CLBE -- CalbaTech Posts Letter to Shareholders on Achievements, Future Business Strategies
IRVINE, Calif., June 13, 2006 /PRNewswire-FirstCall via COMTEX/ -- CalbaTech, Inc. (OTC Bulletin Board: CLBE), an emerging life sciences company (http://www.CalbaTech.com ) concentrating on banking adult stem cells for possible future therapeutic uses and providing products and platforms to the biotech, pharmaceutical research market and to academic institutions, today in a letter to all shareholders said that a comparison of sixteen companies in the stem cell arena showed CalbaTech third in EBITDA (Earnings Before Income Taxes, Depreciation and Amortization) and first in average daily trading volume.
However, the study shows CalbaTech had the second lowest market capitalization. "We believe this means that CalbaTech has tremendous stock upside potential. If our revenues and profits begin to reach pro-forma projections, particularly with LifeStem's Stem Cell MicroBank(TM) Service to open this month, the stock price should respond accordingly," wrote James DeOlden, CEO. The entire letter follows:
Dear Fellow Shareholder:
We at CalbaTech, Inc. thank you for your investment in our Company. The goals at CalbaTech are two-fold: To acquire revenue generating Life Science "tools" companies, that provide products and platforms to researchers, forming a profitable base by which to provide the Company with cash flow and allow it to seek higher reward projects; and to develop those higher reward projects that will provide the opportunity for a greater upside to our shareholders. We believe we are well on our way to accomplishing both of these goals.
Research Reagents Division
In 2003, we acquired Molecula, LLC, a company in Sterling, Virginia, that sold transfection products. In 2004, we acquired KD Medical, a company in Columbia, Maryland, that supplied research products to more than 300 National Institute of Health (NIH) laboratories, as well as most of the major pharmaceutical companies. While both were generating revenue when acquired, neither was profitable. In the past year, we have worked diligently to make the Research Reagents Division the profitable base we intended.
The first step was to incorporate a new Molecula, Inc. in Nevada, and then combine the operations of Molecula and KD Medical into one facility to more efficiently capitalize on their synergistic operations. Next, marketing efforts were coordinated to take advantage of common markets. Finally, redundancies in the management teams of the two companies were eliminated. The result is that the Research Reagents Division reported a net profit for 2005 and again in the first quarter of 2006. Furthermore, this Division is reporting a 25% growth in revenue for the quarter ended March 31, 2006, as compared to the same period in 2005.
The next move is, literally, a move, into a new location. This Division will be moving into a new facility with two validated Class 100 clean rooms and a complete quality control laboratory that will be used to grow revenues in two different ways. One clean room will be used to increase the manufacturing capabilities of the KD Medical product offerings, so as to manufacture a higher quality of product, and to expand the current custom product offerings to the NIH as well as major universities and pharmaceutical companies. The second clean room will be utilized for other potential growth in revenue by allowing the Division to perform contract research for the many pharmaceutical companies located in this region.
Finally, the Research Reagents Division should also experience growth and greater profitability due to a recent understanding with a large media company to produce some of KD's routine media products. This is intended to allow KD to more aggressively sell these routine products, with greater profitability due to a decrease in redundant labor, and to enter markets that were previously unavailable due to cost competitiveness. This should result in an increase in revenues and allow KD to focus more attention to manufacturing custom products.
In summary, we believe that the Research Reagents Division has become a steady, growing, profitable foundation upon which we can build a greater return for our shareholders.
Cellular Therapies Division - LifeStem
In 2004, we purchased I-Stem from Dr. Jason R. Van Tassell, M.D. I-Stem owned the intellectual property to the Stem Cell Delivery Device, an endoscopic device capable of delivering adult stem cells directly to infarcted cardiac tissue. Dr. Van Tassel created the concept after hearing about an Illinois teenager who became a cardiac cripple after being shot in the heart by a nail gun. The teenager had adult stem cells injected into his blood stream resulting in cardiac tissue regeneration. While the teenager does not have completely normal cardiac function, the results were significant, allowing him functionality. Dr. Van Tassel reasoned that if stem cells injected into peripheral blood could cause significant cardiac tissue regeneration, then cells injected directly into the cardiac tissue would have even greater efficacy.
Subsequently the Company formed LifeStem, Inc., a wholly-owned subsidiary, to further I-Stem as well as to enter the new emerging field of banking adult stem cells for autologous use. This was determined after canvassing current stem cell banking services and realizing that there was a tremendous void to be filled, as the market had competitors at opposite poles. There are several companies collecting umbilical cord blood from newborns, which contain fertile stem cells, and there are other companies that are collecting autologous stem cells from adults in extremely inconvenient, invasive, costly, and time consuming ways. The former only helps those of the generation being born today whose parents have the foresight to take advantage of storing cord blood, and the latter does not provide non-invasive and convenient collection and storage of adult stem cells at a reasonable price.
We also determined that there were not any companies offering to collect adult stem cells from more than one tissue source. Some stem cells are more likely to develop into blood cells and similarly related tissues, while others are more likely to develop into bone, cartilage or muscle tissue. We therefore developed the process of harvesting stem cells in micro quantities to be cryopreserved for future transplantation into the client. We filed a patent application for our Stem Cell MicroBank(TM) Service, which is promulgated on the belief that it is unnecessary to collect an amount of stem cells sufficient to fully reconstitute one's entire immune system at the time of collection. LifeStem's Adult Stem Cell MicroBank(TM) is the only company to offer "micro" collections of stem cells from two different tissue sources thereby offering greater potential for treatments for multiple diseased conditions.
To a large degree, we believe that the adult stem cell collection and storage market mirrors the cosmetic surgery market, with its emphasis on proactive and preventative healthcare. People likely to have cosmetic surgery are concerned about quality of and longevity of life, they are health conscious, college-educated, and tend to seek non-traditional medical services. To this end, in December 2005, we signed a distribution agreement with Solana MedSpas, a developer and syndicator of medical spas, with 25 medspas currently open and operating and plans for more than 50 additional locations to open during 2006. In accordance with this agreement, adult stem cell collections will be performed at medspa locations using our Stem Cell Microbank(TM) Service. We are also working to contract with physician's offices to carry our Stem Cell MicroBank(TM) Service and believe that cosmetic surgeons, cardiologists, and orthopedists will be excellent distribution sites. With these agreements, we believe we will be ready to make an explosive entry into this marketplace as we perform the first collections in June.
First Quarter 2006 Financial Results/Stock Performance
The first quarter of this year is reflective of our belief in the CalbaTech model, as well as the actions we have taken over the past year. KD Medical, Molecula, and another of our other wholly-owned subsidiaries, Molecularware, Inc., all were profitable and as a whole experienced a 25% growth in revenue. LifeStem is primed for success as the pricing and cost structure of the Stem Cell Microbank(TM) Service will be profitable from each collection.
Recently, an industry source published information regarding each of the public companies competing in the stem cell arena. Of the sixteen companies listed, CalbaTech was listed third in EBITDA (Earnings Before Income Taxes, Depreciation and Amortization), and first in average daily trading volume, yet had the second lowest market capitalization. We believe this means that CalbaTech has tremendous stock upside potential. If our revenues and profits begin to reach our pro-forma projections, particularly with LifeStem's Stem Cell MicroBank(TM) Service set to open in June, the price of our stock should respond accordingly.
We have put the building blocks in place and have begun building a truly successful company. We are pleased that you have chosen to invest in CalbaTech. Thank you for the trust and continued support.
Sincerely,
James DeOlden
Chief Executive Officer
Contact:
Paul Knopick
E&E Communications
(949) 707-5365
pknopick@eandecommunications.com
SOURCE CalbaTech, Inc.
CONTACT: Paul Knopick of E&E Communications, +1-949-707-5365,
pknopick@eandecommunications.com, for CalbaTech, Inc.
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