Celebrating the 20th Anniversary of REPROCELL: A letter from our CEO Chikafumi Yokoyama

On February 26, 2023, REPROCELL celebrated its 20th anniversary.

I would like to express our sincere gratitude to our customers who use our products and services, our shareholders who have invested in us with high expectations for our future, our partners who have worked with us in joint research and collaboration, our associates and board members who have worked hard to grow the company, and all those who have contributed to us in various ways. It is my great pleasure to celebrate REPROCELL's 20th anniversary together.

I would like to share with you the story of REPROCELL's 20th anniversary, from its foundation to the present day, as well as its future.

From the foundation to the birth of iPS cells (2003-2006)

REPROCELL was founded in 2003 to commercialize the stem cell technology of Prof. Norio Nakatsuji of Kyoto University and Prof. Hiromitsu Nakauchi of the University of Tokyo. 2003 was the year when Prof. Nakatsuji succeeded in establishing the first human embryonic stem cells (ES cells) in Japan, and regenerative medicine began to attract attention. ES cells, like iPS cells, have the ability to change their shape (differentiation) into various types of cells, including nerve cells, heart muscle cells, and liver cells, and were called "pluripotent stem cells". On the other hand, because ES cells are established from fertilized eggs that are no longer needed for fertility treatment, ethical considerations made it difficult to conduct research on ES cells. For this reason, researchers around the world have been trying to create new pluripotent cells from normal cells such as blood and skin (somatic cells), and the initial goal of REPROCELL was to create such "new pluripotent stem cells". The name "REPROCELL" is derived from Repro (reprogramming) + Cell, which means "new pluripotent stem cells".

As a result, this new pluripotent stem cell was invented by Prof. Shinya Yamanaka of Kyoto University in 2006 and named "iPS cells". This major scientific breakthrough occurred only three years after our company’s establishment, but it would significantly change the direction of REPROCELL.

From commercialization of iPS cells to IPO (2007-2013)

After the invention of iPS cells, REPROCELL set its sights on commercialization. Since 2003, our research and development activities using ES cells had contributed significantly to the discovery of iPS cells and REPROCELL was well positioned to become the leading commercial organization.

In 2003, regenerative medicine attracted much attention, but after talking to many researchers and reviewing the regulations, I realized that it would take a considerable amount of time to commercialize a regenerative medicine. Therefore, instead of pursuing regenerative medicine as a single pillar of the business, REPROCELL also built pillars in the supply of research reagents and technologies to enable drug discovery, to better support researchers in academia and pharmaceutical companies. We decided to wait for "the right time" for regenerative medicine.

REPROCELL's first product was "Primate ES Cell Medium", a culture medium exclusively for human ES cells, which was commercialized from Prof. Nakatsuji's human ES cell technology. Since iPS cells have very similar characteristics to ES cells, our human ES cell culture medium also became a human iPS cell culture medium.

In addition, human ES cell-based drug discovery research and development has been conducted since the establishment of our company. Specifically, we have developed technologies to generate cardiomyocytes, neurons, hepatocytes, and other cells from ES cells and use them to screen for new drugs. As a result of these years of research, by applying the ES cell technology to iPS cells, we rapidly succeeded in developing human iPS cell-derived cardiomyocytes, neurons and hepatocytes. In 2009, we launched "iPS cell-derived cardiomyocytes (product name: ReproCardio)" as the world's first iPS cell product, and subsequently succeeded in commercializing nerve cells and liver cells for the first time in the world.

On the other hand, while we were pursuing the commercialization of iPS cell products, the fundraising environment deteriorated sharply after 2007, resulting in a biotech “ice age” and the financial crisis precipitated by the collapse of Lehman Brothers in 2008. REPROCELL also faced extreme difficulties in raising funds, and like many companies investing heavily in R&D, our cash position came under strain, but thanks to the cooperative investment of some partner companies, we were able to successfully commercialize iPS cells. Along with the growth of the iPS cell business, these successes meant we were able to list on the JASDAQ Growth stock exchange in 2013.

From IPO to overseas expansion (2014-2018)

Going public was not our end-goal, but the beginning of a new phase of growth in the company. Our first step after the IPO was to expand overseas by acquiring four companies in 2014: Bioserve (US), Stemgent (US), Reinnervate (UK) and Biopta (UK) in 2015. The two U.S. and two U.K. companies were then merged to form REPROCELL USA and REPROCELL EU, respectively. Overseas expansion has been one of our key strategies since the foundation of the company, but due to financial issues we were unable to do it until we went public.

The largest markets in the pharmaceutical and biotech industries are the U.S. and Europe, where the size and number of pharmaceutical companies and biotech companies are much larger than in Japan. Therefore, it was obvious that if we focused solely on the Japanese market, growth would soon come to a halt. Our overseas expansions, with sites in the U.S. and Europe, had a significant impact on our subsequent growth.

In addition to geographic expansion, we were also able to significantly broaden our business value chain. For example, iPS cells require three basic technologies:

1. tissue procurement — the original core business of Bioserve
2. generation of iPS cells by reprogramming- developed by Stemgent
3. differentiation into various types of target cells- developed by REPROCELL

By combining these three elementary technologies, a series of value chains from upstream to downstream of iPS cells were established. Thus, through overseas expansion, we were able to expand geographically and simultaneously establish a value chain.

Furthermore, in 2014, we established a corporate venture capital (CVC) with Shinsei Corporate Investment, a subsidiary of Shinsei Bank, and invested mainly in overseas regenerative medicine companies. Among the investees were Steminent in Taiwan and Histocell in Spain, which later became important business partners, and the CVC enabled us to further accelerate its overseas expansion.

Start of regenerative medicine business (2018-present)

It was in 2014 that we decided to fully enter the regenerative medicine business, which we had temporarily put on hold in 2003 because we thought it was premature. It had been more than 10 years since the company was founded. The trigger was the new law in Japan on regenerative medicine that came into effect in 2014. This law differentiated cell-processed products from pharmaceutical drugs and medical devices and created a third category of "regenerative medicine products". It also introduced a new "conditional and time-limited approval system" for regenerative medicine products, making Japan the most conducive environment for the industrialization of regenerative medicine in the world.

REPROCELL's original strength is iPS cells, but to commercialize regenerative medical products in the short term, we decided to first introduce Stemchymal (adipose-derived stem cells), a regenerative medicine product from Steminent, and conduct clinical trials and commercialization in Japan. The target disease is spinocerebellar degeneration, one of the designated intractable diseases. At that time, the Phase I clinical trial in Taiwan had been completed and had shown positive results in inhibiting the progression of symptoms, so we decided to go into an exclusive business alliance with Steminent, a company we had met through CVC, with the aim of commercializing the product in Japan.

The Phase II clinical trial in Japan started in February 2020 and was completed in May 2022, including the observation period for all subjects. Data analysis and evaluation are underway, and we will proceed with regulatory submission to make REPROCELL‘s first regenerative medicine product.

Regarding iPS cells, our major strength lies in our 20 years of accumulated research and development and our comprehensive possession of technologies, including the value chain acquired through overseas acquisitions. In particular, the technology of "reprogramming", the process of producing iPS cells, will be an important factor in the commercialization of regenerative medicine. Since Prof. Yamanaka's first report in 2006, various improvements in reprogramming have been made around the world. We have the most advanced RNA reprogramming technology, which minimizes the risk of gene mutation and, of all the available technologies, it has the lowest risk of introducing foreign genes and viruses. This technology is similar to the mRNA vaccine for coronavirus vaccine. Using this technology, iPS cells can be produced safely and optimally for clinical application.

We are applying this technology to the research and development of iPS cell-derived neuroglial cells for the treatment of amyotrophic axon sclerosis (ALS), an incurable disease. This project was also selected for the "Basic Technology Development Project for the Industrialization of Regenerative Medicine and Gene Therapy," an AMED public call. In addition to ALS, the neuroglial cells are also applicable to various neurodegenerative diseases, and we plan to broadly expand the application of these cells in the future.

In addition to the iPS cell regenerative medicine business, we are also developing a new business of a CDMO for iPS cell-derived regenerative medicine products. REPROCELL will derive clinical-grade cells from donors who have given informed consent for commercial use and produce clinical-grade iPS cells with minimal risk of genetic mutation using the RNA reprogramming method. The clinical-grade iPS cells will be made widely available through the Industry Alliance Program of the California Regenerative Medicine Organization, the world's largest organization supporting regenerative medicine. In addition, through alliances with BioBridge (U.S.) and Histocell (Spain), we will provide integrated services from the clinical use of iPS cells to the differentiation into various types of cells to manufacture regenerative medicine products.

In this way, we have been able to expand our partnerships through overseas expansion, enabling us to make great strides in the regenerative medicine business both geographically and technologically.

The next 10 years

Looking back over the past 20 years, the 10 years leading up to our IPO were a start-up period, as we built everything from zero, and we experienced various growing pains, but the fruits of these efforts have become the backbone of REPROCELL. In the 10 years since the IPO, we have accelerated our businesses, including overseas expansion and the start of our regenerative medicine business. From 4 million USD sales in FY ended Mar 2014, when the company was listed, sales increased nearly five-fold to 20 million USD in FY ended Mar 2022, with overseas sales accounting for 45% of total sales. In the field of regenerative medicine, Stemchymal, iPS cell-derived neuroglial cells and iPS cell CDMO businesses are growing as our core businesses.

For the next 10 years, we will continue the same growth strategy. In particular, we will focus on the regenerative medicine business and establish our position as one of the top regenerative medicine companies with many innovative regenerative medicine products.

In addition, we have also launched various new businesses, including coronavirus PCR tests (Japan), personal iPS (Japan), companion diagnostics for cancer (India) and precision medicine with AI technology (UK). We will continue to strengthen and expand our new business portfolio.

Finally, I appreciate very much all of our customers, shareholders, partners, executives, and associates for their great support over the past 20 years. I look forward to your continuous support.

Chika Yokoyama
Chief Executive Officer
REPROCELL Inc.