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Cord Blood Registry: Investing in Life Sciences

March 29, 2016

In the late 2000’s, in an effort to expand the firm’s domain expertise in the healthcare industry, GTCR began to dedicate significant time and resources towards evaluating investment opportunities in the life sciences sector. Much like the pharmaceutical sector, GTCR identified life sciences as an attractive area for investment given its significant market size, compelling industry dynamics and strong growth outlook. The firm’s proactive effort eventually led to a relationship with Geoff Crouse, a life sciences industry veteran with prior experience at Roche, Millipore and Immucor. GTCR began formally working with Mr. Crouse in 2011, evaluating numerous potential investment opportunities before identifying stem cell cryopreservation and storage as an attractive, niche sub-segment within life sciences. As a result, in October of 2011, we began to engage in discussions with the founder and CEO of Cord Blood Registry (“CBR”) on a proprietary basis about a potential transaction. Nearly one year later, in September of 2012, GTCR acquired CBR. As part of the transaction, Mr. Crouse assumed the role of CEO and the founder transitioned to a Board role.

Founded in 1992, CBR is a market leader in the collection, processing and storage of umbilical cord blood and tissue stem cells, enabling families to preserve these cells for potential future use by a child or a related family member. Cord blood stem cells have well-established medical applications in a range of diseases, including blood cancers that required regenerating healthy blood and immune cells after chemotherapy. In addition, stem cells derived from cord blood and cord tissue have demonstrated therapeutic potential in experimental treatments for regenerative medicine applications, such as brain injury, cerebral palsy and hearing loss. CBR is dedicated to supporting the clinical application of cord blood and cord tissue stem cells by partnering with institutions to establish FDA-regulated clinical trials for conditions that had no known cure.

CBR’s attractive commercial model – comprised of an upfront processing fee and long-term annual storage fees – provides strong revenue visibility and recurring cash flow, with minimal customer attrition. The investment thesis in CBR was based on GTCR’s belief that the company was well positioned to drive continued profitable growth of the installed base and benefit from the compounding of long-term storage revenue.

During GTCR’s ownership, the firm worked with Mr. Crouse to recruit a senior management team, transform the digital marketing strategy and build upon CBR’s commercial leadership position. By further refining CBR’s sales and marketing infrastructure, CBR enabled more effective communication with expecting families and OB/GYN physicians, thereby enhancing the consumer health and maternal health brands.

GTCR and Mr. Crouse grew the CBR installed base to over 600,000 units, and reached an important milestone – helping more than 300 families use their cord blood stem cells for established and experimental medical treatments. In addition, CBR invested resources to expand the potential scope of newborn stem cell therapies for availability to patients and their families through FDA regulated clinical trials.

In July of 2015, CBR entered into an agreement to be acquired by AMAG Pharmaceuticals, a publicly-traded specialty pharmaceutical company, as part of a strategy to build its maternal health business.