When Heidi Hayes and her husband were trying to have a child, they spent thousands of dollars, in vain, on fertility clinics. Eventually they adopted, and later had twins thanks to an egg donor. But the arduous process led Hayes to a less expensive, more convenient idea. In 2010, she and reproductive endocrinologist Michael Levy founded Donor Egg Bank USA, the first company to distribute vitrified eggs to other fertility clinics. The company allows women to vet donor profiles and buy eggs online. After raising $1.25 million and starting with 13 partner fertility practices, it has expanded to 50 practices, capturing a third of the market.
By 2016, Donor Egg Bank USA had sent more than 3,200 sets of eggs to women who have given birth to some 1,500 children. The firm reached $17 million in annual revenue before being acquired by California Cryobank, one of the world's largest sperm banks, in a multimillion-dollar deal in December.
Inc.: What makes your technology so disruptive?
Hayes: Donor Egg Bank USA was the first fertility practice to send vitrified eggs to other clinics successfully. After that, a number of other companies joined the market. There are about four egg banks that dominate the space; we have about a third of the market. Egg freezing has been around a long time, but the method of slow cooling did not have a high success rate. In 2009, doctors started making advancements in vitrification, or rapid freezing. Vitrification uses cryoprotectants, which are chemicals that prevent water molecules from turning into ice crystals, protecting the integrity of the genetic material. As soon as doctors started using vitrification, the success rate for pregnancies and births from donated eggs increased dramatically.
How does partnering with fertility practices around the country work?
Michael Levy, my business partner, and I got together and decided we could revolutionize the fertility world by making the use of an egg donor more affordable and eliminating issues related to geography. With fresh eggs, you do not have many choices, because you need to find someone in your general area who is willing to sell her eggs and commit to all the doctor visits, get your menstrual cycles synchronized, and be on call for the transfer. But with Donor Egg Bank USA, geography isn't a factor anymore. Women can buy eggs from a donor anywhere in the country. We wanted to create a model similar to the sperm bank by opening a network of fertility practices around the country, all collaborating and sharing resources. Women find the donor they want online from a pool of diverse donor profiles. Then, we will ship an egg lot (six to eight eggs) to their fertility practice. Women can buy a frozen egg for $1,350. A full treatment cycle costs $17,000 to $21,000. (Fresh human eggs sell for $30,000 to $50,000.)
Why did you sell, and how did you decide on the buyer?
We weren't looking to sell, actually. California Cryobank approached us. California Cryobank also banks blood, but they wanted to start an egg bank. They found us, and we met with them, but we said we weren't for sale. Almost seven months later, they came back to us with a serious offer. The dance and negotiation took place, but in the end the price was right. Most important, the culture was a fit. California Cryobank is a large organization, but they have a culture of sharing resources and collaborating. Plus, it's a leader in the industry and helps set standards.
How do you price a new company with a novel technology?
You have to price it for where you expect it to be in the future. We didn't follow the traditional business rules to calculate the multiple of revenue. We priced the business for what we knew its potential to be years down the road.
Vitrification is relatively new. Can you tell us about starting a business with an experimental technology?
Egg vitrification was considered experimental until 2012, when the American Society for Reproductive Medicine ruled that it was no longer experimental. We launched in 2010, and started shipping to the public in 2012, before the experimental label had been removed. It took a while to persuade fertility practices to partner with us for the treatments. But we were able to show 13 practices that we had a technology that was going to disrupt the market. Still, it was nerve-racking to have the experimental label. In March 2012, we shipped the first egg lot. We weren't confident that we could ship vitrified eggs, but the eggs kept their integrity during transit. Our second shipment resulted in twins being born. At that point, we knew the treatment was going to be revolutionary.
How many women have a successful treatment?
About 50 percent of women give birth after the first cycle; 90 percent of women who enter our program will bring home a baby. But we have a 100 percent money-back guarantee for up to six cycles.
How did it feel to sell your company?
It was exciting, but it was sad, too. It felt as if I had sold a house that I built and loved living in. But I now run the egg division of California Cryobank. The future is bright, as I'm part of a bigger company that is about helping families.
Cryopreservation: How to stop biological time
Assisted reproductive technology has made great strides since Robert Edwards and Patrick Steptoe pioneered in vitro fertilization. Their technique, which involves taking a woman's mature oocyte (egg) and fertilizing it with sperm in a petri dish to form an embryo, led to a U.K. woman's giving birth to the first "test tube baby" in 1978.
The practice of freezing a woman's eggs started in the 1980s, and the first birth using that method occurred in Singapore in 1986. But slow freezing can damage the female gamete as ice crystals form and squeeze the genetic material. Doctors then started exploring vitrification, a type of flash freezing combined with the use of cryoprotectants that preserves genetic material at minus 196 degrees Celsius without allowing ice formation. The first baby from a vitrified egg was born in 1999, in Italy.
Vitrified eggs have a higher chance of survival than slow-freeze eggs, but the earliest cryoprotectants were often toxic and high survival rates remained elusive. Japanese embryologist Masashige Kuwayama made further advances in cryopreservation while working with bovine and porcine oocytes in 1991. He eventually achieved a 95 percent egg-survival rate.
In 1998, Kuwayama started testing on human oocytes and embryos. The first birth using his method came in 2002 in Japan; the first U.S. birth using it followed in 2003. Kuwayama has continued to refine the procedure, with survival rates now approaching 100 percent. Donor Egg Bank USA and embryologists in 40 countries use it. According to Kuwayama, more than 300,000 children have been born from vitrified oocytes or embryos.