The Latest on Cytori

by: Mike Havrilla

The stock research section of BioMedReports.com has been updated to reflect the most recent corporate presentation for Cytori Therapeutics (NASDAQ:CYTX), following the company’s presentation at the Rodman & Renshaw Healthcare conference last week. Click here to visit Cytori’s corporate profile page at OneMedPlace, which also includes a video interview with CEO Christopher Calhoun. A special thanks to Cytori’s Director of IR and Media Relations, Tom Baker, for sending me the latest corporate presentation and speaking with me today for this article so that I am able to provide some color and clarity beyond the recent news headlines and developments for the company.

Cytori is a leading global innovator in the emerging field of regenerative medicine using adipose (fat) tissue as a rich source of adult stem cells capable of differentiating into a variety of cell types. The company develops and markets cell banking, therapeutic, and cosmetic medicine applications for its Celution System, which enables real-time regenerative cell therapy applications by harvesting and processing a small amount of patient-derived fat tissue in about one hour to harvest the adipose-derived stem and regenerative cells (ADRCs).

Cytori also offers StemSource Cell Banking for a patient to preserve their own ADRCs for use in the future as ongoing clinical trials establish the safety and effectiveness for cardiovascular disease, breast reconstruction/augmentation, liver disease, kidney failure, orthopedic/spinal disc regeneration, stress urinary incontinence, and gastrointestinal conditions.

Cytori currently offers its products and services in Japan and Europe along with two key strategic partners - Olympus Corp. (OTCPK:OCPNY) (which is a strategic investor, major shareholder with over 4 million shares, and medical device partner for commercial-stage manufacturing of the Celution System) and Green Hospital Supply (OTC:GHSPF) (a strategic investor holding 3M shares and partner for StemSource Cell Banking for hospitals in Japan). Earlier this year, Cytori formed a partnership with GE Healthcare (NYSE:GE) to market the Celution System in Europe for regenerative medicine and cell banking applications.

On 7/17/09, Cytori announced that the FDA will regulate the company's Celution 700 System as a medical device. This determination was made in response to the company’s Request for Designation and clears the way for Cytori to compile and submit a marketing application to the FDA (either a 510k or PMA) for the Celution 700 System seeking marketing clearance as a medical device in aesthetic body contouring and/or filling of soft tissue voids. Cytori stated that it is preparing for the next steps in the process of working with the FDA to determine the specific device marketing application to submit, including whether clinical trials will be necessary for U.S. marketing clearance of the Celution 700 System.

Marketing applications for the Celution 700 device will be reviewed by the Agency’s Center for Biologics Evaluation and Research under the law applicable to medical devices. Clinical investigations, if required, would be conducted in accordance with the Investigational Device Exemption (IDE) regulations, not the Investigational New Drug (IND) regulations applicable to drugs and biologics. More detail on the FDA strategy and timeline is expected by early 2010, with the 510(k) route representing a quicker process that would be predicated on the cosmetic medicine process known as autologous fat transfer, with the advantage of enhancing this process through ADRCs.

The company is targeting 100 actively (e.g. 3-4 times weekly) installed Celution Systems to achieve profitability, although a more likely scenario is to have more systems in use, but used less often as part of the company’s commercial-stage (key approvals in Japan and Europe) razor / razor blade business model for Celution and associated consumables. Cytori’s business model for potential recurring revenue per year based on an installed base of 100 systems used three times weekly includes $30 million in revenue with average pricing of $2,000 per consumable and $300,000 per device.

Cytori has established a fiscal year 2009 revenue goal of $10 million, which represents more than 2X the year-ago period – resulting in a 50% reduction in cash operating loss. The company is also targeting a cash burn rate objective of $1.2 million per month during 2H09 and currently has about 36.8 million shares outstanding as of 7/31/09 with $16.4 million in pro-forma cash and $1.5 million in accounts receivable as of mid-year.

Because of the high estimated cost for future clinical development of cardiac indications (acute – heart attack, chronic – ischemia), Cytori is open to partnerships pending the outcome and presentation of two ongoing studies at the appropriate venues during 1H10 (with more details expected in the coming months for presenting this clinical data).

On 9/14/09, Cytori reported results from a preclinical study on the use of uncultured ADRCs in the treatment of critical periodontal defects in a rat model. The results suggest that the use of ADRCs may reverse the effects of periodontal disease, evidenced by significantly improved alveolar bone healing and decreased gingival (gum) invasion of the defect, and the data were reported today at the 95th Annual Meeting of the American Academy of Periodontology in Boston.

On 9/9/09, Cytori announced its fall medical conference presentation schedule, including the San Antonio Breast Cancer Symposium (December 9-13) presentation of

  1. interim, rolling six-month results on patients from the RESTORE-2 study and
  2. preclinical data will be presented on the mechanisms by which ADRCs safely enhance fat grafting.

Cytori expects to present six-month data for 15-30 patients while final, 12-month data on all patients is expected in early 2011.

The ClinicalTrials.gov identifier is NCT00616135 for the RESTORE-2 study, which is a European study designed to evaluate the transplantation of ADRC-enhanced autologous (patient-derived) fat tissue into and around breast deformities. Data from this post-marketing study will also be used to support market adoption and insurance reimbursement for the procedure.

On 5/27/09, Cytori announced that it completed enrollment in the first study to investigate adipose derived stem and regenerative cells in chronic heart disease. The trial, which has been named the PRECISE study, was carried out at leading cardiology centers in Europe. It specifically enrolled patients suffering from an advanced form of chronic heart disease, known as chronic myocardial ischemia, for which there is no generally accepted treatment. The trial enrolled 27 patients and was designed as a double-blind, randomized, placebo controlled, dose escalation study.

The primary objectives of the study were to assess safety and feasibility of Cytori’s Celution System as part of a novel procedure for chronic heart disease. The company believes it will be able to fully assess these primary objectives with the data obtained from 27 patients (the protocol allowed for up to 36 patients). Further, the independent data safety and monitoring board had not identified any safety concerns relating to the Celution output or the procedure. Six month results are expected during 1H10.

On 5/28/09, Cytori announced the publication of the first preclinical study to demonstrate ADRCs significantly improved cardiac function after a heart attack. The APOLLO study is the first clinical trial to investigate uncultured ADRCs in heart attacks in human patients. Enrollment has been completed in APOLLO, which is a double blind, placebo controlled, safety and feasibility trial. Data from this study are also expected to be reported during 1H10.

In addition to the pending clinical trial results outlined above, Cytori is focused on clarifying the U.S. regulatory strategy for its Celution System with the FDA and expanding the approved indications in the European market, in addition to a focused marketing campaign in the EU – targeting plastic surgeons for a significant market opportunity in the breast augmentation market. With Johnson & Johnson (NYSE:JNJ) paying over $1 billion for breast implant maker Mentor, the most interesting application of the Celution System may be for cosmetic medicine in the form of breast reconstruction and augmentation procedures.

Disclosure: Long CYTX.