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31 Aug, 2009 06:24

Investors look for upside as stem cell specialists prepare to list

The Institute of Human Stem Cells is about to see one of Russia’s first biotechnology IPO’s in its attempt to boost the Russian stem cell storage market.

Finding a cure for previously incurable diseases – stem cell technology is pushing back the frontiers of medicine. Just how the potential of stem cell technology can be practically utilized is still undefined, but its promise is already obvious .

Stem cells are stored in stem cell banks – the Institute of Human Stem Cells in Moscow has over 50% of the Russian market.

Compared to other countries, the market has a vast growth potential, and the institute has formed a company to market its services. It's storing stem cells and using them to develop new treatment methods.

The company is preparing for an IPO in the autumn, and is hoping to float from 15 to 25% of its shares to raise just under $5 million dollars, according to Head, Artur Isaev.

“Out cash flow comes from storing stem cells, but we also have an R and D section where we work on developing drugs. Our aim is to use the material in creating drugs and methods for curing certain diseases. If we succeed in that – our capitalisation could grow many- fold.”

The placement which is being managed by the Alor investment company  – will be made on the MICEX Innovation and growing companies sector – specially created for hi-tech companies.

So far its had just 5 placements, mainly of IT companies, but Maksim Dryomin from Alor says it has good prospects.

“The crisis has little effect on innovation companies. Investors are looking for new ideas, and they evaluate the companies not considering current performance, but according to the potential for growth. Our investors are private investors. There are few innovation companies at such a stage – some are just starting who have products but no understanding of the market, some don't have good management – but this company has it all.”

The valuation of the company will be determined not only by its financial results by also by the value of its owned patents.

A road show will start in October of this year. Aiming mainly at private investors, the company will have to explain how it is going create benefits for investors from such a risky and new business and at a time of uncertainty on the market for innovative investment.