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Cytomedix undergoes business regeneration
March 2012
EDIT CONNECT
SHARING OPTIONS:
GAITHERSBURG, Md.—When Cytomedix Inc. recently acquired
Durham, N.C.-based Aldagen
Inc. in a stock deal valued at $40 million, the
Maryland firm fulfilled its vision of rising from a wound-care-based technology
platform to
resurrecting its business plan, broadening its pipeline and
becoming a genuine regenerative stem-cell therapy operation.
Under the terms of the acquisition agreement announced Feb.
8, Cytomedix issued Aldagen shareholders preferred shares valued
at $16
million, giving Aldagen a 17.3 percent stake in Cytomedix. As part of the
transaction, some Aldagen investors purchased $5 million of Cytomedix
common
stock in a private placement. Aldagen became a wholly owned subsidiary of
Cytomedix, yet retained its North Carolina facilities and former
Aldagen
executive officers found parallel positions at Cytomedix.
Aldagen's lead stem-cell
therapy candidates include a
treatment for critical limb ischemia, a severe obstruction of the arteries that
decreases blood flow to the extremities of
the body. The company is also
developing a treatment for ischemic heart failure, a condition in which the
heart suffers from decreased blood flow and
oxygen due to narrowing of the
arteries.
In January, Aldagen received U.S. Food and Drug
Administration (FDA) clearance to begin a Phase II study of a regenerative
cell
therapy for stroke patients, and in June 2011, Aldagen enrolled its first
patient in a Phase II clinical trial studying candidate ALD-401 as a
treatment
for ischemic stroke.
Andrew Maslan, Cytomedix's chief financial officer, believes
the agreement sets the stage
for a bright future.
"We think this was a really good deal for us, primarily
because we tied such a
significant portion of the consideration (60 percent) to
the achievement of milestones," Maslan tells ddn. "Of that, 80 percent is payable only
upon success in the
currently ongoing RECOVER-Stroke Phase II trial. Success, as I use it here, is
defined as both a positive efficacy signal and a
positive end of Phase II, in
meeting with the FDA.
"We believe the upfront consideration, valued
at $16 million
based on a recent VWAP of $1.18 leading up to the transaction, is a relatively
very low price for a platform technology that could
potentially address huge
markets such as stroke, critical limb ischemia, etc.," Maslan says. "We believe
the ALDHbr cell line and manufacturing
process has distinct competitive advantages
as compared to other cell therapy companies. Other public cell therapy companies, at very similar stages of
development to Aldagen, have market values in the $50 to $75 million range."
Maslan is quick to dispel
any concerns about its use of stem
cells.
"One of the very attractive components to the Aldagen
technology is that it is not involved with embryonic stem cells," Maslan says.
"Aldagen technology relies on stem cells that come from the patient
's own bone
marrow, so it avoids totally any controversy associated with embryonic stem
cells."
Cytomedix's new stem-cell therapy virtually eliminates
immune system rejection, he adds.
"We believe the platform technology has multiple potential
indications." Maslan says. "We are
committed to completing (at our own expense)
the ongoing Phase II study in
stroke. We believe there will be additional studies in other areas funded by
third parties that we hope to announce later
this year."
The company already has positive Phase I data in end-stage
heart failure and Phase
I/II data in critical limb ischemia, he says.
"We have thoughts around other potential
applications,"
Maslan says. "However, any major development outside of the stroke indication
will require a strategic partner or other source of
significant funding. We
will seek such opportunities, but our first priority in these earliest days
post-acquisition is to ensure that we focus on the
immediate opportunities
before us—namely the successful completion of the stroke trial and the
third-party funded studies that we believe will
materialize in the near
future."
There are also opportunities to develop utilizations for the
ALDHbr technology in combination with the company's Angel Whole Blood
Separation System, "which we are very eager to explore," he says.
In a conference call Feb. 9, Dr. James Hinson, Cytomedix's
chief medical officer, told investors, "To me,
regenerative medicine holds the
most excitement and promise that I have seen in therapeutic medicine over my
36-year medical career. The use of cells
as therapeutic agents has potential
not only to change the way physicians practice medicine, but significantly and
importantly, to change the lives of
patients who heretofore have had
untreatable illnesses. To that end, the combination of these two companies that
both have cellular focus in different
areas offers the opportunity to tap
potential with the synergy to treat complex diseases that so far has not been
seen."
The deal between the two companies nearly did not happen.
Venture capital-backed Aldagen raised more than $60
million from investors
including the Aurora Funds, Intersouth Partners, Harbert Venture Partners, CNF
Investments and Tullis-Dickerson. Aldagen took
steps toward an initial public
stock offering, but withdrew those plans in 2009, citing market conditions.
At the conference call, Martin P. Rosendale, Cytomedix's
CEO, said the company is close to a licensing deal with a "top 20
global
pharmaceutical company" on its Autologel wound care system. The company is also
seeking to add indications for its Angel Whole Blood Separation
System. A
510(k) clearance could give the company a piece of the $800 million-a-year
biologics market associated with spinal fusion procedures.
"Since joining Cytomedix as chief executive in 2008, our
strategy has evolved, but the vision to
transform the company from a
wound-care-based technology platform into a broader regenerative medicine
company has remained constant," Rosendale
stated in a news release. "In pursuit
of this vision, we started with the successful 2010 acquisition and integration
of the Angel System, a unique,
best-in-class PRP platform technology that has
allowed us to grow from nominal sales to $6 million per year in just over 18
months."
The acquisition of Aldagen provides Cytomedix with a "novel,
patent-protected cell selection technology that
fits well with our existing
commercial products and strengthens our long-range growth profile,"
Rosendale stated.
"Aldagen has the only stem cell selection technology
utilizing an intracellular enzyme marker to fractionate essential regenerative
cells from a patient's bone marrow," Rosendale tells ddn. "We now touch on the three pillars of regenerative medicine
with autologous stem
cells, platelet-derived signaling molecules and plasma
scaffolds. Fortunately, integration of the two companies will be
straightforward. The first
steps are to integrate our financial processes and
our quality systems. Luckily, there is very little redundancy between the
personnel at the two
organizations, so we do not anticipate any staff reductions."
Code: E031222 Back |
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