The Life Sciences Report

Jason Kolbert, Maxim Group (3/12/14) "Cytori Therapeutics Inc. reported total revenues for the full year of $12.2M. . .the company ended the year with $15.5M of cash and cash equivalents and $4.2M in accounts receivable. . . with a potential Biomedical Advanced Research and Development Authority award pending and clinical trials now enrolling, we believe 2014 could be a major year of transition for the company."

Keay Nakae, Ascendiant Capital Markets (3/12/14) "The Biomedical Advanced Research and Development Authority (BARDA) Contract Remains the Key Catalyst for Cytori Therapeutics Inc.: The company has completed work on the three objectives in the first phase of the BARDA contract and will next meet with the FDA to discuss the study design of a pivotal trial that is intended to serve as the basis for an eventual FDA PMA approval of the Celution Cell Therapy System. Following this meeting Cytori then expects to have a review meeting with BARDA in Q2/14. . .Cytori management now expects topline data from the Athena study to be available Q1/15."

The Life Sciences Report Interview with Steve Brozak (2/6/14) "Producing Cytori Therapeutics Inc.'s adipose-derived stem and regenerative cells is actually an efficient model because it is simple. The costs of goods sold are minimal by comparison to therapies that do not work as well. Remember, it's not just an immediate economic or cost-saving benefit we're looking for—it is about obtaining a good result, with the potential for restoration of health. The U.S. government—specifically the Biomedical Advanced Research and Development Authority (BARDA)—has backed this company, allowing it to demonstrate that it can repeat in animals what it has already done in people. The company can qualify for up to $56M in nondilutive development funding once it achieves BARDA milestones. What BARDA is looking to do is seed the field so new things can grow. The government would like to see tactical regenerative medicine demonstrated by clinicians—in Cytori's case, for treatment of radiation burns. Frankly, burns—whether from radiation or other sources—will be treated the same way. That's where there is exciting potential for Cytori's therapy. The ADRCs are produced by the company's Celution system, which is being vended now. Once the system is out there, clinicians will be free to use it in other capacities." More >

John Savin, Edison Investment Research (2/4/14) "Recruitment for the phase 2 trail of Cytori's Athena should be complete in Q2/14 with initial data likely in Q4/14, which could lead to a partnership deal in 2015. . .2013 product sales are expected to be $11M, plus development income from the BARDA contract of $3M. . .FDA approval of Athena is possible by 2019."

Jason Kolbert, Maxim Group (2/3/14) "Cytori Therapeutics Inc. received investigational device exemption approval from the U.S. Food and Drug Administration to begin a prospective clinical trial to evaluate the safety and feasibility of Cytori cell therapy as a potential treatment for hamstring injuries. . .we believe the company is now moving to create additional indications with very clear endpoints that will help drive commercialization of Celution."

Yale Jen, Laidlaw & Company (1/28/14) "After our recent company update by Cytori Therapeutics Inc.'s management, we walked away with renewed confidence as its development plans are on track with completion of the ATHENA trial patient recruitment in H1/14 and a possible Biomedical Advanced Research and Development Authority decision in Q2/14. . .we are reiterating our Buy rating and our $9 target price."

The Life Sciences Report Interview with Jason Kolbert (12/17/13) "Cytori Therapeutics Inc. [is] in a chronic myocardial ischemia phase 2 trial. The company operates its own subsidiary in Japan, and probably has the largest presence of any cell therapy company in that country." More >

The Life Sciences Report Interview with Michael Hay (11/26/13) "Cytori Therapeutics Inc. is a stem cell or cellular therapy company. It has a product, adipose-derived regenerative cells (ADRCs), that has been approved for breast reconstruction in Europe. In the U.S., the company is looking at treating heart disease with its ADRCs—both acute coronary syndrome and coronary artery disease. This field has been advancing in the last few years because cardiovascular disease continues to be a major cause of death. There are preventive drugs, such as statins and antihypertensive agents, but once you have cardiovascular disease, or if you have heart failure, there are very few modalities on the market that are able to reverse it and help the heart repair the damage. This is the problem Cytori has been working on. Cardiovascular data are expected this year, from two different trials. One is the phase 2 ADVANCE trial, for acute myocardial infarction, with only 23 patients. The phase 1 APOLLO trial, for the same indication, is supposed to publish results for 18-month data. These data should give us more of a gauge of the way these cells work, and how well they're working." More >

Joseph Pantginis, ROTH Capital Partners (11/21/13) "Yesterday, the Japanese Diet passed The Regenerative Medicine Law, which legislates procedures to accelerate clinical development of cell and regenerative therapies, including a fast-track process for the therapies. This is positive for Cytori Therapeutics Inc. as over half of its revenue is generated through Tokyo-based subsidiary Cytori Therapeutics K.K. . .favorable risk/reward profile. . .reiterate Buy."

Jason Kolbert, Maxim Group (11/20/13) "The Cytori Therapeutics Inc. business model is quite strong, in our opinion; one system (capital investment less than $100K) can support each catheter. Laboratory and the principal revenue will be driven by the consumables used in each process; we do believe the easy, simple-to-use platform of a heterogeneous cell population (with low cost of goods sold) is a viable competitor in the cardiovascular space."

The Life Sciences Report Interview with Joseph Pantginis (11/14/13) "Cytori 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.

TLSR: 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."

Jason Kolbert, Maxim Group (11/11/13) "Cytori Therapeutics Inc. reported the quarter last week—just a day after announcing a partnership with a strategic high-net-worth entrepreneur who will assist in sales and marketing of equipment in specified territories in Asia Pacific. . . we see the 'partnership/ financing' as quite positive for Cytori. . .and believe that Cytori represents the best of both autologous and allogeneic worlds. In this light, the created entity (Loren Vascular, private) makes perfect sense to us."

Henry McCusker, Scimitar Equity LLC (11/7/13) "Cytori Therapeutics Inc. has received the first $12M installment from the equity agreement with newly formed Lorem Vascular partnership/equity agreement. The equity agreement is part of Cytori's partnership with Lorem Vascular to commercialize Cytori's cell therapy for the cardiovascular, renal and diabetes markets in China, Hong Kong, Malaysia, Singapore and Australia. The second $12M payment will be made before the end of the year."

Henry McCusker, Regenerative Medicine Investors (11/5/13) "What could be conjecture on Cytori Theraputics Inc. is that the geographical areas of the [Lorem Vascular] partnership are 'relationship driven' and it will be interesting how this 'opportunity' plays out in the ramp-up of the deal particulars through distributors or direct sale infrastructures but, I could predict a significant swing! Either way is the gift!. . .this creative approach by Cytori and its new partner is just the beginning of I believe subsequent deals of its kind that will provide value well beyond near-term cash (for companies) and better pricing for longer term investors."

Henry McCusker, Scimitar Equity LLC (11/4/13) "Cytori Therapeutics Inc. licenses Asia-Pacific cardiovascular, renal and diabetes markets to Lorem Vascular and soars +$0.96 to $3.05 or +45.93% in the after-market. . .Cytori gets up to $500M in fees for the license, $24M for 8M shares of common stock at $3/share and a commitment for a $7M Celution device and consumables order. Not many can beat that bottom line flow-down. . .my take? A $5 movement to the upside!"

Henry McCusker, Scimitar Equity (10/7/13) "Cytori Therapeutics Inc. has received approval from the Health Sciences Authority (HSA) in Singapore for the Celution System for autologous reimplantation or reinfusion of a patient's own adipose-derived regenerative cells (ADRCs); the approval and claims in Singapore strengthen market access in the region and reinforce the company's global regulatory strategy. . .I see better horizons for Cytori and this is just one element to the long-term revenue guidance."

Joseph Pantginis, ROTH Capital Partners (9/20/13) "Cytori Therapeutics Inc. announced positive scleroderma data from an investigator-sponsored study. . .this news represents a nice incremental positive for Cytori as it continues to broaden the potential profile of the Celution approach. . .investors remain keenly focused on the ATHENA phase 2 study in chronic heart failure. We believe that the company has generated important proof-of-concept data for Celution in both acute myocardial infarction and chronic heart failure patients. . .we believe that Cytori is a leading regenerative medicine player and believe current valuations are attractive as we prepare for key upcoming clinical data catalysts."

The Life Sciences Report Interview with Keay Nakae (9/19/13) "One cell therapy company with a number of important catalysts coming up is Cytori Therapeutics Inc. Cytori has an autologous (using the patient's own cells or tissues) approach. The company runs a sample of adipose tissue obtained from a liposuction-like extraction procedure through its device, the Celution System, which concentrates the cells of interest. The processed material is called adipose-derived stem and regenerative cells (ADRCs), which are injected back into the patient. The company has generated a decent amount of clinical patient data thus far. . .Cytori is currently conducting a clinical study called ATHENA in the U.S. to evaluate the ability of its cell therapy product to treat patients with chronic ischemic heart disease. We expect to see top-line results reported in the middle of 2014. Hence, Cytori has two pretty significant, upcoming catalysts: a decision on whether it will move into the second phase of the BARDA contract, and the top-line results from its ATHENA study, evaluating its product in chronic ischemic heart disease." More >

Jason Kolbert, Maxim Group (9/18/13) "We are excited that Cytori Therapeutics Inc.'s ATHENA [trials are] building critical mass. . .we believe that ATHENA II will enroll rapidly on the heels of ATHENA I, and the additional data should reduce pivotal risk. . .results of the two ATHENA trials will determine the size, length of time, powering and endpoints for the pivotal program; a little extra data here at phase 2 could pay large rewards in cost, time and risk. . .the BARDA contract represents a significant opportunity for the company to develop clinical data with commercial value, as well as win a government supply contract."

Joseph Pantginis, ROTH Capital Partners (9/10/13) "Based on intriguing clinical data to date, we believe Cytori Therapeutics Inc.'s cardiovascular pipeline holds promise. . .additionally, we believe the company is poised for significant cash flow from its dealings with BARDA, starting with the $106M development contract in hand, which hopefully will turn into a procurement contract for radiation and thermal burns. . .we believe that Cytori is a leading regenerative medicine player and believe current valuations are attractive as we prepare for key upcoming clinical data catalysts."

Keay Nakae, Ascendiant Capital Markets (8/9/13) "We believe that Cytori Therapeutics Inc. is making good progress on its primary objectives. . .a key opportunity for the company is the contract it entered into last September with the U.S. Health and Human Services' Biomedical Advanced Research Authority. The primary benefit of the contract is that it could represent a potential source of non-dilutive R&D funding that could offset the entire cost for Cytori to finally be able to commence commercial sales of its Cellution System in the U.S. for treating soft tissue injuries with an FDA premarket approval for thermal burns, as well as funding the development of Cytori's next generation version of the device."

Jason Kolbert, Maxim Group (8/9/13) "Cytori Therapeutics Inc. continues to make great progress in Japan, where the company has been operating for a decade. As Japanese regulations shift and offer a fast-track pathway for cell therapy companies seeking approval, we see Cytori as ideally positioned to be among the first to utilize this program. Japan could be a surprise upside option that—like BARDA and the chronic myocardial ischemia (ATHENA) trial—could transform this company."

The Life Sciences Report Interview with Jason Kolbert (5/10/13) Jason Kolbert: When we talk about cardiovascular disease, the last thing we want, because the market is so large, is a highly personalized, expensive approach. Here's where Cytori shines, because it provides basically the best of both worlds. It has an autologous process with allogeneic-like cost of goods sold. . .one consideration that does seem to be emerging is that cells sourced from adipose tissue, as in the Cytori model, seem to be healthier than cells sourced from marrow. A company like Cytori may have a strategic advantage by using an adipose-sourced cell. . .

The Life Sciences Report: Cytori has a machine called the Celution System, which processes a liposuction aspirate into cells in a syringe in 60–80 minutes. The Celution System costs $100,000, or the company leases it. Does Cytori charge a license fee for each batch of cells processed?

JK: Every time the machine is used, a consumables package must be purchased. So the question is, if you are processing a lipoaspirate for chronic myocardial ischemia, is that a different consumable package with a different price point than, say, a package for breast reconstruction or burns? I think the answer is yes, that different packages will go with each application, and there will be different margins. . .but because the Cytori process is so cost-effective, I believe it is going to be able to have biotech-like margins, at a very attractive price point that will be priced on a per-use basis for the machine. More >