Morgan Myrmo's  Instablog

Morgan Myrmo
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I provide economic analysis, market commentary and company-specific research. My general view is to operate a diversified basket of long-term investments in both equities and fixed income. I have a bachelor's degree in economics from San Diego State University (2007), eight years of publishing... More
  • Cytori Therapeutics Soars In 2009 0 comments
    Jul 12, 2009 12:27 AM | about stocks: CYTK, AGEN, PPHM, CHTP, SVA, BCRX, GE, GERN, CYTX

    I was considering investing in a small, San Diego biotech firm called Cytori Therapeutics (NASDAQ: CYTX) when the stock was about $1.75-1.80 per share this April (2009). They have a clinical trial in Japan right now where they have used a type of proprietary technology to increase the size of women's breasts. My understanding is that they are combining regenerative cells and the patient's own fat tissue to increase their breast size. The risk is that the breast may absorb the added fat over an extended period of time rendering the breasts to their original size. However if it does take, Cytori may completely replace silicone breast implants as long as the price is competitive. Think about it: Cytori may give women the opportunity to grow their breasts which would look and feel natural. This is a huge market but it is not the main focus or risk/reward of the Company.

    The stock fell off my radar until General Electric (NYSE: GE) signed an agreement with Geron (NASDAQ: GERN) to provide stem cells for research applications last month. On July 10, 2009 Cytori closed at $3.18 per share, up over 92% from where it closed on April 15. CYTX has no net debt and is receiving over $20 million this year in additional funding from an investment partnership called Seaside 88 LP. This is a large sum considering CYTX has an enterprise value between $115-125 million.

    CYTX

    Although I am not a doctor and have a limited understanding of medicine, I have been fascinated by investment possibilities in biotechnology companies for the last 10 years. During the tech-bubble deflation from 9/2000-3/2003, several large biotech firms (such as Genentech) dropped 50 to 90% but many F-rated, high-risk biotech companies performed quite well on speculation (usually until they received bad clinical results, then the party was over on a respective basis).

    Along with Cytori, several micro-cap biotechnology companies are on a roar while the S&P 500 is up about 4% during the same time period. Today Cytori, Biocrist Pharmaceuticals (NASDAQ:BCRX), Sinovac Biotech (NASDAQ:SVA), Chelsea Therapeutics (NASDAQ:CHTP), Peregrine (NASDAQ:PPHM), Antigenics (NASDAQ:AGEN) and Cytokinetics (NASDAQ:CYTK) are all up 50 to 183% since April 15, 2009.

    S&P 500

    Disclosure: No positions.

    Stocks: CYTK, AGEN, PPHM, CHTP, SVA, BCRX, GE, GERN, CYTX
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