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StemCell United shares surge on securing five-year resina supply contract

The company’s shares are trading 28% higher intra-day, at 3.2 cents.
Traditional Chinese medicine
Traditional Chinese medicine is a sizeable opportunity

StemCell United Ltd (ASX:SCU) has delivered an initial one tonne of Daemonorops Draco Blume extract (resina) as part of a contract to supply 50 tonnes to Zhejiang Forest Rainbow Medical Co Ltd of China over five years.

Resina is extracted from Daemonorops Draco Blume, a plant that grows in the tropical rainforests of Indonesia.

Traditionally, resina is used to assist blood circulation, stop bleeding, alleviate pain caused by injuries and to promote tissue regeneration.

Resina final extract product

StemCell is a bio-technology company focused on the growth, reproduction, culture and extraction of stem cells, but its role in this contract is limited to supply chain management and quality check.

The company will procure the resina powder from its Indonesian agents, ship it to subcontractors for extraction of the active ingredient (Dracohodin) and then process the powder into cakes.

The raw material for resina is procured from various Indonesian agents and purchase orders will be issued as and when Zhejiang Forest requires it for production.

Zhejiang Forest is a major importer and distributor of medical equipment and TCM (traditional Chinese medicine) products in China.

First shipment has complied with the Chinese safety standards

StemCell will provide instructions on the extraction techniques to its subcontractor and monitor the quality control during the whole process.

The completed products (cake form) will be shipped to StemCell operation in Singapore for final quality check before shipping to China.

StemCell’s first shipment has complied with the Chinese safety standards and been released to Zhejiang Forest on 9 July 2018, thereby validating the contract.

Traditional Chinese medicine is a big opportunity

The agreed unit price of resina is US$200 per kilogram, or US$200,000 per tonne and is subject to change according to market price. StemCell expects to have a profit of about US$40,000 per tonne.

StemCell chief executive officer Philip Gu said: “SCU has a proven track record in producing and marketing high quality Daemonorops Draco Blume extract and securing this contract is further validation of opportunities in the multi-billion dollar global health market to commercialise our proprietary stem cell technology and generate substantial revenue from Traditional Chinese Medicine products.”

Commercialising cannabis stem cell extraction technology

In parallel to today’s first shipment of resina, StemCell is uniquely positioned to commercialise the use of its proprietary technology for cannabis stem cell extraction in cooperation with Yunnan Hua Fang Industrial Hemp (HFIH).

HFIH is StemCell’s close working partner and obtained its inaugural industrial hemp licence in China in June this year.

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