Platelet Rich Plasma - The Science Matters
Approximately a year ago, I came across a message board post stating that insiders were buying heavily in Cytomedix. At the time, Cytomedix was trading at $0.36. Mildly interested, I began my initial scan to determine whether Cytomedix might present a compelling investment opportunity. Satisfied by my initial scan, I took a deeper look at Cytomedix.
Cytomedix (CMXI.OB) is considered a biotech company focused on the field of biologics and regenerative healing. However, in April of 2010, Cytomedix acquired the Angel line, a line of blood separators which fit squarely into its Autologel offering. Over the past two years, Cytomedix has transformed the Angel purchase into an integral part of its offering, increasing revenues from the Angel line every quarter since the acquisition. Additionally, on February 8, 2012, Cytomedix demonstrated its commitment to building a formidable biologics company by acquiring Aldagen, Inc., a privately held biopharmaceutical company developing regenerative cell therapies.
The above acquisitions aside, the drivers behind the steady upswing in Cytomedix shares over the past year are (1) the Centers for Medicare & Medicaid Services (NYSE:CMS) reconsideration of its National Coverage Determination as to whether autologous platelet rich plasma (PRP) gel is reasonable and necessary under the Medicare program, and (2) an unidentified big pharma option extension to license sales of Autologel for wound care in the United States that expires on June 30, 2012. It is believed that if Cytomedix succeeds with the CMS determination, which is due by May 9, 2012, that the unidentified big pharma will proceed with licensing Autologel and commencing a marketing push to hospitals nationwide.
Proof is in the Science
Whatever decision CMS ultimately reaches, the proof of PRP efficacy is in the science. Worldwide, 346 million people suffer from diabetes and diabetes related medical problems In the April 2012 edition, the Journal of Ostomy Wound Management reported on wound care in a retrospective, longitudinal study of Japanese patients primarily with diabetes mellitus (NYSE:DM). DM is a major health care challenge in Japan, and a number of Wound Care Centers (NYSE:WCC) are focused on healing nonhealing wounds and preventing Lower Extremity Amputations (NYSE:LEA). It is estimated that 20% of individuals with DM will undergo a LEA and 25% are likely to have an additional amputation within a year. In its study, the WCCs evaluated the outcome of the standard of care protocols versus topical PRP treatments in a variety of complex non-healing wounds.
Standard of care protocols involved "the use of dressings and gels that support moist wound healing, use of silver-impregnated or other dressings that inhibit infection, wound bed preparation, addressing underlying factors, and the use of alternative modalities such as negative pressure wound therapy and maggot therapy when appropriate and PRP gel between April and November 2010."
From a pool of 1053 potential participants, 40 chronic, nonhealing wound care outcomes from 39 patients were evaluated at two different time periods. The two time periods encompassed both the standard of care at first presentation and the PRP treatment at second presentation. Of the 40 wounds, 34 (85%) were classified as complications from DM, 29 were accompanied by arteriosclerotic obliterans, 5 were arterial ulcers, and one was a pressure ulcer.
During the first treatment (T1-T2), on average, each wound was treated for approximately 75 days using the standard of care. Despite many of the wounds receiving revascularization or debridement while receiving the standard of care, none of the wounds healed and the average area, depth and volume of the wounds increased. Following the second stage which began with the application of PRP treatments, and lasted an average of 45 days, 83% of the wounds in the study healed. Only one patient required a lower extremity amputation (T2-T3).
A p-value measurement demonstrates the statistical significance of a study - when the p-value is less than .05 or .01 depending on the cutoff, the result is said to be statistically significant. In this study, the p-value associated with the difference in healing from the standard of care at T1-T2 to the PRP treatment from T2 to the conclusion of the study at T3 was .00002. As a consequence, this study demonstrated the significant statistical significance with respect to healing outcomes in severe lower extremity wounds with PRP vis-a-vis the current standard of care. Despite the small study size, the healing trajectories were similar to much larger PRP study populations that have been conducted over the last five (5) years.
Generally speaking, autologous PRP has been used clinically for more than two decades. However, in 2007, Cytomedix received FDA approval of its PRP formulation for venous leg pressure and diabetic foot ulcers, indications which are included in the chronic wound care market. The chronic would care market is valued at $2.3 billion in the United States alone, and PRP is believed to be significantly cheaper than the current standard of care. See Slide 11 and 22. Additionally, ortho-biologics is the fastest growing segment within the orthopedic market. This trend is represented by the many professional athletes who are beginning to turn to PRP injections as a way to repair tissue and recover from tendinitis. Finally, dermal/aesthetics markets including hair transplants, facelifts and breast augmentation have begun to use PRP as a way to improve healing outcomes.
Looking at the recent Ostomy Wound Journal study and prior similar studies, showing improved patient outcomes at price points cheaper than the current standard of care, it is clear that the gathering tidal wave of clinical evidence overwhelmingly supports a positive CMS recommendation. See CMS comments. And, while I believe that Cytomedix and PRP have bright, albeit much slower, futures without a positive CMS reimbursement decision, if CMS reimbursement is approved and the unidentified big pharma closes on the licensing deal, I believe the full support of a large entrenched big pharma sales force focused on selling to hospitals will propel Cytomedix shares much higher over the next two years. With that said, Cytomedix has had a very strong upward movement, and any initial good news may be met with the buy the rumor, sell the news phenomena. As such, any potential purchasers should average in to avoid this potential scenario.
Disclosure: I am long CMXI.OB.