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TOPIC: Rothco´s maxim update

Rothco´s maxim update 10 Dec 2014 09:51 #2889

  • fas
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Maxim Group
EQUITY RESEARCH
Cytori Therapeutics Inc (CYTX - NASDAQ - $ 0.50 )
Buy
Target Price: $ 6.00(Prior: $ 4.00 )
Cytori Goes Pivotal - Scleroderma
Summary:
The FDA has granted Cytori conditional approval for an Investigational Device Exemption (IDE) for an ADRC pivotal study in Scleroderma . The 'STAR' trial will be a modest-sized, 80-patient, phase II/III pivotal trial, based on phase I data (proof of concept) from an investigator-initiated trial in France that was published late this summer. (Paper Link)
In the phase I SCLERADEC-I trial, the ADRCs were shown to be well tolerated and patients had significant improvements in hand pain and mobility at 6 months post-ADRC injection. Improvements were significant (50%) across four validated key endpoints (Cochin Hand Function Scale, Visual Analogue Score for pain, Raynaud's Condition Score and Scleroderma Health Assessment).
The Celution System is regulated as a class III medical device by the FDA, meaning a successful modest-sized pivotal trial (The STAR Trial) should be enough for approval in the US.
We believe that Cytori now has an accelerated pathway to ADRC approval for Scleroderma and combined with the expected release of a next generation Celution System in early 2015, is poised for a valuation inflection. We have remodeled the Scleroderma space for a 2017 launch and thus are increasing our target price to $ 6.00, from $ 4.00.
Details:
Phase I Study results. Twelve Scleroderma patients received autologous ADRCs by subcutaneous injection into each finger. Primary endpoints were safety and tolerability at 2 and 4 months, which were met and no adverse events reported. Secondary endpoints showed sustained, statistically significant improvements for hand and diabililty pain, Raynauds’s phenomenon (discoloration of extremities and pain due to lost blood flow), and quality of life at 2 and 6 months.

Key Data Points. Hand disability was reduced, as measured by a decrease from baseline in the Cochin Hand Function Scale at both two months (47.4%) and six months (56.0%); Hand pain was diminished, as measured in visual analog score at both two months (37.8%) and six months (41.7%); Raynaud’s phenomenon was reduced, as measured by a decrease from baseline in the Raynaud’s Condition Score at both two months (53.7%) and six months (67.5%); and Overall quality of life was improved, as measured by a decrease from baseline in the Scleroderma Health Assessment Questionnaire scores at both two months (45.2%) and six months (42.4%).

What is Scleroderma? Scleroderma is an autoimmune disorder that causes skin fibrosis and destructive changes in blood vessels due. Scleroderma is a systemic disease that affects the major organs but most commonly causes changes in the skin and hands, often resulting in disability, diminished mobility and pain. Care is largely palliative and is based on treatment standards for Raynauds’s phenomenon. There are 75,000 scleroderma patients in the US alone and most have hand manifestations of the disease. This represents an opportunity for Cytori to advance the ADRC franchise. The patient population is not large but the cost of care is high, likely resulting in significant market penetration quickly.

Valuation. We assume Cytori will be successful in Scleroderma and multiple other indications utilizing ADRCs (thermal burns, stress urinary incontinence, and osteoarthritis. We apply a 25% risk cut to our therapeutic model and a 30% discount to financial models for FCFF, discounted EPS, and SOP to arrive at a $ 6.00 PT.


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The following user(s) said Thank You: d9dozrman

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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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