This would mark the first for a biotech company on the Russian stock market.

Russia’s joint stock company Human Stem Cell Institute has set a preliminary price range for its planned IPO at about 9–11 rubles (about $0.30–$0.37) per ordinary share. The offering will comprise some 15 million ordinary shares, and the company says that it expects its post-IPO market capitalization to be in the region of 675–825 million rubles (approximately $22.68 –$27.71 million). The free float will be approximately 20%. HSCI aims to use the resulting funds in part for the development of new stem cell therapies for a range of diseases including blood cancers and heart attack.

HSCI announced earlier this year that it was planning an IPO on the Innovative & Growing Companies sector of the Innovation and Investments Market on the Moscow Interbank Currency Exchange (MICEX). The company said the IPO will be not only be the first initial public offering in Russia in 2009, but the first one for a biotechnology company in the history of the Russian stock market.

After the IPO HSCI general director, Artur Isaev, will retain the largest shareholding in the company. Isaev claims the IPO will mark an important step in creating a dynamic new biotechnology sector in Russia. “In addition, the capital we raise will allow us to implement research and development projects to develop our own innovative and unique stem cell-based medications, which are aimed at treating blood cancer, heart attacks, ischemia, burns, and skin defects.”

The HSCI was founded in 2003 to advance projects in stem cell technologies. The institute now has an international presence, with laboratories and offices in Moscow, Saint Petersburg, Ukraine, and Germany. HSCI operates Gemabank, a bank for personal storage of hematopoietic stem cells derived from umbilical cord blood. The company predicts that it will have some 8000 stem cell samples in storage by the end of the current year, compared with 5,000 at the end of 2008.

Human Stem Cell Institute also has a biotechnology laboratory in Saarbrücken, Germany, affiliated with the human stem cell institute of SymbioTech, in which HSCI has a shareholding.

HSCI predicts that in comparison with 2008, its 2009 EBITDA will be up 80% at 22.17 million rubles (roughly $0.74 million), with earnings after taxes up 110%, at 14 million. In the first half of 2009 the Institute’s net income went up by 59%.

According to the Russia Pharmaceuticals and Healthcare Report, published recently by Research and Markets, Russia’s overall macroeconomic situation has stabilized markedly since the end of the first quarter. Nevertheless, the report’s author suggests that in US dollar terms, 2009 will be a tough year for the Russian pharmaceutical market, with a predicted 13.9% contraction.

Athough in ruble terms the market will grow by an estimated 15.9%, much of this will be due to price inflation. Volume consumption is actually expected to remain stagnant or even fall. These are “both worrying signs and likely to spur heavy handed regulation,” the report notes. Overall, the report predicts the Russian pharmaceutical market will grow at a 7.8 3% compound annual growth rate between 2008 and 2013 and be worth some $23.4 billion by the end of 2013.

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