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TOPIC: The mechanics of the Barda Contract

The mechanics of the Barda Contract 23 Aug 2014 12:38 #2079

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This explanation was sent to a friend to answer his question. I thought I should post it since many still believe Barda will write a check to Cytori.


The way the Barda contract works is like an expense reimbursement account. As Cytori allocates expenses to work done on the contract, an entry is made to Research and Development Expenses. At the same time, an entry is made to Development Revenues plus 7.5% profit margin. For example, Cytori spends $ 100,000 and then applies for an expense reimbursement from the Barda escrow account. The reimbursement check is for $ 107,500. This is the correct way to explain what happens when Cytori spends their own money. There will be cases when it becomes necessary to purchase goods and services from other entities such as a hospital. In this case, the escrow account may pay that bill directly.

$ 12.1 million has been set aside for continued investigation and development of Cytori Cell Therapy for use in thermal burn injuries. This includes experimenting with delivery methods for getting the cells positioned in the wound area for the most effective outcome. The $ 8.3 million is to pay 100% of the cost of a clinical trial. Nothing has been released concerning the structure and end points of the trial. That should happen fairly soon since the cost of it has been estimated. This would be a phase II trial to establish safety and efficacy before the final Pivotal Trial (Phase III) which leads to FDA approval. That cost has been estimated to be million in the contract.

If 90% of the funds in the escrow account flow directly to Cytori, then $ 18,360,000 will be applied to revenues over the next 8 quarters or $ 2,295,000 per quarter, Of course, this will not be straight lined and will start small and grow until fully used. Gross profit from this contract over the next two years will be a maximum of $ 1,530,000.

If Cytori management is correct (looking for that day), when the next generation Celution device is ready for production, the Department of Defense wants to forward deploy a large number of the devices to the battlefield and to VA hospitals. The Department of Homeland Security wants to join in and deploy them to major hospitals for current use and training so that in the event of a thermal and/or radiation attack by ISIS, we will have the ability to treat a large number of injured people. The DOD and Barda have the authority to deploy the Celution device and use it prior to the FDA approval. Rightly so, no one has attempted to predict this revenue potential.
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The mechanics of the Barda Contract 23 Aug 2014 12:59 #2080

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Thanks Lewis-

Without any Saad´s debits and credits in there this looks perfect and makes sense. :grin:

It all is a bit conservative to me, mind you. Cytori had to do the primate study although the app was already proven in humans (Akita)- now additional pre-clinical AND the pilot in humans has to be "re-done", arriving at a stage we had achieved already. :whistle:

Anyway- its moving...

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:
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