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TOPIC: Q316 Call- Partnership development status

Q316 Call- Partnership development status 13 Nov 2016 09:59 #8007

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Since it is clear that only partnership money will prevent the shareholder base from further dilution in the exorbitant fashion we experienced in the past 2 years in order to pay for excessive management bonuses and other business expenditures, it is necessary to keep track of the status of those discussions on a regular basis.

The corrected Seeking Alpha Transcript you will find below- but this time I believe the transcript was very decent- the spoken word pretty much agreed to the transcript. The only problem was -especially with the OA issue- that some of Hedrick´s statements simply did not make sense to me although correctly "translated from voice to digital wordings". Surely he was reading from a statement- some of it probably was "read wrong" or incorrectly interpreted. :whistle: Whatever...

So follows the (slightly corrected) transcript from Seeking Alpha, with Brozak asking the question and Hedrick putting the "best chance" sequence now into : 1. global scleroderma extended 2. OA but pre-mature 3. all purpose Japan.

Brozak: Hey. Good afternoon, gentlemen and thank you obviously for the detail that you've gone into. Just a quick question on business development updates, I mean you intimated at it in terms of going out there in interest, but can you describe anything on the biz dev side and especially in the heightened interest on the programs now that you've completed enrollment of the Phase III on hand dysfunctional trial in scleroderma. And can you give us much color is that is possible because obviously people are looking to see what you might be able to look at as far as external interest to validate everything you're doing? Thank you.


Hedrick: Hey, Steve. Okay, happy to do what I can and I think I understand the question and I'll be sensitive as I can on what we could talk about and what we can’t. Talking about deals that aren’t fully negotiated and reported is the sensitive matter. We start with just big picture, what if we've been trying to accomplish and is that a little bit like a broken record, but we've been focused on trying to find a regional partner in Japan for scleroderma and a regional partner in Europe for the MAP, because we can't afford to invest the kind of dollars you need to build that program out without a partner. So having a partner there would be good.

And so we have been having discussions, which include term sheets in both of those areas and so there are some possibilities there, but we want to see some things from a partner and we're not going to deal until we see. We have a list of few things we want to see. But we have some interested parties in both of those and kind of in parallel because of the U.S. data and that trial being enrolled and I think showing some promise in the pilot trial.

I think there is some interest in expanding out to a global partnership and that partnership might extend beyond scleroderma into these autoimmune conditions of the hand which represent much bigger markets. We are actually putting that on the table in terms of our dialogue. So I think there are some opportunities there. No promises. We won't do a bad deal. We will say no before we do a bad deal, but we're looking to get either a global regional deal done from the parties that we’re talking with today.

So that was sort of Business Development strategy number one. BD strategy number two is to try to identify global OA partner. And that process is really early. It's early because as I mentioned on the call the Holy Grail here is showing a cartilage benefit. Our goal was never to be another app based on pain relief, it was to be something that improves the symptoms, but also improves the cartilage in these patients. And within the limits of that trial it looks like there is a cartilage effect, but is that clinically significant? We don't know, but we know just from our early part of discussions that's the thing that's on potential partners minds is can you change the cartilage curve.

So we're having early – but active discussions there that will take awhile, I think, to work itself out. But the utility of the ACT-OA data as I mentioned it’s hard to drive the partnership, but also to drive utilization in that data we're actively sharing with a number of customers in Japan and that’s creating some – I think some pull-through in terms of new clinics that want to offer the therapy and allowing them to help better explain what the therapy might do to patients that they treat. (??)

This finally sort of a third issue that because of the advancements in Japan in urology, breast reconstruction, aesthetics that's surfacing some interest on other areas and so I think there might be some opportunities to monetize the platform in broader ways and really start driving some utilization and use outside of those two core areas I mentioned before. So bottom line is getting a deal is a priority for me personally for a team, but we want to do the right deal and I think the right deal will really help to show proof-of-concept and create shareholder value.

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Q316 Call- Partnership development status 13 Nov 2016 20:05 #8009

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We'll everyone knows my thoughts on OA.
While something in Japan is possible, I think the ashes are still smouldering from all the bridges CC burned.
That leaves us with Scleroderma/hand dysfunction. Adding to my comments post Q3 call I would say they would want to see those final results due mid 2017 and then have their own team review the data...so my guess, a very best case, q4 2017 with 2018 more likely. Assuming a deal gets reached at all.
That means dilution in some form is a foregone conclusion and that is what has pressured the stock.

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Q316 Call- Partnership development status 14 Nov 2016 06:25 #8010

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In my opinion, the chances of at least one partnership before the end of Q-1 are almost a 100% guarantee - Hedrick and Tiago are well aware of the consequences of another offering - I do not believe that they will be foolish enough to be "unreasonably" demanding in negotiating the deals that are being considered.:yep: :nice:

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Q316 Call- Partnership development status 14 Nov 2016 07:27 #8012

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Past history leads us to believe a deal will not be done until after management gets awarded their incentive stock options in early January. The only new data that is scheduled to come out any time soon is the 36 month Scleradec 1 trial follow-up. There is the six month primary end point on the STAR Trial (mid December), but the data will remain blinded and not announced. If a partnership gets done before dilution, it will have to get done on the existing data. Therefore, my expectations are limited to small regional deals. I agree with Hedge that a large global deal would only be possible after STAR results have been made public (July/August). There may be enough legwork done in advance of the data so the deal could get done within 60 days after the data release.

Interesting that term sheets have been developed in both regions. That's a good sign! First and foremost is an agreement not to buyout Cytori after seeing the data. With $376 million in tax loss carry forwards and a market cap of only $35 million, a buyout could actually generate free cash to the acquirer. Scary stuff!

This week's excitement will be learning whether or not the FDA intentionally designated ECCS-50 with orphan drug status. I found the link and it clearly shows the designation on November 9th. The NO that followed in the next row was to state that ECCS-50 has NOT been approved for marketing. I would guess that orphan drug status by the FDA is a bigger deal than when it was granted by the EMEA.

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Q316 Call- Partnership development status 14 Nov 2016 10:03 #8014

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DOV wrote: Past history leads us to believe a deal will not be done until after management gets awarded their incentive stock options in early January.


Agree- do not expect anything this year, since surely our heroes would like to milk the cow as much as possible while they can.

The American College of Rheumatology Annual Meeting in Washington DC, was on November 11th already, so last Friday and I understood that they would have presented the interim data there. So there should be a poster? :whistle:

It might be relevant- since it does happen that investigators can see "through the blinding" based on the data available. For instance that happened with APOLLO, albeit the n was really small here.

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Q316 Call- Partnership development status 14 Nov 2016 10:38 #8015

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fas wrote: It might be relevant- since it does happen that investigators can see "through the blinding" based on the data available. For instance that happened with APOLLO, albeit the n was really small here.


No- not relevant at all- the poster is nothing saying. The ACR issued a gigantic PDF of approx. 4600 pages on all abstracts and posters- it is good that I have Acrobat Pro- that finds Khanna quite quickly..:winky:

Abstract Number: 2890
Feasibility of Same Day Adipose Tissue Harvest, Cell Processing and Subcutaneous Delivery of Adipose Derived Regenerative Cells into Fingers of Scleroderma Patients within a Randomized Double Blind Clinical Trial

First publication: September 28, 2016

SESSION INFORMATION

Session Date: Tuesday, November 15, 2016
Session Title: Systemic Sclerosis, Fibrosing Syndromes, and Raynaud's – Clinical Aspects and Therapeutics - Poster III
Session Type: ACR Poster Session C
Session Time: 9:00AM-11:00AM

Background/Purpose: Current medical therapy to improve hand function has had very limited benefit in patients with systemic sclerosis (SSc). Cells present within a person’s own adipose tissue (Adipose Derived Regenerative Cells [ADRCs]) have the potential to improve tissue injury in scleroderma by modulating inflammation, stimulating angiogenesis, improving vasomotor reactivity, and stimulating local repair cells.

Methods: The STAR Trial is a phase III, pivotal, prospective, randomized (1:1), placebo-controlled, multi-center trial to assess safety and efficacy of subcutaneous administration of ADRCs into fingers of patients with hand dysfunction due to scleroderma. Key inclusion criteria include a classification of SSc, based on 2013 ACR/ EULAR classification criteria and a baseline Cochin Hand Function Scale (CHFS) score ≥20 units (suggesting at least moderate hand impairment). All enrolled patients (ADRC and placebo) undergo fat harvest through small volume liposuction (~200 to 400 mL). Lipoaspirate is processed in the Celution® System (Cytori Therapeutics, San Diego) to isolate and concentrate ADRCs, which contain CD34+ multipotent cells, pericytes, endothelial cells, and other cellular constituents. Patients then receive subcutaneous administration of 1 mL test substance (ADRC [4 million cells per finger] or matching placebo [Lactated Ringers containing patient’s own blood to visually match the placebo to ADRCs]) into all fingers. Placebo patients may cross-over to open label ADRCs at the end of the trial. Key endpoints include: CHFS, Raynaud’s Condition Score (RCS), Scleroderma Health Assessment Questionnaire (SHAQ), global assessments, Hand Mobility in Scleroderma (HAMIS) test, digital ulcer counts/time to new ulcer, modified Rodnan Score (hands only), grip/pinch strength, and analgesic use. Follow up visits are scheduled for weeks 1, 4, 12, 24, 36, 48 weeks.
Results: Trial enrollment has been completed (n=88) with baseline blinded data available from up to 86 patients. Patient demographics from the cohort indicated a mean age 53.2±10.6 years, female 87%, 77% Caucasian, and %limited/diffuse 42/58. Baseline Cochin score was 42.2±14.2 (0-60) and the baseline RCS was 3.9±2.1 (0-10); 73% of patients had a history of digital ulcers with 39% reported with digital ulcer(s) at baseline. Patients experienced expected adverse events such as liposuction related discomfort and ecchymosis; however, no peri-procedure complications or serious adverse events occurred. No cell related adverse events have been reported. All patients were discharged the same day following fat harvest, cell processing and cell injection. Mean adipose tissue harvest 293±50 mL, ADRC yield 120.6±66 x 106 cells, ADRC/gm adipose tissue 3.97±1.82 x 105, ADRC viability 89.1±2.7%. Data continues to be collected in the follow-up period.

Conclusion: The STAR trial demonstrates same day fat harvest, cell processing and subcutaneous injection of ADRCs to all fingers in patients with scleroderma is feasible and can be performed safely.

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