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Cord Blood America has accomplished what they set out to do in
early 2003, which was to create a company that makes it very easy for consumers to
privately store their umbilical cord blood stem cells
Medical Laboratories & Research
Cord Blood America, Inc.
9000 West Sunset Boulevard Suite 400
Los Angeles, CA 90069
Matthew L. Schissler
Founder, Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
August 3, 2006
Matt Schissler, Founder, Chairman and CEO of Cord Blood America, Inc.
Mr. Schissler and two partners Founded Cord Partners, Inc on January 3, 2003. In April of
2004, Mr. Schissler lead Cord Partners through a reverse merger into an newly formed
company Cord Blood America, Inc., and began trading publicly under the symbol CBAI by
January of 2005. Prior to January 2003, was 7 months of research and development in order
to create their corporation. Cord Partners has launched successfully, achieving rapid
growth in its first 3 years, all while using personal investment as well as raising over
$7M though various channels to fund its growth.
Before this, Matt began his RainMakers International
start-up on May 3, 2001. In his career, Start-ups are all Matt has ever done. It quickly
became a powerhouse in the direct response advertising arena. His prior success of
start-ups led him on his entrepreneurial quest of providing a revenue generating sales
machine that any client company can use to boost their top line. Matts mission
is to create The most respected advertising agency in the world. Currently,
RainMakers is doing just that. By using a cost per acquisition model on National
Television, Radio and the internet, RainMakers provides their clients a fixed cost per
lead or fixed cost per sale advertising approach.
Matt started his second RainMakers affiliated
company on May 3, 2002. RainMakers Fruit is a direct-to-consumer Fruit shipping
business great for holiday gifting, corporate gifting, fundraisers and Floridian
Prior to RainMakers, Matt held the position of Sr.
Regional Director for TMP Worldwide, formerly System One Technical. During
Matts seven year stint, he was instrumental in starting four separate business units
for System One/TMP. Matt became the youngest Branch manager ever in System One history,
and followed that by starting three of the most profitable offices in System One history,
including New York, Atlanta and Dallas.
In addition to his sales achievements, Matt was
responsible for developing the entire training program for hundreds of sales
representatives across North America. He personally trained over 200 Sales Representatives
in a one week Boot Camp training. He also authored the Accountability and Results
standards for TMP Worldwide, for all sales representatives. This manual is also still in
use and practice today.
Prior to System One, Matt and a partner were involved
in a start-up radio station, Sports Radio 960, WTGM, in Salisbury, MD. This new radio
broadcast achieved profitability within six months. Before radio, Matt started his own
successful Life Insurance practice in Delaware and Maryland.
Matt graduated with a BA in both Biology and Public
Policy, from St. Marys College of Maryland.
There is uniformity in science that stem cells will play a key role in fighting disease as
we move through this century; indeed, some believe stem cells could launch a new era in
medicine, perhaps even curing some of our most intractable diseases. The umbilical cord,
which at birth, traditionally has been tossed away, contains a rich store of stem cells.
Cord Blood America, Inc., through its wholly owned subsidiary, Cord Partners, Inc.,
markets a service to preserve the umbilical cord blood in a patented process for future
use exclusively by the family. The collection takes less than five minutes, is umbilical
cord stem cells have already been used to treat 75 major diseases, including leukemia,
severe anemia, metabolic blood disorders and immune deficiencies. This list is guaranteed
to grow as medical research learns more about the incredible healing power of stem cells.
What Cord Blood America offers is the proverbial once
in a lifetime opportunity. You cant give birth to the same child twice. That is why
marketing, and education, is such an important factor in this sector. Cord Blood America
has assembled an experienced marketing team second to none in the industry. This is a
growth industry: In 2003, only five percent of the four million women in the U.S. giving
birth knew about preserving their umbilical cord blood and two percent of these took
advantage of this life-saving procedure. The number of cord blood samples stored grew by
75 percent in 2004 and is expected to grow again by 75 percent in 2005, with five percent
of all those giving birth now preserving their umbilical cord blood. Cord Blood America
intends to be number one in educating about the advantages of these cord blood banking
services and then to be the top performer in signing new families to utilize its services.
The Company already has revenues topping $2 million annually.
CEOCFO: Mr. Schissler, what is your vision when you founded
the company and where are you today?
Mr. Schissler: Our vision was to create a company that
made it very easy for consumers to privately store their umbilical cord blood stem cells.
When we were founded in early 2003, stem cell storage was still very new and not heard of
and most consumers had a difficult time linking all the pieces they had together to store
them. Our vision was to make a one-stop, one phone call, all services you need to get your
stem cells stored type of company and we did just that.
CEOCFO: Who is storing
stem cells today; what is the demographic?
Mr. Schissler: It tends to be families, mostly urban or
suburban, highly educated families that are having children and storing stem cells from
the childs umbilical cord, which are a perfect match for that baby.
CEOCFO: How do you keep
them safely and where are they stored?
Mr. Schissler: We store them at the Community Blood
Services of Paramus New Jersey, which is a large not for profit blood bank up in New
Jersey. The stem cells and umbilical cord are cryogenically frozen and the Bergen
Community Blood center has over 20,000 samples stored privately and they have been doing
it since 1996. They hold all the licenses required to do so including the American
Association of Blood banks, The American Association of Tissue Banks, State of NY and NJ
licenses. They are a well-run, highly accredited, highly certified, with a long history of
experience type of lab that stores stem cells.
CEOCFO: How do you
introduce the subject to your customers?
Mr. Schissler: The first way is through direct response
advertising; what that means is through magazine advertising, internet advertising, direct
mail, email, and so forth. That prompts the customers to call into our office and request
information and ask questions. The other way is through the business-to-business channels,
which include OB-GYNS, hospitals and other healthcare influencers, to provide them
information during their prenatal stages whether it be lamaze class, doctors office or a
tour of the facility; that is another time where you can reach the consumer.
CEOCFO: Are the doctors
Mr. Schissler: Some are, some arent. At the end
of the day, this is an elective for the consumer. If the consumer chooses to do so, the
doctors are more than willing to collect the cord blood for the consumer; it
is a very simple procedure. Most doctors do not tend to sell things that are not medically
necessary like a medical procedure that is an elective procedure. They are not
un-receptive; I believe they leave that decision in the consumers hands.
CEOCFO: Will you tell us
about the industry and what part Cord Blood America plays?
Mr. Schissler: In the US there are 25competitors in the
industry that privately bank umbilical cord stem cells; there are also numerous public
donation banks. Cord Blood America is a private bank and the consumers know us as Cord
Partners. There is no industry oversight as of rankings and size of labs and so forth; we
do believe we are in the top 10 of the 25 labs and the number of private storages. The
industry from 2003, to 2005, grew 79% up to about 3 ½ percent of all families privately
banking in 2005. What has happened in late 2005 through 2006 is that we have seen some
slow growth in the industry. It is growing but not at such a dramatic rate. We feel what
has happened in the industry is the earlier doctors, the ones that have to have everything
first, they are in and have bought on to the fact that they need to store their stem cells
and that is great. We are now in a period of creating new incentives, payment plans, and
educational opportunities for families that are not 100% convinced and even more
importantly have the money to store their stem cells to figure out ways to get them
storing stem cells for the family. I consider this like any other industry; this is the
consolidation phase at the industry. The early adopters are in and the masses are not in.
This is when all the original players start to consolidate. Therefore, Cord Blood America
is going to be extremely aggressive in mergers and acquisitions and in fact, we did our
first one in January of 2006; that was the first asset purchase in the industry in over
three years. We have launched the first (inaudible) and we continue to look at mergers and
CEOCFO: Where are your
Mr. Schissler: We have customers all over the country
and all over the world. Some companies market locally and some, like us market nationally.
It depends on the business model; I can name 10 laboratories that just market to the local
doctors and local communities. They have what I call the boutique model and are not highly
profitable, they do not have a tremendous growth curve but they do work a nice business
and local market. By and large, there are about six either large companies or rapid
growers in the industry that market nationally. They go after national audiences or baby
fairs around the country.
CEOCFO: Is it mostly
cost or lack of knowledge that impedes growth?
Mr. Schissler: A bit of both. Families have to equate
cost at the time of birth as to whether or not it is valuable. To talk about stem cells
and how they are used to battle diseases, takes a lot of time and if a family does not
have the time to learn about stem cells, they probably do not equate the value to meeting
it. Stem cells battle cancer and leukemia and they just do the math and say what are the
odds that our child comes down with cancer and leukemia and the odds are fairly slim. We
consider a biological life insurance policy similar to what we are paying for insurance
and other products in our lives. If you are asking a family at the time of birth to spend
anywhere from $1,500 to $2000, usually one of the two parents are not working so there is
less income coming into the house. You are starting to see more people that are not of the
CEOCFO: Tell us about
your new payment plan to increase your reach?
Mr. Schissler: Yes, we have a payment plan of no money
down and $269 dollars a year that we launched in September last year; it helped to grow
our core enrollments through last year by approximately 27%. We reached out to a different
demographic. If you do not have the money at the time of birth, but have a decent credit
history, you do not have to give us any money at the time of birth and you only pay $269 a
year for eighteen years and it is a one-time payment. That makes it a lot more realistic
CEOCFO: You certainly
had good numbers this last quarter!
Mr. Schissler: Yeah! We did. Our revenues were up 71%
over the fourth quarter of 2005. Our gross profit was up 116% over fourth quarter of 2005
and our loss was down 20% over the fourth quarter of 2005.
CEOCFO: Your mission is
to be the most respected stem cell preservation company in the industry; how do you
Mr. Schissler: By making this a consumer based
industry, and providing the education to the consumer so they can make their own
decisions. What has historically happened in the industry is lack of educational
opportunities and more presence in higher sales opportunities by our competitors that
confuse families and storing their stem cells. What we want to do to is become the most
respected and we want the families to know that we are the ones that educated them on stem
cells; why they are valuable and why they should store them. Everyday, by talking to one
family at a time by using a quote by Dean Witter, we talk to one family at a time and
educate them and that is how we become the most respected.
CEOCFO: What is new in
the stem cell area?
Mr. Schissler: There are a few new sources of stem
cells that are getting tremendous amount of publicity and they are doing a tremendous
amount of clinical trials. The first source is adipose tissue stem cells, which are stem
cells from your fat, and they show regenerative traits to be able to grow things such as
bone, and cartilage. There are also adult peripheral stem cells, which are stem cells in
adult bloodstreams that are not concentrated, so they show the same traits as bone marrow
stem cells or umbilical stem cells, which are called Hematopoietic traits, which
essentially means that they repopulate the immune system of the body while a person may
undergo radiation treatment for cancer and leukemia. The Hematopoietic stem cells can
re-populate the immune system, keep the body strong so you can endure the radiation and
CEOCFO: How does that
fit into what you would do?
Mr. Schissler: We actually made an announcement late
last summer that we were going to be storing adipose tissue stem cells and that business
plan is still on track. The laboratory where we will be storing adipose stem cells is
taking a little longer to get the plan approved by all of the accrediting and licensing
facilities. We are still on target for the middle of the summer maybe early August, to be
able to store adipose tissue stem cells as well. We should be the first company to launch
this in the United States.
CEOCFO: Why should
potential investors be interested and what should they realize about the company that they
may not realize at first?
Mr. Schissler: They should be interested in the fact
that stem cells actually dominate the medical news at this juncture and many of the large
companies such as Amgen, Inc. (NASDAQ: AMGN) and Baxter International Inc. (NYSE: BAX)
have launched stem cell initiatives for therapies in the future. The pharmaceutical
companies are starting to realize that stem cells will play an important role in the
future health of America. The other thing they need to realize is that we are growing
rapidly and if you do your due diligence on us vs. a couple of our competitors that trade
publicly, you will see that although they are larger than we are at this juncture, with
our rapid growth rate, you can do your due diligence and realize we are probably an
undervalued stock at this point. That is my speculative opinion. I think investors need to
realize as far as CBAI, and the industry, that unlike the late nineties and the internet
boom, stem cells take time to get through clinical trials so that the new therapies can be
approved and used in patients. We are in those trials now; it could be a couple more years
until we start to see more uses for stem cells. Unlike the 1990s and early 2000s
where computer and software based companies could just pump out new products and services
by hiring new people, we have to allow the due process of nature through clinical trials,
take effect before the stem cell industry shows more promise in battling cancer and
CEOCFO: Do you see this
as standard 20 years down the road?
Mr. Schissler: I do. Before any of us were human
beings, we were 8 stem cells and those cells multiplied into the 208 different types of
cells that we have in our bodies. Theoretically, scientists believe they can take those
cells, which have no identity and recreate almost any human tissue through the proper
channels. Since stem cells are the building blocks of human beings, it all starts with
stem cells. I believe this is the stem cell revolution and through the next forty years
you are going to see many more therapies being developed for stem cell use.
CEOCFO: Any final words
to our readers?
Mr. Schissler: I would like to say thanks to any
investors that are currently invested in CBAI. For the potential investors evaluating us
as an organization, do your due diligence, look at our stock vs. other stem cell companies
in the micro cap and nano cap space and I think you will see that we have a good story to
tell in this space.
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