Analyst Uncovers Why Investors Should Pay Attention To Cytori Therapeutics, Inc.
Published: Nov 22, 2013
Important Development in Cytori Therapeutics Inc.'s Cell Therapy Technology: Joseph Pantginis
Joseph Pantginis: Cytori Therapeutics Inc. is an interesting company right now. It has had a lot of ups and downs over the last several years. The company made an intriguing announcement on Nov. 6 with the equity investment from Lorem Vascular, which will market Cytori's cell therapy technology in China, including Hong Kong, Malaysia, Singapore and Australia. Cytori gets $24 million ($24M) for 8M shares of its stock at $3/share. Cytori gets $12M now and $12M in 60 days, around the end of this year.
If you start with the initial investment case, Cytori has approval of its Celution system for regenerative medicine in both Japan and Europe. The company's focus now, in Europe, is on various ongoing translational studies, getting physicians used to the Celution system and getting physicians to do various studies to generate clinical data. The same is true in Japan.
In H1/14, we're going to see the phase 2 data from the ATHENA study in chronic heart failure patients.
Again, regenerative medicine is a risky proposition. It's very volatile. It's a headline-driven space, but one thing that has provided a lot of buoyancy to the space is cash flow from agencies and groups such as the California Institute for Regenerative Medicine, which is throwing millions of dollars—$20M grants here, $40M grants there—to various companies working in regenerative medicine.
The Life Sciences Report: If the ATHENA study is your driver right now, what's your case for it?
JP: The ATHENA study is based on intriguing earlier-stage data that the company generated from both heart failure patients as well as heart attack patients. The company has presented excellent visuals with its clinical reports of actual functional remodeling of the heart and, I would go so far as to say, tissue healing in the damaged areas where you might have seen an infarct.
With that said, and with all the volatility we've seen in this stock, it's been languishing. The upcoming clinical data will be a major catalyst for the company, giving confidence not only to investors but also to the physician community in the U.S. with regard to Celution and Cytori's regenerative medicine approach.
TLSR: Lorem Vascular has committed up to $531M in license fees. Does that mean buying consumables?
JP: First, Lorem is providing the equity investment into Cytori. Cytori has provided an exclusive license for the Celution system for 30 years. Cytori is going to get a milestone fee, or a licensing fee, for this exclusive license every year. On top of that, there will be the purchase of the actual Celution system machines, as well as the consumables for the Celution process. You have the licensing fees, which are part of the $531M over 30 years based on revenue milestones. Then you also have the sale of the Celution system and consumables through the transfer pricing.
TLSR: The ATHENA trial is only 45 patients, versus the 27 patients that we saw in the phase 1 PRECISE trial, where mortality was only slightly improved versus placebo. We had tremendous upward move in this stock after the Lorem Vascular deal was announced— the company's value shot up by $90M. I wonder if you think the ATHENA trial is going to move the needle even further on this stock, if the data are good?
JP: I do. Even though, like you said, it only includes up to 45 patients, I think it's a well-designed study.
This phase 2 clinical data from ATHENA will be very important for the regenerative medicine space because currently stem cells are still considered a relative science experiment. So much of the industry is in early-stage development; there are not a lot of late-stage data."
Joseph Pantginis, Ph.D., joined ROTH Capital Partners in 2009. Prior to joining Roth Pantginis was a senior biotech analyst at Merriman Curhan Ford (now Merriman Holdings Inc.). Pantginis was also a senior biotechnology analyst at Canaccord Adams, focusing on the oncology, inflammation and infectious disease spaces. Prior to Canaccord Adams he was a biotech analyst at several firms, including JbHanauer & Co., First Albany Corp., Commerce Capital Markets Inc. and Ladenburg Thalmann & Co., Inc. Prior to his tenure on Wall Street, Pantginis served as an associate manager/scientist of Regeneron Pharmaceuticals' Retrovirus Core Facility. Pantginis received a master's degree in business administration (finance) from Pace University; a doctorate in molecular genetics and a master's degree from Albert Einstein College of Me dicine; and a bachelor's degree from Fordham University.
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1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Life Sciences Report: Cytori Therapeutics Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Joseph Pantginis: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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