🧫🧪The human stem cell Institute (HSCI) is a Russian biotechnological company founded in 2003 that develops and provides services related to cell, gene and post-genomic technologies. Identifies five areas of activity: regenerative medicine, and bio insurance, medical genetics, gene therapy, Biopharmaceuticals.
📌 Share capital structure. In total, the company has 75 million shares in circulation, but according to the Charter, it is possible to issue another 100 million with a nominal value of 0.1 rubles.:
25.65% - Dynamic solutions ltd-an offshore company associated with the company's founder - Isaev.
32.53% - M. I. Isaeva - there is no information at all, but apparently this is Isaev's wife.
Of 2.05% - the next-gen is a subsidiary.
3.49% (about) are members of the SD.
36.28% - free-float (although the annual report says that some mysterious "World of mothers" has 16.68% of shares, but we did not find such an organization or company).
📌 The company structure is a holding company. PJSC "iskch" is directly the parent company, and the other 8 are subsidiaries, and 3 of them are residents of SKOLKOVO (we are not ready to say exactly whether this is good or bad 😂 ). More about these 8 companies:
🔷 Center of Genetics and Reproductive Medicine "GENETIKO". This complex consists of 5 laboratories that specialize in various types of research:
🔹 The NGS laboratory is engaged in a new generation of sequencing - a method of DNA analysis that allows you to read several sections of the genome at once.
Лаборатория laboratory for non-invasive prenatal diagnostics. It allows women, starting from the 10th week of pregnancy, to undergo an analysis to determine congenital fetal pathologies (down, Edwards, Patau syndromes, aneuploidy by sex chromosomes).
ОН Laboratory Of Oncogenetics. Offers solutions related to the study of mutations in tumor tissue.
Фа ELISA laboratory-tests for coronavirus.
🔹 Genotyping laboratory - genetic tests.
Read the reviews on the laboratory, impressions are ambivalent on docdoc (https://docdoc.ru/clinic/institut_stvolovih_kletok_cheloveka) looks like zakazuha, but zoon (https://zoon.ru/msk/medical/laboratoriya_genetiko_na_ulitse_gubkina/reviews/) it seems to be true.
🔶 MMCB "Gemabank". This is really something unique for our country. In short, this is a storage of stem cells. Stem cells are special cells in our body that "haven't found their profession yet." They can turn into almost any cell in our body: bones, blood, skin, and so on. We are not strong in medicine, but as far as we understand, stem cells can treat many diseases (even coronavirus was treated).
However, getting these cells is not so easy. A great way is to extract them from the umbilical cord blood of a newborn. Cord blood is a storehouse of suitable stem cells for this child. Gamebank provides the collection of stem cells from umbilical cord blood and storing them though in a lifetime. If such a donor then has cancer and receives harsh chemotherapy, it is possible to restore organs with the help of stem cells.
Vitacel is a biotechnological company specializing in the development of innovative technologies based on the use of autologous (own) patient cells. Now the company uses SPRS therapy (a complex of personalized medical and diagnostic procedures for restoring skin with signs of age-related and scarring changes) and SPRG therapy (restoration of soft periodontal tissues). The Resident Of SKOLKOVO.
Friends, unfortunately, we had some problems, which is why there was so little material in the last few days. Now we are returning to normal mode and will again delight you with reviews. Tomorrow we will consider some more companies of the HSCI.
🔷 The next-gen - another SKOLKOVO resident, which is engaged in the development and production of gene therapy drugs. The company also develops methods for the prevention and treatment of hereditary diseases, as well as pathologies with a genetic component.
The company's key development is Neovasculgen. It is intended for the treatment of patients with chronic lower limb ischemia (HINK). The disease is caused by clinical manifestations of atherosclerotic lesion of the leg vessels (narrowing of the lumen of the vessels and reducing their patency). In severe form-the so-called critical ischemia of the lower extremities (KINK) - the disease threatens to require amputation of the limb.
Нек NextGen Pharma is a specially created company for the distribution of Neovasculgen.
Reprobank is a" Bank " for storing reproductive cells and tissues, which includes: a modern laboratory, a donor Bank of sperm and oocytes, and a personal Bank for storing sperm, embryos, and eggs.
HSC also has several other subsidiaries, but we will not focus on them, since the main essence of the activity is revealed in the above-mentioned ones.
📌 Let's now take a look at which segments of the HSC business generate more revenue:
Генет genetic research and consulting (services of the Genetico project), in millions of rubles (note: in 2017, this segment still included the Reprobank project, since 2018. it is separated into a separate segment. Since 2020, the revenue structure has become even more diversified due to COVID, so we will attach the slide with revenue for the 1st half of the year separately):
2017 is a long way 211,0 (42,7% of the total);
2018 - ₽325.9 (50.6% of the total);
2019 - ₽392.9 (46.9% of the total);
1H 2020 - ₽141.5 (31.2% of the total).
Выделение isolation, cryopreservation and long-term personal storage of cord blood stem cells (Gemabank), in millions of rubles:
2017 is a long way 222,7 (45,0% of the total);
2018 - ₽242.3 (37.6% of the total);
2019 - ₽241.7 (28.9% of the total);
1H 2020 - ₽124.3 (27.4% of the total).
SPR SPRS therapy services, in millions of rubles:
2017 is a long way to 35.2 (7.1% of total);
2018 - ₽38.9 (6.0% of the total);
2019 - ₽39.8 (4.8% of the total);
1H 2020 - ₽15.3 (3.3% of the total).
💊 Sales of the drug Neovasculgen, in millions of rubles:
2017 is a long way 25,4 (5,1% of the total);
2018 - ₽12.2 (1.9% of the total);
2019 - ₽74.9 (9.0% of the total);
1H 2020 - ₽63.0 (13.9% of the total).
Note the huge growth in the segment over the past year and a half.
🧫 Implementation of DRM (donation of human reproductive cells) (Reprobank®), in millions of rubles:
2017-there was no segment;
2018 is a long way to 23.9 (3.7% of the total);
2019 - ₽85.9 (10.3% of the total);
1H 2020 - ₽36.9 (8.1% of the total).
📶 Today, the company sets a number of goals that should continue to contribute to its growth. These include:
▫ This is the increase in sales and market share in Russia due to the expansion of the product line and their possible applications;
▫ This is the access to the international market;
▫ ️ Providing the possibility of using drugs (neovasculgen) and methods (SPRS-therapy) to foreign partners on the basis of licenses.
❗️Financial analysis❗️
Due to losses, year after year, the HSC does not pay dividends (the last payment was in 2016, but it was so meager that it did not play a special role in calculating the indicators). However, in 2019, the company went into profit, but about everything in order🗂
📌NWC
201️⃣6️⃣: 84.474
201️⃣7️⃣: (-164.612)
201️⃣8️⃣: 61.043
201️⃣9️⃣: 22.191
Net working capital randomly falls, then rises, then goes into negative values. In this regard, we conclude that management does not monitor the balance of short-term liabilities and current assets.
📌Current ratio
201️⃣6️⃣: 1,18
201️⃣7️⃣: 0,71
201️⃣8️⃣: 1,15
201️⃣9️⃣: 1,05
Current liquidity also jumps accordingly. But it is worth saying that the company has remained liquid for the past two years.
📌Quick ratio
201️⃣6️⃣: 0,85
201️⃣7️⃣: 0,44
201️⃣8️⃣: 0,47
201️⃣9️⃣: 0,49
The rapid liquidity indicator has fallen to very low levels. This means that the HSC will not be able to repay its short-term obligations if it is urgently needed.
📌Debt ratio
201️⃣6️⃣: 0,77
201️⃣7️⃣: 0,88
201️⃣8️⃣: 0,89
201️⃣9️⃣: 0,74
The debt indicator has high ratios, even though it has declined over the past year.
📌Growth of revenue
201️⃣6️⃣: 25,59%
201️⃣7️⃣: 26,66%
201️⃣8️⃣: 30,39%
201️⃣9️⃣: 29,61%
📌Growth of net income
201️⃣6️⃣: 109,47%
201️⃣7️⃣: (-16,03)%
201️⃣8️⃣: (-83,41)%
201️⃣9️⃣: 710,29%
📌Profit margin on sales
201️⃣6️⃣: -
201️⃣7️⃣: -
201️⃣8️⃣: -
201️⃣9️⃣: 13,32%
HSCI started making a profit only in the last year. 13% reached net profit, but it is too early to conclude whether the company is effectively increasing profits. So far, it seems that HSCI does not have a sufficient market and has only established its activities.
📌ROA
201️⃣6️⃣: (-15,35)%
201️⃣7️⃣: (-5,56)%
201️⃣8️⃣: 10,78%
201️⃣9️⃣: 14,31%
📌ROE
201️⃣6️⃣: (-54,88)%
201️⃣7️⃣: (-85,55)%
201️⃣8️⃣: (-14,98)%
201️⃣9️⃣: 30,03%
Profitability remained negative for three years. Only in 2018 did the return on assets become positive, and in 2019 both indicators showed good performance of the company.
📌FCF
201️⃣8️⃣: (-137.429,20)
201️⃣9️⃣: 47.100,60
Accordingly, the change in free cash flow confirms the hypothesis of "acceleration" of the business until 2019.
📌SGR
201️⃣6️⃣: (-54,88)%
201️⃣7️⃣: (-85,55)%
201️⃣8️⃣: (-14,98)%
201️⃣9️⃣: 30,03%
Sustainable growth rate is similar to ROE due to the lack of dividends. At the end of 2019, HSCI could have developed by about 30% without external sources.
📌WACC=6,12%
WACC for the Russian market is acceptable and below the ROA for the last year. This means that the HSC is working effectively.
📌Q ratio=5,67
The Tobin coefficient shows that the HSCI is fairly valued, and the market capitalization is more than 5 times higher than the book value.
📌E(M)=1,02%
📌st=17,24%
The average weekly return is colossally above 1%. Of all the reviews we saw this only in a recent review of Nvidia (https://t.me/HARE_FROM_NASDAQ/130) in our second channel. However, the risk is also exorbitant. We haven't met 17% yet. And here the yield is disproportionate to the risk.
📌beta=1,45
A beta above one indicates the growth rate of HSCI shares by more % than the market as a whole.
📌correl=(-0,07)
Correlation analysis showed a low inverse relationship. In most cases, the growth index Mosberg, shares fall HSCI. However, the correlation is so small that it is more relevant to say that there is practically no dependence.
📌Min=7,77
📌Max=39,28
📌CurrP=29,33
Today's HSC price is 25% off its 4-year high.
📌TSR=126,41%
📌km=(-9,43)%
HSCI yield for that year amounted to more than 100% have this We tend to write this off as a hype around pharmaceutical companies amid the pandemic.
📌MAR
201️⃣7️⃣: 63,00%
201️⃣8️⃣: 65,97%
201️⃣9️⃣: 131,31%
202️⃣0️⃣: 249,97%
If 3-4 years ago, the HSCI was almost 2 times lower than the market. Over the past 1.5 years, HSCI shares have begun to actively outplay the market.
💹 Advantages for the company and its strengths:
⚜ This is a unique business and the complexity of market entry. First, everyone is well aware that the pharmaceutical industry is poorly developed in our country. For example, the farmsintez that we have already disassembled is sitting on state support. Companies in the AFK System bring very little profit so far.
But the divisions of the HSCI have long since entered the market and took a confident share. Cord blood, banks of reproductive cells, genetic research-all this, of course, requires huge investments and advanced technologies. Not every new company will be able to show efficiency in this segment of activity.
📈 Excellent prospects for growth. The company keeps up with the times. Now more and more people in Russia are thinking about a healthy lifestyle, about tracking their health. This is also helped by genetic tests. Storing stem cells in case of a serious illness is even more interesting. You can be absolutely sure that with proper advertising, the demand for HSC services will grow steadily.
Успехи success with Neovasculgen. We have already written that this is a drug against lower limb ischemia of domestic development. Its effectiveness is confirmed by the high growth rate of sales revenue. From 2018 to 2019, it increased 6 times, and only for the 1st half of 2020 it was almost as much as it was earned on the drug in 2019.
A separate company was even created for distribution. Thanks to the drug, HSCI has a new revenue item - revenue from issuing licenses for its production to foreign partners.
🌍 "Development in breadth and depth". As the CEO of iskch-Artur Isaev said in an interview with Forbes (https://www.forbes.ru/tehnologii/372793-na-poroge-bessmertiya-kogda-lyudi-poveryat-chto-mogut-zhit-po-300-let-i-chto-eto)he believes that the company's business model would be successful not only in Russia. This determines the current strategy of the HSCI - expansion of cooperation with the CIS and non-CIS countries, as well as penetration into the subjects of the Russian Federation. According to the Annual report for 2019, the most powerful projects of the company increased the market due to availability for the regions. Tests for tests, as well as cord blood can be taken from the client now not only in the capital.
♻️ Holding structure. The HSCI is a bit like a private equity Fund (we told you in the review of the System what it is). The difference is that the company is not going to sell its successful projects. But Gemobank in 2019 was brought to the stock exchange through an IPO. Currently, according to Isaev, he invests in several biotech startups at once, whose innovations can be used in the future.
🦠 And, of course, your favorite COVID. If you have read the previous parts of our review carefully, you will have seen that we have attached a slide on revenue in 2020. There were added 2 new lines: the implementation of tests to determine the presence of antibodies to the virus and the service for testing for antibodies. These two items generated an additional slightly more than 62 million in revenue (13.2% of the total revenue for the six months).
📛 Problems and triggers of the company:
⚜️ Reputational risk. HSCI operates in a very specific segment: some of its divisions store clients ' stem cells for many years. Despite one of the best levels of protection in the industry, in the event of loss/damage to biological material, the company may face a massive outflow of customers, so you need to be especially careful here.
You should also pay attention to the fact that genetic information can tell a lot about its owner, it is more specific than personal data. Improper security of such data can also negatively affect the reputation of the HSC.
🧬 Legal regulation. Speaking about personal and genetic data, it should be noted that in Russia this industry is still at the stage of its legal registration. Accordingly, we must not forget about the possibility of any harsh legal regulations that can slow down the development of the company.
📉 Stagnation of the Russian economy. Of course, this is a problem for any Russian company. However, HSCI feels this particularly acutely, since its services and drugs are more likely to be luxury goods. Accordingly, until we see the normal growth of our economy with the growth of real incomes of the population, the HSCI, at least in Russia, will not have a rapid growth rate. This idea is proved by the cord blood Bank. Revenue grew well 5-7 years ago, but now it is essentially standing still.
🔆 Progress. The company's business is built around specific services and medications (Neovasculgen). However, at any time, the drug may have a side effect or a more effective competitor may appear. The obsolescence of technologies (for example, the company's cosmetology services) is also quite real.
☠ This sanctions and currency. First, we must not forget how Americans feel about good Russian and Chinese products. Often they are simply banned. Since neovasculgen is our drug, the US may ban Its use at some point. You also need to understand that services are provided on the territory of Russia, that is, in rubles. But equipment and raw materials are purchased abroad in dollars.
🤕 Low level of public knowledge about genetics. Many people (including us before the review) do not know about the services provided by the company, or consider them pseudoscientific. The same banks of reproductive cells. Many people have probably heard about such establishments in Western films, but they do not understand why we, in Russia, need such things.
People also don't understand what valuable information a genetic test can provide or that stem cells can save lives in the future. All this has yet to be accepted by the Russian society in order to start treating the topic more rationally and without fear.
💦 Risk of share dilution. If you follow our Instagram (https://instagram.com/hare_from_moex?igshid=zzcgot71144r), we posted a fragment from the Charter of the HSCI in the "history". According to it, in addition to the 75 million shares already placed, the company has the right to issue another 100 million. That is, the share of each shareholder will decrease by more than 2 times.
🌍 High competition in the foreign market. We have already written that the HSCI plans to expand not only within the Russian Federation and the CIS, but also in foreign countries. However, it should be understood that the implementation of the goal may be complicated by the high activity of biopharmaceutical companies from the United States and Europe. Of course, the HSC needs to enter the global market, but if management chooses the wrong moment, it can affect resources and financial stability.
What should I do with the HSCI?
We must admit that the HSCI pleasantly surprised us. Starting the review, we thought that this is another eater of state subsidies (some divisions are residents of SKOLKOVO), as well as pharmsintez. However, the opinion quickly changed.
First of all, we liked the innovative nature of the business. Stem cells, genetic research-all this seemed far from Russia. But as it turned out, the company not only makes all these things available to the Russian consumer, but also creates technologies and techniques that are unique even for world practice.
Secondly, the very structure of the business, which is quite diversified, looks strong. In recent years, revenue and PE growth has accelerated strongly, which should attract more and more new shareholders, raising the company's liquidity.
HSCI has huge prospects, as the population of the Russian Federation is just beginning to learn about the benefits of the services offered by the company. The possibility of expanding at this expense, through entering foreign markets, and all other factors indicate that the company should set new records in the medium term. The main risk, in our opinion, is the lack of growth in real incomes of the population. On the short-term horizon, this will most constrain growth.
Financial analysis has shown that in recent years, HSCI has been setting up its business, and in 2019 it began to work effectively. All indicators began to come in order; the company began to make a profit.
The analysis of the security showed that the average return caused by the pandemic is too high and the risk of the security is too high. The low inverse dependence on the Moscow Exchange Index has provided high returns over the past two years.
Technical analysis showed a continuation of the downtrend at the moment. All indicators have confirmed this, and there are no hints of a change yet.