Henry McCusker's  Instablog

The FDA has granted Cytori marketing clearance for the PureGraft™ System. CYTX will launch the first and only device in the United States cleared for aesthetic body contouring using autologous fat. PureGraft™ allows a patient’s own fat tissue to rapidly be prepared in approximately 15 minutes for re-injection back into the same patient for aesthetic contouring.

• This clearance provides CYTX with a new product for addressing the cosmetic and reconstructive surgery market in the US and  a strategically important product that helps establish and grow relationships with plastic and cosmetic surgeons.  Upon clearance in the EU; PureGraph  will offer a complementary product to the tissue processing systems already cleared in Europe,
• PureGraft™ is able to prepare both small and large volumes of fat grafting tissue ranging from 50 mL to 250 mL.  Puregraft™ maintains sterility while optimizing the yield of tissue to be grafted, which provides significant utility to physicians. In contrast to traditional methods of graft preparation, PureGraft™ washes the graft and drains the tumescent fluid, free lipid and debris in a closed sterile system, allowing for a cleaner graft in less time than it would take to prepare a comparable volume of graft tissue traditionally,
• There are several advantages this product offers physicians performing autologous fat grafts, which can improve efficiencies in the operating room, decrease surgery time and, by being able to process greater volumes, to include large defects,
• PureGraft™ will be sold in the United States directly by CYTX as well as through select distribution partners on a non‐exclusive basis. The product will be available in Q1/10 and will be formally launched at the American Society of Aesthetic Plastic Surgeons in May 2010,
• Cytori is also seeking marketing approval (CE Mark certification) for PureGraft™ in Europe, which is expected in the first half of 2010. In Europe, PureGraft™, in addition to being sold as a standalone product will be used to complement Cytori’s currently available autologous tissue processing system asa means to expand the potential number of clinical applications,
• According to the American Society of Plastic Surgeons’ most recent report of Plastic Surgery Statistics, over 46,000 fat grafting procedures were performed in the US in 2008.  Currently, over 5,000 plastic surgeons are registered with the American Society of Plastic Surgeons.

The Bottom Line: Pre-open 1/8/10, CYTX is trading at $6.48, a market cap of $251.12 M with an enterprise value of $244.02 M; outstanding shares are listed at 36.75 M with a float of 29.79M shares.  Hopefully, Q4/09 sales of systems should track with expectation; the current sales cycle has been extremely slow for many companies.

• What I  – still truly like is that 24.24 % of the stock is held by insiders while 27.70% is held by institutions,
• Our new target price has been pegged at $8.00  in a cursory review – without a full model.

Cytori Therapeutics is developing treatments of cardiovascular disease, spinal disc degeneration, gastrointestinal disorders, liver and renal disease and pelvic health conditions.  CYTX engages in the development, manufacture and sale of medical technologies to enable the practice of regenerative medicine. (http://www.cytoritx.com )

Athersys (ATHX) is a bio-pharmaceutical company engaged in the discovery and development of therapeutic product candidates designed to extend and enhance the quality of human life. ATHX is developing MultiStem, a patented adult-derived “off-the-shelf” stem cell product platform for multiple disease indications, including damage caused by myocardial infarction, bone marrow transplantation/oncology support, ischemic stroke and other indications. (www.athersys.com)

Updates from our posts: 10/29/09 and 11/6/09.

Pfizer Inc (PFE) is buying the rights to a stem-cell therapy to treat inflammatory bowel disease from ATHX. PFE will pay ATHX $6 M initially and up to $105 M in the future.

http://www.nytimes.com/2009/12/21/business/21pfizer.html?_r=1&hp

The relatively small payment reflects that “it’s really early for cell therapy and there’s more research to be done,” said Ruth McKernan, chief scientific officer of Pfizer Regenerative Medicine, a unit created by the company about 18 months ago to develop treatments based on stem cells. ATHX’s cells, derived from human bone marrow; have not yet been tested in people with inflammatory bowel disease, a term that encompasses ulcerative colitis and Crohn’s disease. But the product, called MultiStem, is in early human testing as a treatment for heart attacks and for cancer patients receiving bone marrow transplants. PFE and ATHX envision the cells being infused into patients not to replace damaged tissue but rather to produce various proteins that would help existing tissues heal or prevent them from being damaged. Stem cells derived from adult tissues, like MultiStem, are less ethically controversial than stem cells from human embryos. But MultiStem has been dogged by scientific controversy (NY Times).

Reiterating, ATHX’s MultiStem is a biologic product that is manufactured from human stem cells obtained from adult bone marrow or other non-embryonic tissue sources.  Unlike other cell types, MultiStem cells after isolation from a qualified donor may be expanded on a large scale for future clinical use and stored in frozen form until needed. Cells obtained from a single donor require no genetic modification and may be used to produce banks yielding hundreds of thousands to millions of doses of MultiStem – an amount far greater than other stem cell types. Each bank is extensively characterized to ensure product consistency and safety. This “master file” approach uses a single product manufacturing platform to achieve consistency in product manufacturing, characterization and validation while pursuing multiple distinct pre-clinical and clinical product portfolios within the MultiStem application.

Bottom Line: Athersys’s cells, which are derived from human bone marrow have yet to be tested in people with inflammatory bowel disease,

• The pharmaceutical industry faces a growing problem in the drug development process; obtaining access to validated drug targets in order to develop new therapies without infringing on patents that restrict the use of cloned and isolated gene sequences encoding the target,
• The doors have opened giving the sector a better investment focus and visibility … let’s hope it continues!