Cell storage has never been a new topic. In the promotion of cell storage, these precious biological resources, from stem cells to immune cells, can be stored in case of emergency through freezing, and play a key role in treating diseases, delaying aging and even regenerative medicine. Simply put, storing your own cells is an investment in future health, although this is expensive. "The most expensive unit price is 176,000 yuan, and it is stored for 20 years," Shanghai Cell Therapy Group, which applied for an IPO on the Hong Kong stock market, revealed to us the tip of the iceberg of the cell storage business. Relying on the cell storage business, Shanghai Cell Therapy Group earns 600 million yuan a year and supports the company's IPO. So, what is the clinical value of cell storage? What kind of business is this?

The reason why it is called "the first cell storage stock" is naturally because the core business of Shanghai Cell Therapy Group is cell storage: in 2023, the company's revenue of 759 million yuan, the cell storage business revenue reached 599 million yuan, accounting for nearly 80%. Moreover, from the perspective of market share, Shanghai Cell Therapy Group is also the leader in the field of domestic cell storage, with a market share of 40.7% in 2023. The so-called cell storage refers to the preservation of some cell types that may be used in the future, such as immune cells or stem cells, for future emergency needs.

This is a high-tech job. Regardless of the source of the cells or the type of product, maintaining cell activity, resilience and efficacy while ensuring product safety is the key to cell storage. Because the activity of cells during extraction and storage is directly related to their activity during recovery, the requirements are also higher.

For example, after freezing to the target temperature, cells need to be stored in a liquid nitrogen storage device at -196°C and protected by a freezing system. The system needs to have all-weather real-time temperature monitoring and automatic alarm functions to ensure safety. Due to the high requirements, the corresponding charging standards are naturally not low. In the prospectus, Shanghai Cell Therapy Group listed three representative packages: Bai Ze Cell Human-Taihe Edition, Bai Ze Ai Health, and Jiliangyuan Health. The storage period is 20 years, and the price range is 108,000-176,000 yuan, 68,000-136,000 yuan, and 60,000 yuan, respectively.

Among them, Bai Ze Cell Human-Taihe Edition and Bai Ze Ai Health are both aimed at immune cells. Customers enjoy the right to be included in clinical projects first after the tumor is diagnosed. The more expensive Bai Ze Cell Human-Taihe Edition also includes tumor insurance services. Supported by such high prices, how is the cell storage business?

It seems that the cell storage business is not very ideal. The core is that the entire market ceiling is relatively limited. From 2021 to 2023, the incremental storage quantity of Shanghai Cell Therapy Group will be 16,600, 24,700, and 32,600, respectively, 19,700 in the first half of 2024, and 19,000 in the same period of 2023. Although its business growth looks good, it has actually occupied half of the domestic cell storage market. Of course, more importantly, the high cost and the ultimate benefit may still need to be discussed.

For example, the cell storage business of Shanghai Cell Therapy mainly requires immune cell storage. The business application scenario of this cell storage is that when patients have cancer, they may need to extract immune cells, but the quality is not ideal because the patient's immune system is weak and non-targeted treatment leads to poor cell quality. At this time, the stored immune cells may come in handy.

However, the phenomenon of getting cancer within 20 years and being unable to extract immune cells is ultimately only a low-probability event; at the same time, whether long-term frozen cells can play their due role may still need to be discussed. In the prospectus, Shanghai Cell Therapy Group stated that "T cell therapy products produced by frozen cells have been approved for marketing by the FDA." In fact, it is not the FDA that has approved the listing of T cell therapy products produced by frozen cells, but the two approved CAR-T cell therapy products Kymriah and Carvykti, which can be manufactured based on clinical practice using frozen cells from patients.

This verifies that frozen cells still have certain value. However, the difference between CART products made from fresh and frozen cells has not been widely studied in humans, so the subsequent value needs to be verified by more clinical trials. Under this logic, whether more people are willing to spend a high price to freeze immune cells is obviously a problem. For this reason, Shanghai Cell Therapy Group needs a new story.

Shanghai Cell Therapy Group has found a new story - creating an ecosystem. The so-called ecosystem refers to starting with cell storage and extending to upstream and downstream, including cell therapy therapeutic drugs, tumor treatment hospitals, and even more cutting-edge cell therapy health oral products. This is exactly what Shanghai Cell Therapy Group is currently trying to do.

In 2020, it will expand to the field of tumor medical services, and further launch cell charging products in 2023. Under this logic, the Cell Therapy Group believes that it has created a closed loop.

First, the expertise and skills in cell storage ensure the preservation of high-quality key raw materials (i.e., cells from healthy people) for cell technology applications, thereby increasing the "medicinal" value of frozen cells and enabling patients to benefit from the treatment effect.

Secondly, the research and development of cell drugs has enabled the company to accumulate a deep understanding of the high quality standards (including storage conditions, environment, and technology) required for cryopreserved cells as key raw materials for cell drugs; research-based cancer hospitals can promptly discover unmet clinical needs, accumulate rich experience by participating in and promoting clinical trials initiated by researchers, and provide a place for the potential application of cell therapy products in the future after they are approved for marketing.

This cell drug research and development capability can also enhance the trust of patients in tumor medical services. After the approval and listing of cell therapy products in the future, it has the potential to drive the overall revenue growth of 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 tumor medical and cell charging sectors.

Finally, as one of the delivery links of cell storage services (such as cell collection and physical examination), hospitals provide more scenarios for customers to accept cell storage services and increase customers' trust in the brand.

However, both the development of innovative drugs and the operation of hospitals are not easy, and creating a closed loop is even more difficult. So, can the dream of Shanghai Cell Therapy Group succeed?

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