Cryosite profit aims ahead of target

Private cord blood storage service Cryosite has said it now does not expect to have to go through another round of fund-raising to achieve profitability.

The company, which was listed on the Australian Stock Exchange on May 9 this year, said it had received a high level of interest in its services and now had $2.8 million in the bank, with monthly costs of $150,000.

Umbilical cord blood is the blood that remains in the placenta and umbilical cord following birth. During pregnancy, cord blood becomes a rich source of the baby's own bone marrow stem cells, which have been shown to be more effective treatments than chemotherapy or radiation as transplants to treat diseases such as leukaemia, with less chance of rejection than regular blood transplants.

Although some hospitals maintain cord blood storage facilities, Cryosite is the first to offer a private service within Australia. To break even every month, Cryosite needs to win 117 contracts, and said it broke its May record in July by 60 per cent.

More than 140 obstetricians in 78 private and public hospitals around Australia have now collected cord blood samples to be banked by Cryosite, which now has offices in Adelaide and Perth.

Managing director Gordon Milliken said uptake of the service had been "unbelievably smooth".

The company's distribution of American Type Culture Collection products was also starting to take off, he said, and it had also received several contracts from pharmaceutical companies and contract research organisations for controlled storage and shipping of trial drugs.

"There are about 800 clinical trials going on in Australia, and we see that as the next growth area," Milliken said. "Lots of drugs need to be kept at room temperature."

Milliken said Cryosite was also in the process of opening Melbourne and Brisbane offices, and was considering building an archival storage facility in Melbourne. He said the company had already received cord blood samples from every state except the Northern Territory, and could see its business model extending into the Asia-Pacific region.

He said that since the company listed, its share price hadn't dropped below the 40c listing price, and was currently trading at around 60c a share. "Most of our seed investors have stuck with us," he said.

Cryosite has been marketing itself in parenting and lifestyle magazines and to obstetricians and midwives. "We go in and do in-service training," Milliken said. "Even though obstetricians take the blood, we've got an obligation to train."