2 Small-Cap Healthcare Companies Investors Should Consider Based On Recent Developments

Includes: CRMD, CYTX
by: Matt Schilling

On Thursday October 11th, two companies within the healthcare sector announced significant developments that have sent shares considerably higher during today's intraday session. The first of these companies announced a development with regard to meeting European compliance requirements and the second announced it has initiated its Athena clinical trial.

CorMedix (NYSEMKT:CRMD), which is headquartered in Bridgewater, New Jersey, is "a development stage pharmaceutical and medical device company focused on developing and commercializing therapeutic products for the treatment of cardiac and renal dysfunction, primarily in the dialysis and non-dialysis areas. The company's principal product under development includes CRMD003 (Neutrolin) for the prevention of catheter related bloodstream infections and maintenance of catheter patency in central venous catheters used for vascular access in hemodialysis patients. Its products also include CRMD004, a pressure sensitive gel that is in pre-clinical Phase." (Profile: Yahoo Finance).

One of the company's main goals has been to achieve European regulatory compliance with regard to obtaining the ISO 13485:2003 certification. It was announced earlier today that CRMD has taken a number of steps to ensure that such compliance requirements have been met. This certification opens a critical door for the company, and gives it the ability to engage in the sale of medical devices throughout the European Union. Such a development is a positive catalyst for potential shareholders simply because it has the ability to significantly affect CRMD's bottom line over the next few years.

Cytori Therapeutics (NASDAQ:CYTX), which is headquartered in San Diego, California, "engages in developing cell therapies based on autologous adipose-derived stem and regenerative cells (ADRCs) to treat cardiovascular disease and repair soft tissue defects. It offers Celution 800 System on a pre-launch basis, which is used for certain soft tissue procedures, including breast reconstruction; sells Stem Source cell banking line, encompassing three product configurations, to hospitals, plastic surgery clinics, tissue banks, and stem cell banking companies; and commercializes Puregraft System that is designed to streamline the fat graft preparation process by selectively washing and filtering the tissue to remove contaminants in a closed sterile field." (Profile: Yahoo Finance).

The big news out of Cytori came when the company announced that it had treated its first patient in its US-based heart failure clinical trial. According to an article featured on Business Wire, "the trial will measure several endpoints, including peak oxygen consumption (VO2 Max). VO2 Max is an objective functional measurement that can be predictive of outcomes in heart disease, including mortality, and is commonly used as a primary determinant for qualifying patients for heart transplantation. Additional endpoints include perfusion defect, left ventricle end-systolic and diastolic volume and ejection fraction at six and 12 months. ATHENA will also evaluate medical economic factors such as rate of re-hospitalization and heart failure symptoms such as angina and quality of life at 12 months." If CYTX can meet all of the endpoints with regard ATHENA, including preservation of a patient's life through the procedures administration, potential investors have a great opportunity to get in while the iron is hot. I strongly believe that a successful clinical trial (though each phase) could untimely result in any number of positive outcomes that include but are not limited to the idea of an acquisition, enhanced quarterly and annual results, and exponential growth if and when such a procedure is approved by the FDA.

Should potential investors consider positions in Both CorMedix and Cytori based on the recent developments at each company? Yes they certainly should. The potential at CorMedix will directly affect earnings considering the fact the company has met compliance requires for an ISO 13485 certification. The potential at Cytori opens the door to a number of possibilities that are all heavily dependent on the success of the company's ATHENA trials.

Are there any negative catalysts potential investors should consider before establishing a position in either company? As is the case with any small-cap company, potential investors need to keep in mind some of the negative catalysts that go hand-in-hand with both CorMedix and Cytori. In the case of CorMedix, ISO compliance can mean some pretty things for the company's bottom line, but if sales expectations fall short or if there is either an EU or US rejection with regard to CRMD003 or CRMD004, the stock could be in for a serious haircut. In the case of Cytori, the one thing potential investors should keep in mind is the fact that ATHENA is still in its early stages and therefore any number of things could go wrong, such as an unexpected increase in patient mortality. Though not intended to deter potential investors these are variables that must be taken into account before an investment decision is made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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