Activities

The Group is a profitable emerging healthcare services group whose business focuses on the collection, processing and storage of human adult stem cells collected from the umbilical cord at birth. The Company was founded in 2000 in The Netherlands, with its principal operating subsidiary being established in Switzerland. The Group currently trades in 36 countries, principally in Europe. It operates four laboratories where it has to date stored in excess of 65,000 stem cell samples, which management estimates represents approximately 50% of the total cord blood stem cell samples stored annually in Europe. The Group is the largest adult stem cell storage group in Europe. In 2006, the Group had annual revenues of approximately € 10.9m and profit before tax of approximately € 2.9m.

Stem cells are unspecialised cells which have the ability to replicate and transform into a range of specialised cell types which form the basis of different human tissues. The application of stem cells for the regeneration of human tissue is used in medical therapies (please refer to Part 3 for further information in relation to stem cells).

The Group’s services allow parents and guardians to collect and cryogenically preserve a child’s stem cells, contained either in the blood or wall of the umbilical cord, so that they may be used in medical therapies if the child so requires during his or her lifetime. Samples are taken immediately following birth and once collected are delivered to the Group’s laboratories for processing, analysis and storage. Samples are stored in the gas phase of liquid nitrogen using sophisticated biological storage techniques. The storage is monitored under laboratory conditions for a minimum of 20 years. After 20 years the child is offered the opportunity to continue with the storage and, on payment of a further fee, may store their sample for the rest of their life. The collection of adult stem cells from the umbilical cord is widely considered to be non-invasive, simple and safe.

Cord blood banking is a rapidly growing industry which has evolved as a result of significant developments in the field of stem cell research. It has been an established practice in the United States for 25 years, where approximately 2.3% of live births result in stem cell storage, contrasting with rates in Europe, where currently approximately 0.8% of live births result in stem cell storage.(1) Adult stem cells from the umbilical cord have a number of uses and are considered particularly promising for medical therapies. Significantly, the collection and use of adult stem cells can be clearly distinguished from the collection and use of stem cells taken from embryos (embryonic stem cells). While the use of embryonic stem cells in research and medical therapies is the subject of ethical concerns, several religious and regulatory bodies, including the Catholic Church, have expressly supported the use of adult stem cells for these purposes. The Group has never been, nor does it intend to become, involved in the storage or collection of embryonic stem cells.

In addition to its core business of storage of HSCs extracted from cord blood, the Group is in the process of developing three new products which it expects to introduce during 2008:

• Cryo-Cord+ - The isolation, collection and storage of mesenchymal stem cells (MSCs) taken from the umbilical cord in addition to, and separate from, the collection of haematopoeitic stem cells (HSCs) taken from the cord blood. The Group is in the process of obtaining validation of this collection and storage process. The Directors believe that this marks a significant advance in the Group’s stem cell storage business as MSCs in the umbilical cord are found in far greater numbers than HSCs found in the cord blood. MSCs also have a broader range of potential therapeutic applications as they can be developed into a greater range of tissue types than HSCs. A significant number of MSC-related clinical trials are currently in progress worldwide and the Directors therefore believe that the commercialisation of MSC collection and storage through Cryo-Cord+ represents a key growth opportunity for the Group.

• Cryo-Lip - The collection and storage of stem cells obtained from fat reserves via liposuction. This product enables the Group to offer stem cell collection and storage to adults for themselves, and Cryo-Lip will therefore open a new market for the Group.

• Cryo-Preservation - The cryogenic storage of tissue samples (including serum, sperm etc.) for third party universities and pharmaceutical companies.