Cytori and Global Healthcare
Cytori and Global Healthcare

Cytori and Global Healthcare

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Written by Fas Kuiters

On August 8 2013 Cytori reported its results on Q2 and held its usual Conference Call to discuss business developments. Some folks stamped it as being the worst call made since 7 years and the ensuing market reaction the next day more or less confirmed that view. I would not deny that or try to argue otherwise. It probably was the worst call for a very long time, but on the other hand it provided also a lot of clarity, which surely was a bit more difficult to discover for the common shareholder, for which reason I decided to write this article. Lets start with this- the most important statement:

"We're creating an autologous point-of-care system. We're not manipulating cells. The business model really works. It's affordable. These aren't therapies, which costs a hundred thousand Dollar per shot. No, they're a few thousand dollars to maybe $5,000 or $10,000 for vascular, very affordable" 

very easy to do and incredibly safe. And that's what's really driving the utilization of our technology and the support of it by more than a dozen governments that are funding our technology and clinical use around the world, and that number is growing.

This is key really and very very true. I have been looking now for many years to clinical results from highly engineered (Provenge as an example) or massively cultured (Prochymal as example) cells. They are generally very poor and not comparible with what one sees with fresh -non-cultured- ADRCs extracted with Celution. It works- Walter Cruttenden was absolutely right with the "Power of the Gimish (or better Gemisch)- it is cheap and costs only a fraction of what Companies want for their engineered/cultured products, which basically are unaffordable for any healtcare system. Here comes the responsibility of governments, who want their healthcare systems to remain affordable and provide good service to their populations at the same time......

More than a dozen governments that are funding our technology and clinical use around the world, and that number is growing........ 

That is a statement you should think about for a few more minutes and than let it roll over your tongue by speaking it out loud for a few times.
Of course we know a bit about that- the US is sponsoring the BARDA contract i.e. thermal burns. Japan sponsors a therapy against SUI and France a therapy against Cutaneous Scleroderma. So- which countries are the other ones? And what are they sponsoring? Would you think that "Wallstreet" will understand if you bring out an announcement specifying the countries who sponsor- the disorder- number of patients involved and patients treated sofar? I think they would, especially if you carefully word that the likelihood of passing regulatory hurdles with such clinics are very very high. The government sponsors and approves- all at the same time of course. This is simply the age old issue with horrible IR that we have had for many years now.

Why I think a lot more clarity exists, but at the same time investors were scared off again-

 

In past calls the impression has been provided that Cyori goes for "BARDA" i.e. want to reach those "big government money coffers", which is pure rubbish as disclosed in this call. As could be expected- it pays for expense associated with clinical development, but surely does not pay the salaries of CC and all the VPs. Those still need to be funded- there will NOT be an upfront lumpsum. 
Furthermore- as commented on our board- ATHENA enrollment was very poor and "defended" with - that there will be no change in the start date of the pivotal trial. Well- surely nobody has ever considered that particular date in the first place.
The scolding on Europe is totally out-of-wack. As a device company they should know for many years already what the situation is. Europe is united in the EMA- for drugs only. Harmonization in device and DRG regulations are NOT contemplated before 2020 and Cytori should know that. Actually, Europe is self-sufficient I think in deploying the Celution platform. Governments will take over development and hopefully ADVANCE will be replaced by local clinics and the decision to stop the trial conveyed to "ignorant" shareholders again with most likely "untrue" reasoning. 
There you have it- I do accuse Cytori (again) of misleading shareholders.

Establishment of Registries and the ENORMOUS Value created in Europe. 

The accuracy of my statement above is indirectly confirmed by Cytori themselves in the prepared statement of the Call-
Our clinical experience is the most extensive of any company in the field. Coupled with our expanding regulatory approvals around the world (=besides Class I tool claim in Japan- only in EUROPE !!!), the Celution System is becoming the standard source for accessing clinical grade cells for therapy and is now being supported by institutions and governments around the world. Our commercial strategy and business model reflect this. We are focused on providing systems and consumables primarily to academic research institutions performing their own investigator-initiated studies or clinical case theories, as well as establishing indication-specific patient registries.
The investigator-initiated studies are of strategic significance, in that they identify potential new therapeutic applications for Cytori Cell Therapy and are generating a vast amount of safety data and signals of efficacy. These studies create awareness and familiarity amongst physicians who are the thought leaders and influencers in their respective medical disciplines, as well as for patients who may have unmet medical needs, which are being studied. Additionally, we're establishing indication specific patient registries so the groups of physicians can pull their data and share their experiences. This data can be used to support expanded indications for use, product reimbursement and market adoption. A good example of this is our new registry for chronic heart failure in Europe. With our recent CE Mark for Intravase, physicians can now treat patients intravascularly, meaning, they can treat patients with diseases such as heart failure, heart attack, stroke, chronic limb ischemia and other injuries or diseases where cells need to be delivered into the vascular system versus directly into the tissue. Through the chronic heart failure patient registry, physicians and hospitals can participate in a global, prospective clinical outcomes and practice patterns' study. Access to the registry can help facilitate local IRB approvals and participation in the future data presentations and publications. And for Cytori, it helps us capture value -- valuable utilization in patient outcomes data that can support regulatory and reimbursement efforts, as well as for driving market adoption.
 

 

wallstreetgekkoThe last couple of sentences, I surely agree with and that value is immense that is being created.

Chaos on Wallstreet in the Regenerative Industry sector.

 

Lately a lot of funny stuff is going on which must confuse the common investor totally. Examples?
-KOOL. After merging with TotipotentRX as of August 1- Thermogenesis announced the first Bone Marrow Transplant using an own device at one of the Fortis Hospitals in India. These transplants are done already for 30 years and represent nothing new. The stock soars with > 30%. I can assure you- there is HARDLY underlying value in KOOL.
-ASTM Rumors have it that a J&J sub is in negotiations to take over Aastrom. The stock soars with almost 100% (0,39 to 0,77). No announcement has been made, nor will one be made. ASTM is dead money and a one trick pony i.e the DCM trial, which very likely will not produce convincing results or will be dropped.
-OPXA  Opexa- The developer of an engineered MS product soars 120% on no news at all. The news really was a secondary at half the price. So after soaring 120% OPXA is again below where the started from (1.37) and is likely not to produce anything of significance in the years ahead.
The regenerative field is being exploited big time- I believe CYTX  however is exactly the opposite. No hype- subdued and misleading IR and will be a MONSTER Company going forward. The reason for that, you have to figure out, all by yourself. LOL.
 

Mark my words. 

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