StemTech Lab Licensing Program
StemTech Labs is introducing a program by which satellite labs are built in foreign sites. StemTech has been producing two types of stem cells from discarded human umbilical cords and cord blood. These cells have proven, in international as well as our own experience, to be quite effective and safe in a number of different health conditions. StemTech also realizes that having laboratories in individual states and countries would increase their availability, help more people, avoid the problems of transportation and importation of such sensitive live cells. In particular, keeping the cells within the bounds of one state removes jurisdiction from Federal agencies, such as the Food and Drug Administration and the Federal Trade Commission.
Some desire to establish a stem cell treatment center, as well as the production lab. One lab could supply many treatment centers. Our intention is to provide labs in individual states, on a first-come, first-served basis, so that there will not be excessive competition for the existing market. We will continue a system-wide marketing program, which will provide demand for the product.
Cost: Base price for intellectual property, training, equipment and supplies is $250,000 (see break down below). We have designed this program, to include a year’s salaries for three technicians (one PhD and 2 BS degrees). Therefore, to this is added $110,000 for a PhD level microbiologist, and $70,000 each for two other microbiologists. This adds an additional $250,000 to the purchase price. If the cost of business in your area is significantly higher (rent, wages), then the price can be raised to accommodate that. This price includes protocols, training, laboratory equipment, including a flow cytometer, furnishings, a clean room, laboratory construction costs, supplies for the first 100 cord units, operating capital, money for purchasing or compensating donors, insurance, legal support, wages and rent for 3 months, and the first year’s franchise fee of $35,000. By the time that these supplies are consumed, there should be plenty of revenue to purchase more. Purchase of real estate for these laboratories is be beyond the scope of this franchise, but could be accomplished by modifying this plan.
Research-level labs will also be available, for an additional cost. These may also be financed by the same organization. We will have one research lab for each ten production labs. Production labs would partially support the research labs, and intellectual property would be shared throughout the system.
The above price does not include: full research lab capabilities, vehicles, income or other taxes, back-up power, or real estate, but does include several months rent or real-estate payments. Real-estate can also be financed.
Franchisee obligations include assistance with hiring, licensing, coordination with local medical personnel, including at least one licensed physician to order supplies, procuring a contract for cords, and local marketing. Franchisee will also provide a 10% licensing fee for each stem cell unit sold. Lab is designed to fit in a 700 ft2 office or lab space.
Projected profits operating at a low level (2 cords per day) would yield over $1 million yearly, and expansion up to 8 cords per day ($5 M per year) could be done with this lab.
Stem Tech Production Lab Licensing Plans
1) Franchising plus full production lab
- Build-out of your space into a functioning lab.
- Full laboratory equipment, furniture, clean room, and administrative area furniture.
- Supplies for first 100 cords processed.Quantity discounts for some supplies and equipment
- Proven protocols and techniques.
- Training on site or at another lab.
- StemTech will monitor your products’ quality.
- Continual process improvement from sharing research with various labs.
- Access to our markets:
i. Sales - Access to our IRB and grants.
- Franchisee’s ownership only valid for the year franchise fee is paid:
i. Franchises are renewable, subject to quality and performance conditions. - Group legal support.
- Competitive salaries for three employees.
2) Franchising only—if you already have a lab, $35,000 per year for franchising it as part of StemTech Labs
You get:
- Proven Protocols and techniques.
- Help in setting up lab, choosing equipment, etc.
- Quantity discounts for some supplies and equipment.
- StemTech will monitor your products’ quality.
- Continual process improvement from sharing research with various labs.
- Access to our markets.
i. Sales: - Access to our IRB and grants.
- Access to on-site training and supervision (costs extra).
- Franchisee’s ownership only valid for the year franchise fee is paid:
i. Franchises are renewable, subject to quality and performance conditions. - Group legal support.
3) Licensing fees: $250 per unit sold at full price (10%).
- Excludes stem cells used in-house for research.
- $250 licensing fee for cells used by staff for themselves, families, etc.
- $250 licensing fee for repeat sales @ 50% discount.
- Still should give $2000 profit for each full price unit sold.
- Sell 12 units and make back all of franchising fee.
4) Marketing
- If quality is good, StemTech will purchase and market stem cell units to other physicians.
- No guarantee that all of your product will be sold.
- Interstate marketing may remove exemption from FDA jurisdiction.
Potential Revenue for franchisee--Reasonable full-scale production.
- Production: 4 cords per day x 20 days/month = 80 cords/month (could expand up to 8 cords/day)
- Sales:
i. 4 cords per day x 20 days/month = 80 cords/month
ii. Sales of 80 cords/month at $2,500 ea = $200,000 per month
iii. Total sales $200,000 per month - Costs:
i. Minus Licensing fee of $40,000 Full cost sales
ii. Minus estimated costs of production @ $500 per cord=$40,000
iii. Total costs: $80,000 - Profit: $200,000 - $80,000 = $120,000 per month, or $1.44M per year.
