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TOPIC: RothCo post- Kolbert note

RothCo post- Kolbert note 23 Oct 2014 09:04 #2509

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I edited the post (had to delete the original)- same stuff below.. :cool:

Jason has come out with new report. Draw your own conclusions.

Maxim Group
EQUITY RESEARCH
COMPANY UPDATE
.
Cytori Therapeutics Inc (CYTX - $ 0.46 )
Buy
Target Price: $ 5.00
FDA Green-Lights Athena to Move Forward: We See a New Strategy Emerging; Get Data, Find a Partner
Summary:
Cytori received the green light from the FDA to start back up enrollment in the ATHENA cardiovascular trials. The FDA has agreed that the submitted data and protocol amendments support the fact that there are no subject protection concerns that preclude continuation of the trials.
We view this as positive; however, we believe Cytori is likely to drive the trial to an interim stopping point, evaluate the totality of its cardiovascular data (combining results with other trials), and determine which signals are evident. Cytori will then face the "go-it-alone" or partner decision.
Our best guess is that the new management team is committed to the new business directions we reviewed in our prior note (and again below). We believe it will likely look to land a partnership before pursuing the cardiovascular programs. On a side note, we believe that there are multiple alternative programs in which Cytori can prosper--particularly around breast reconstruction associated with lumpectomy (breast cancer surgery). This may hold greater promise and a larger market opportunity in which liposuction and fat grafting is already part of the treatment process.
Details:
​The New Cytori: Lean & Focused: The takeaway from the restructuring announcement is that the company will save ~$ 8M per year in non-R&D expenses. A reduction in headcount (119 to 77), consolidation of operations, and trimming of unnecessary expenses is underway. Refocused efforts around thermal burns (BARDA contract), scleroderma, osteoarthritis, and urinary incontinence should represent a clear-cut clinical pathway to the marketplace.

Thermal Burns and BARDA. The BARDA contract is worth up to $ 106M in non-dilutive capital. A $ 12M contract option was recently executed and another $ 8M will come following completion of the pilot clinical trial for burn injury and IDE approval. The company anticipates completing the trial following the release of the next-generation Celution System in 2015.

Scleroderma and Osteoarthritis. Cytori continues to diversify the ADRC therapeutic indication with movement in the scleroderma trial, which has produced six-month data that has been published and 12-month data that is being reviewed for 1Q15. The scleroderma space has 70,000 patients in the United States, and Cytori believes that it can take a large market share relatively easily for this unmet need. In osteoarthritis (knee), Cytori is currently evaluating ADRCs in the RECOVER (phase I/II) trial, which is planned to expand from 10 patients to 70 in 2015. The company has also received approval for an IDE trial in osteoarthritis, which is expected to enroll in 2015.

Urinary Incontinence and Japan. Currently, the Japanese-government-sponsored pivotal clinical trial is being reviewed by the MHLW and should commence enrolling in 2015. Also, the new regenerative medicine legislation should favor Cytori as the ADRCs are already approved as an autologous, POC therapy. This could set the stage for Cytori to capture significant revenues in Japan, a country with 4 million urinary incontinence patients. Success in Japan could aid in clinical development here in the U.S. (25 million patients).

Valuation. We have revised our model to reflect these initiatives (operational and clinical) and assume that Cytori will be successful in one, if not multiple, indications. Using these metrics, we model the market and discount back using a 30% rate in our FCF, discounted EPS, and sum-of the-parts models to arrive at our $ 5.00 price target.

Please click here for full report.
Jason Kolbert
Head of Healthcare Research
Senior Managing Director and Biotechnology Analyst
O: (212) 895-3516
M: (516) 353-2959
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
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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:

RothCo post- Kolbert note 23 Oct 2014 09:42 #2510

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Any thoughts on JK's note Fas ?

Sounds as though he thinks breast recon will now be a bigger market than cardiac. However, in the next paragraph where he list the "refocused efforts" he doesnt mention breast at all.

I agree scleroderma should be a easy market...how soon a pathway to reimbursement comes is still a very big unknown.

The rest...he's still just throwing darts.

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RothCo post- Kolbert note 23 Oct 2014 11:21 #2515

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Hedge-

I agree with JK on ATHENA.

I agree with you that we need a partner and cash...

The damage has been done -50+ Mio shares at fifty plus cents. Imagine how nicely one is in control for peanuts.

A couple of folks still need to be sued if not hanged. :bang:

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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:

RothCo post- Kolbert note 23 Oct 2014 12:39 #2518

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We need a partnership deal which provides sufficient funds so that we do not require ANY further investment bank date rapist introductions. Suing ourselves will not help ........ and as much as I feel some rough justice may be warranted it is not going to happen. Who is most to blame ........ those who stayed or those who left ????. :evil: :bash: :KO:

Any partnership deal ideally should include cash and also financing of pivotal trials in the specific indications. It need not be of Mesoblast magnitude but the structure is appropriate.

I wonder whether it would be feasible to expand Sceleroderma/Sclerodactili to include Rheumatoid Arthritis. They appear to have many similarities in the hand manifestation .......... the gemisch could very quickly prove its efficacy in these indications. There is extensive proof of immune system regulation, vascularization, and osteoarthritis benefit from ADRC application. This would constitute a huge increase in patient population with lead in to multiple applications (fat/ADRC banking) and systemic application. :winky: :grin:

I believe strongly in the rationale for use in breast lumpectomy treatment but I fear that we may have similar issues with the UK ...... need for very large trial size for confirmation. Perhaps Japan will be more receptive to this indication. They have much more data already and cultural affinity for this procedure, not to mention that it is legal to sell and provide on a self pay basis already.

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RothCo post- Kolbert note 23 Oct 2014 15:04 #2519

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***Any partnership deal ideally should include cash and also financing of pivotal trials in the specific indications. It need not be of Mesoblast magnitude but the structure is appropriate.***

Sure but what has really changed. Only Japan will be changing somewhat and every bridge we have attempted to build there has gone up in flames like rice paper.
They still need what they have ALWAYS needed. Large scale acceptance or at least a growing ramp....NOT translational trial BS of a handful of patients here and there...This takes time and the cash isnt giving very much of it even assuming the .577 warrants are exercised.

What we need to hear from management in about 2 weeks is evidence that the above WILL change and why. I do not know that Hedrick is up to that. Even if he is, would he be believed.

With 14 million in volume today....we should be cleard out of our new investors soon enough. Then we will see where the market values Cytori near term.
BTW....it would also be nice for Hedrick to narrow the timing of the new celution launch beyond sometime in 2015
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RothCo post- Kolbert note 23 Oct 2014 15:40 #2521

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Well said Hedge but any positive outcome will have to have as its catalyst of "perfect storm" of clinical outcomes both from Athena, BARDA, Okyanos, and other stem cell therapies which continue to proliferate in the space. Any negative outcomes will be disastrous. This landscape is fragile and this company is more than fragile at this point. The cash burn is always the "Sword of Damocles" which hovers over Cytori's survival.

Just my two cents.
Don't have much more than that left!
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