OREANDA-NEWS. PJSC HSCI – The Human Stem Cells Institute (“HSCI”, MOEX: ISKJ), one of Russia’s leading biotech companies, today announced its audited unconsolidated results for 2015 in accordance with the Russian Accounting Standards (RAS):

  • HSCI’s revenue for the full year 2015 amounted to RUB 227.4 million1 compared to RUB 234.4 million in 2014.
  • Gross profit amounted to RUB 112.0 million representing gross profit margin of 49.3%.
  • OIBDA2amounted to RUB 16.0 million for an OIBDA margin of 7.0%.
  • Operating profit was RUB 2.6 million.
  • HSCI’s net profit in 2014 amounted to RUB 9.1 million.

1 HSCI’s RAS revenue for 2015 does not include in full the revenues from Gemabank’s service of cord blood stem cell banking comprised of isolation, cryopreservation and storage of umbilical cord blood stem cells (SCs). Since from October 1, 2015 the Company started transferring Gemabank’s activities into IMCB LLC – HSCI’s 100%-subsidiary (for details – see page 4). So HSCI’s FY 2015 RAS revenue lacked the revenues from isolation and cryopreservation of cord blood CSs received in Q42015 and recognized in IMCB’s financial results – in the amount of RUB 21.9 million. Therefore, the Company’s total RAS revenue for 2015 under RAS, comparable with the one for 2014, amounted
to RUB 249.3 million.

2 OIBDA is a non-U.S. GAAP and non-IFRS financial measure, which the Company calculates as total revenues less operating expenses excluding depreciation and amortization. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance investments and to incur and service debt. OIBDA should not be considered in isolation as an alternative to net income, operating income or any other measure of performance under U.S. GAAP or IFRS.

General Director of HSCI Artur Isaev commented:

“Year 2015 for us has been a year of intense and fruitful work in almost all areas. Results are already visible within the Company, and soon they will positively affect our financial performance and shareholder value.

We continued corporate restructuring that was initiated in late 2014 with the purpose to improve management efficiency and to reduce costs. It will also help us to use all the opportunities provided by the government for medical and R&D companies.

HSCI is entering a new stage of its development, and we want approach it as prepared as possible. From 2011 to 2015 we were aimed on developing products and technologies, market access and receiving feedback from doctors and professionals considering to implement those treatments in practice. In 2015 situation began to actively change. Today our technologies are not just developments that are ready for use, but products and services accepted by key opinion leaders within respective medical communities. We are talking about Neovasculgen®, SPRS-therapy®, Reprobank®, PGD and other Genetico® services. For the most part, they overcame critical points of product development, and currently we started to more actively invest in their promotion, advertising and sales.

During the reporting year, we worked well and did a lot for promoting our products and services in the Russian market. It is worth mentioning that special attention was paid to the interaction with the professional medical community and regulatory authorities in order to facilitate patient access to our innovative drug Neovasculgen® – according to the government directive it was included into the Vital and Essential Drug list for 2016 in Russia.

And last year we began work on licensing and developing Neovasculgen® in new promising markets. The success in those markets may have a significant impact on our intellectual property valuation and the company’s valuation itself.

First of all, we are targeted at the U.S. market – to increase the chances for the success of Neovasculgen® in the other international markets, since the regulatory systems of many countries throughout the world are more adopted to approve the drugs coming from the developed markets, and the first-in-class drug from Russia is something extraordinary for the regulators of the most countries.

To obtain marketing authorization in the USA for the drug candidate based on IP connected with the Russian innovative drug Neovasculgen®, HSCI and its partners plan to conduct clinical trials based on contract manufacturing according to the U.S. regulatory requirements. Organization of contract manufacturing in the USA is of great importance as our current production capacities in Russia are not sufficient to produce the drug in volumes necessary for conducting clinical trials and making sales in the foreign markets”.