revenues charged ahead from $2.6 million to $6.6 million, with about a third of that coming from overseas marketing. Naturally, the company continues to sustain losses — $22.3 million in 2012 — as it focuses on building its infrastructure and plows funds into R&D.

Cellular Dynamics’ management team is also top-notch. Specifically, CEO Robert Palay previously sold NimbleGen — a company that developed tools for biotech companies — to Roche back in 2007 for $272.5 million.

The opportunity for CDI is massive. According to research from Adivo Associates, the company’s addressable market is expected to surge from $17.1 billion in 2011 to $40.5 billion by 2020.

CDI plans to list its shares on the Nasdaq under the ticker of ICEL. The underwriters on the deal include JPMorgan (JPM), Cowen and Co. and Leerink Swann.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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