At Cellular Dynamics, The Beat Goes On Under Fujifilm Ownership

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profitable in three years. Last year, the company reported a $30.6 million loss on $16.7 million in revenue. Following the acquisition, CDI is no longer publicly traded, meaning it doesn’t have to report earnings.

The potential damage to short-term financial performance is one reason CDI may opt to expand its footprint slowly, if it does so at all. Another might be that the 155-employee company has a good reputation for creating cell lines, says Thorsten Schlaeger, head of the Human Embryonic Stem Cell Core Facility at Boston Children’s Hospital and an expert in pluripotent stem cells.

“There are still very few companies that offer iPS-derived cells as a product,” Schlaeger says in an e-mail. “CDI is known as a reliable provider of high-quality cells. They are one of the first to use this business model, and they are a leader.”

Whether CDI decides to create its own drug development pipeline will hinge in part on how deeply it and Fujifilm are willing to reach into their pockets, says Cade Hildreth, president and CEO at BioInformant, a stem cell market research firm. She points to a 2014 study from the Tufts Center for the Study of Drug Development that estimated the cost of a new drug to be about $2.6 billion.

“However,” says Hildreth in an e-mail, “cellular products will be the future of medicine, because we are not made of drugs, we are made of cells. There has never been greater opportunity for the development of cell therapy products. In the long run, it could be very lucrative.”

According to a case study on CDI Hildreth authored earlier this year, competitors also working to develop iPS cell therapies include Marlborough, MA-based Ocata Therapeutics (NASDAQ: ACTC), which the Japanese drug firm Astellas Pharma recently bought for $379 million, and two San Diego companies: Fate Therapeutics (NASDAQ: FATE) and ViaCyte.

Parker joined the company in 2007, long before the acquisition. He says before Fujifilm entered the picture, cash flow and fundraising were often top of mind for leaders at CDI. To insulate itself from financial risk, he says, it usually made the most sense to find partners to co-fund clinical studies, which can be long and expensive.

“The big difference between now and then is now we have more choices,” Parker says. “Now, we have an internal large stakeholder that has the ability to fund activities, should [it] choose. Fujifilm has allowed us to accelerate things.”

CDI currently has a consignment agreement with the UW-Madison allowing the company to use a campus lab that the FDA has approved for clinical trials and drug manufacturing, Parker says. If CDI were to ramp up its operations significantly, it might need to find another facility—or build its own.

“The questions now are where, when, and how big?” Parker says. “Is it a Fujifilm facility? Is it a CDI facility? Is it an external facility? We’re evaluating all those options right now. It’s going to be dependent on scale.”

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