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Moving on Up! Cytori Therapeutics (NASDAQ:CYTX)

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 )

Focus: CYTX’s principal products include the Celution System family of products, which processes patients’ cells at the bedside in real time; products consist of a central device, a related single-use consumable used for each patient procedure, proprietary enzymes, and related instrumentation. CYTX also operates a tissue bank facility for the preservation of stem and regenerative cells extracted from adipose tissue.

Market Opportunity: Heart disease is the number one cause of death in the US, Europe and the majority of other countries around the world. Advanced heart disease also accounts for many disabilities, lost productivity, and diminished lifestyle.  Cytori performed pre-clinical (in the laboratory) studies that suggested a restoration of heart function following the application of adipose-derived stem and regenerative cells (ADRCs). Commercial activities are currently focused on marketing the Celution® cell processing system and related family of products across 3 areas: cosmetic and reconstructive surgery in Europe and Asia-Pacific; demand among physicians in Europe and Asia Pacific for access to clinical grade stem and regenerative cells and marketing the Celution-based StemSource® Cell Bank worldwide to hospitals and tissue banks so they can in turn offer patients the opportunity to cyropreserve their own adipose-derive stem and regenerative cells.

Finance: CYTX closed a financing on 3/10/09 for $10 M; the funds are for the commercialization of the Celution(NYSE:R) System and consumables as well as other related and complementary products for ongoing clinical studies of breast reconstruction and cardiovascular disease, ongoing R&D and working capital.

Regulatory Status: In the area of heart disease, CYTX is sponsoring 2 European clinical trials that evaluate the use of adipose-derived stem and regenerative cells (ADRCs) to treat acute myocardial infarction (heart attack) and chronic myocardial ischemia (a severe form of coronary artery disease):

  • APOLLO-01 – The Acute Myocardial Infarction trial is a safety and feasibility study in Europe to evaluate the use of ADRCs as a treatment in heart attack patients. Within 24 hours of experiencing heart attack symptoms, a patient’s own ADRCs are extracted and injected into his/her coronary artery. Enrollment is complete and patients will be followed and evaluated for 3 years. The last patient enrolled in the study is expected to finish study participation by 4/12.  Primary outcome data from the 6 months study will be analyzed in 2010. This data will provide information on safety and feasibility of the use of ADRCs in this patient population,
  • PRECISE-01 trial for Chronic Myocardial Ischemia (coronary artery disease) is a safety and feasibility study in Europe to evaluate the use of ADRCs in chronic ischemia patients that cannot be treated with other means. A patient’s own ADRCs are extracted and then injected around the injured, oxygen-deprived areas of his/her heart through a catheter. Enrollment is complete and patients will be followed and evaluated for 3 years. The last patient enrolled in the study is expected to finish study participation by 4/12.  Data from the 6 month of study participation for all patients will be analyzed in 2010.  This data will provide information on safety and feasibility of the use of ADRCs in this patient population,
  • In the area of reconstructive surgery, CYTX is sponsoring a European clinical for patients requiring breast reconstruction after lumpectomy for breast cancer. There are limited reconstructive options to address tissue defects and asymmetry which commonly result from segmental mastectomy or quadrantectomy (lumpectomy). Breast implants do not adequately address these defects and other surgical options are traumatic and require prolonged hospitalization. Transplantation of autologous (patient’s own) fat tissue has been tried, with unpredictable results due to variable rates of fat transplant retention over time. With the RESTORE-2 study, Cytori hopes to discover that enriching a patient’s fat graft with her own Adipose-Derived Stem and Regenerative Cells (ADRCs) will improve graft survival as well as patient and physician satisfactions. Data from this post-marketing study will also be used to support market adoption and insurance reimbursement for the procedure.  Enrollment is currently “open” and study investigators are actively looking for potential patients with a history of breast carcinoma who have had surgical or endoscopic segmental mastectomy or quadrantectomy (lumpectomy) and are recurrence free. It is expected that the sites will enroll up to 70 patients. Patients are followed and evaluated for 1 year with data being analyzed in 2010. This data will provide information on safety, volume retention, patient and physician satisfaction.

Bottom Line: CYTX is engages in the discovery and development of cell-based regenerative medicine therapies worldwide.  While, CYTX’s Celution system automates proprietary processes and methods for separating, isolating and concentrating stem and regenerative cells from adipose tissue; but, also further develops and manufactures bioresorbable surgical implants including HYDROSORB bioresorbable spine and orthopedic surgical implants and Thin Film bioresorbable surgical implants which are used for soft tissue indications in Japan:

  • Its products are used for the treatment of cardiovascular disease and gastrointestinal disorders, as well as in spine and orthopedic repair, and aesthetic and reconstructive surgery.
  • CYTX operates a tissue bank facility for the preservation of stem and regenerative cells extracted from adipose tissue. Additionally, it has a joint venture with Olympus Corporation to develop and manufacture second generation devices based on its Celution system,
  • Their StemSource® product line is sold globally for cell banking and research applications. CYTX also offers Celution 800/CRS System for the European cosmetic and reconstructive surgery market through a network of medical distributors; and the Celution 900/MB in Japan through its commercialization partner as part of the StemSource Cell Bank, which prepares cells for cryopreservation,
  • CYTX is trading at $3.12, a market cap of $114.85 M with an enterprise value of $113.72 M; outstanding shares are listed at 36.81 M with a float of 27.93 M shares.  Revenue has been reported as $14.93 M to date and hopefully, sales of the system should track with expectation;  the current sales cycle has been extremely slow for many companies,
  • The 52 week range is down approximately 18 % ($1.42 – $5.14),
  • What I truly like is that 26.57 % of the stock is held by insiders,
  • Cash is listed at $13.92 M and debt at $6.54 M,
  • The target price has been pegged at $3.00 (low)-$5.75 (mean)-$6.00 (median) to $8.00 (high) – I believe this stock/share – for this market – in a cursory review – without a full model should be “priced” at $4.25 to $4.50,
  • Institutions/Funds hold – 24.07 % with Gagnon Securities, Perkins Capital, Barclays Global, Jennison associates, Straus Capital, Dimensional Funds, Northern Trust, State Street, Princeton Capital and Renaissance Technologies lead the pack of smaller funds,
  • It’s Celution System has been described as “a better mousetrap for quickly and efficiently harvesting adult stem cells”,
  • News flow helped the shares after results of a procedure where stem and regenerative cells from a patient’s own fat tissue were used to treat stress urinary incontinence showed the investigational treatment is safe and feasible,
  • The Stem Cell Stock Index is down dramatically.  Until the FDA starts approving some of these stem cell technologies;  the sector will remain flat as dilution based on financing might assist sustainability but not always viability or sector appreciation,
  • A final factor, CYTX has identified a number of therapeutic areas that may benefit from the use of their Tissue Processing System; it is already CE marked for certain uses in Europe. However, in order to be a commercially available option for physicians and patients for additional therapeutic areas; the system must go through clinical evaluation,
  • Cytori continues to work with the FDA working to begin conducting studies in the United States,
  • For additional disclosure purposes, this blog is posted without  any contact with ATHX and is my own view with NO personal holdings (see disclosure section in Scimitar Equity site),
  • Find me one company that has — this much — in this sector!!!

Make SURE you listen to THIS conference call/web-cast as CYTX will release its Q3 results on Monday, 11/9/09 at 10:30 AM – Eastern Time.