Isolagen: After Meeting Managment, We're Still Upbeat

| About: Isolagen, Inc. (ILE)
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Today we had the opportunity to meet several members of the Isolagen (ILE) management team at the company's annual meeting. We walked away very impressed with the company's prospects, and remain convinced that the stock offers extraordinary appreciation potential for investors with the patience to wait two to three years for the company's late-stage pipeline to get into full swing (see original report).

Interestingly, though the hype surrounding the company's technology has been focused on the wrinkle market, current management seems most optimistic concerning the application of the platform for the burn scar market. There is currently no cure for the segment of the burn scar market that ILE is targeting and it therefore appears likely that the company may receive fast track approval for this indication. The market potential of this application ranges from $125 million to $700 million. We expect to hear news concerning late-stage burn scar trials in early 2007.

On another note, given the tremendous success and growth of the cryogenic storage of umbilical cord blood (i.e. ViaCell (VIAC) and Cryo-Cell (OTCPK:CCEL), we are convinced that ILE has the potential to launch a similar type of service for the aesthetics market once, or perhaps even before, their wrinkle product receives FDA approval. Instead of storing umbilical cords, though, ILE would cryogenically store patients' fibroblasts for future treatments via the Isolagen process.

In case you are unfamilar, the Isolagen process works as follows: The patient’s physician obtains a punch biopsy from behind the patient’s ear with the use of a local anesthetic. The biopsy is then packed in a vial in a special shipping container and is shipped overnight to ILE's laboratory. Upon arrival at the laboratory, the biopsy is initiated into culture. The fibroblasts within the biopsy are allowed to multiply over a period of approximately four to six weeks in a series of cell factories. The fibroblasts are then harvested and put into a special transport vial. After completion of a series of quality control tests, the cells are released and shipped to the physician’s office overnight. Injections are supplied and administered to the patient at approximately two week intervals.

It seems clear to us that if the process is approved and becomes popular, patients will not want to receive a punch biopsy each time they elect to have the procedure done. Instead the patient will elect to cryogenically store his or her fibroblasts at ILE's facilities for a fixed annual fee.This may all sound far-fetched at this point, but who would have believed a few years ago, that cryogenic storage of umbilical cords would launch a $100 million+ and growing storage business.

Overall, as the above scenario demonstrates, ILE has several major growth opportunities in the coming years. With a management team that is used to running multi-billion dollar businesses, we don't think it will take that long for the company to begin making significant deals and launching several major revenue initiatives. Patient investors, who can handle the risk of a biotech investment, should be rewarded.

Disclosure: We own shares in Isolagen.

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