China's First Cell Banking IPO Candidate Charges Up to RMB 176,000 for 20-Year Immune Cell Storage

Cell storage has never been a new topic.

In the promotion of cell storage, from stem cells to immune cells, these precious biological resources can be cryopreserved for unforeseen needs and play a crucial role in treating diseases, delaying aging, and even regenerative medicine.

In simple terms, storing your own cells is an investment in future health, albeit an expensive one. "The most expensive unit price is 176,000 yuan for 20 years of storage," Shanghai Cell Therapy Group, which has filed for an IPO on the Hong Kong Stock Exchange, has revealed a glimpse of the cell storage business.

Relying on the cell storage business, Shanghai Cell Therapy Group generates an annual revenue of 600 million yuan, which also supports the company's push for an IPO.

So, what is the clinical value of cell storage? What kind of business is this exactly?

/ 01 / The Sky-High Cost of Cell Storage Services

It is called the "first stock of cell storage" because the core business of Shanghai Cell Therapy Group is cell storage:

In 2023, out of the company's 7.59 billion yuan in revenue, 5.99 billion yuan came from the cell storage business, accounting for nearly 80%. Moreover, in terms of market share, Shanghai Cell Therapy Group is the leader in China's cell storage sector, with a market share of 40.7% in 2023.

Cell storage refers to the preservation of certain cell types that may be needed in the future, such as immune cells or stem cells, for potential use down the line.

This is a high-tech job.

Regardless of the cell source or product type, maintaining cell viability, resilience, and potency while ensuring product safety is key to cell storage. This is because the activity of cells during extraction and storage is directly related to their activity during the recovery process, which also demands higher requirements.

For example, the storage of cells requires them to be stored in liquid nitrogen storage equipment at -196°C after being frozen to the target temperature, and protected by a cryogenic system. This system must have real-time temperature monitoring and automatic alarm functions around the clock to ensure safety.

Due to the high requirements, the corresponding charge standards are naturally not low. In the prospectus, Shanghai Cell Therapy Group listed three representative packages: Baize Cell Human - Taihe Version, Baize Ai Health, and Jiliang Yuan Health, all with a storage duration of 20 years, and their price ranges are 108,000-176,000 yuan, 68,000-136,000 yuan, and 60,000 yuan, respectively.

Among them, Baize Cellular Human - Taihe Edition and Baize Love Health both target immune cells. Customers are entitled to priority inclusion in clinical projects upon a confirmed cancer diagnosis. The higher-priced Baize Cellular Human - Taihe Edition also includes tumor insurance services.

How is the business of cell storage doing under such high prices?

/ 02 / An Extremely Niche Market

It seems that the business of cell storage is not very ideal. The core issue lies in the relatively limited market ceiling.

From 2021 to 2023, the incremental storage volumes of Shanghai Cell Therapy Group were 16,600 units, 24,700 units, and 32,600 units, respectively. In the first half of 2024, it was 19,700 units, compared to 19,000 units in the same period of 2023.

Although its business growth appears impressive, it has already captured half of the cell storage market in China. As shown in the figure below, in 2023, the company ranked second stored only 8,000 samples, while the fifth-ranked company had merely 3,000.

In other words, from the perspective of total demand, this is a relatively niche market.

It's not hard to understand, after all, this is a high-priced product. As mentioned above, packages costing over 100,000 yuan determine the niche consumer group.

Of course, more importantly, the high cost and the degree of ultimate benefit may still need to be discussed.

For example, the cell storage business of Shanghai Cell Therapy mainly focuses on immune cell storage. The application scenario for this cell storage service arises when a patient diagnosed with cancer may need to extract immune cells, but their quality is often suboptimal because the patient's immune system is weakened and non-targeted treatments further degrade cell quality. In such cases, the stored immune cells may prove useful.

However, the occurrence of being diagnosed with cancer within 20 years and the inability to extract immune cells is ultimately a low-probability event; meanwhile, whether long-term cryopreserved cells can function as expected may still be debatable.

In the prospectus, Shanghai Cell Therapy Group stated, "T-cell therapy products produced from cryopreserved cells have been approved for marketing by the FDA."

In fact, it is not that the FDA has approved the marketing of T-cell therapeutic products manufactured from cryopreserved cells, but rather that two approved CAR-T cell therapy products, Kymriah and Carvykti, can be manufactured using cryopreserved cells from patients based on clinical practice.

This validates that cryopreserved cells still hold certain value. However, the differences between CAR-T products prepared from fresh and cryopreserved cells have not been extensively studied in humans, so their subsequent value still needs to be verified through more clinical studies.

Under this logic, whether more people are willing to spend high prices to cryopreserve immune cells is clearly a question. Precisely because of this, the Shanghai Cell Therapy Group needs a new story.

/ 03 / Has Become an Ecosystem

Shanghai Cell Therapy Group has found a new story — building an ecosystem.

The so-called ecosystem refers to starting from cell storage, extending upstream and downstream, including therapeutic drugs for cell therapy, cancer treatment hospitals, and even more advanced health oral products for cell therapy. This is exactly what the Shanghai Cell Therapy Group is currently attempting to do.

As shown in the figure above, it expanded to tumors in 2020.HealthcareService areas, and further launched cellular energy products in 2023. Under this logic, the cell therapy group believes that it has created a closed loop.

First, professional knowledge and skills in cell storage ensure the preservation of high-quality critical raw materials (i.e., cells from healthy individuals) for cell technology applications, thereby increasing the "medicinal" value of cryopreserved cells and enabling patients to benefit from therapeutic effects.

Secondly, in the research and development of cellular drugs, the company has gained a deep understanding of the high-quality standards (including storage conditions, environment, and technology) required for cryopreserved cells as critical raw materials for cell-based therapies. Meanwhile, research-oriented cancer hospitals can promptly identify unmet clinical needs, accumulate extensive experience by participating in and promoting investigator-initiated clinical trials, and provide venues for the potential application of cell therapy products currently under research after their future regulatory approval and market launch.

This capability in cell drug development can also enhance patient trust in tumor medical services. After cell therapy products are approved and launched in the future, they have the potential to drive overall revenue growth for tumor medical services.

In the company's view, the cell storage business has a large customer base, which can potentially provide cross-selling opportunities for the company's diversified product/service portfolio and generate synergies in the oncology medical and cell empowerment segments.

Finally, hospitals serve as one of the delivery channels for cell storage services (such as cell collection and health checkups), providing customers with more scenarios to access these services and enhancing their trust in the brand.

However, whether it is the research and development of innovative drugs or the operation of hospitals, neither is an easy task, and creating a closed loop is even more difficult. So, can the dream of Shanghai Cell Therapy Group succeed?

       Title: Maximum Unit Price of 176,000 Yuan: A Breakdown of the First Cell Storage Stock