Cord Blood Bill Passes in Senate

Late on Friday, the Senate passed a bill, HR 2520, to authorize $79 million in federal funding for the collection and storage of umbilical cord blood for stem cell research and the treatment of diseases on December 16. The bill was originally approved by the House in May, and the Senate’s amendments were unanimously passed by the House on December 17. The passage of this bill is hugely bullish for Cryo-Cell (CCEL.ob) (one of my top picks) and Viacell (VIAC), CCEL´s larger competitor.

Interestingly, CCEL did not move much on this news, despite the fact that this news is unequivocally bullish for the company. The bill will create greater awareness of cord blood banking, driving demand for CCEL´s services for the forseeable future.

The numbers here are simply staggering. There are about 4 million births a year in the US alone. It seems obvious that cord blood banking will be mainstream in 5 years, creating at least 1 million new customers (25% market penetration) a year for the cord blood banking industry. That equals about $1 billion in sign-up fees a year and an additional $100 million a year in recurring revenue for the industry.

The cord blood banking companies, are therefore, in my opinion, no brainer investments. I expect consolidation in the industry over the coming years, and at most three big players each raking in $100´s of millions of dollars a year in ten years or so. As the oldest and one of the more respected cord blood banking companies, CCEL.ob will benefit from this major business and social trend.