Stem cell treatments and/or therapies represent the back bone of regenerative medicine. That said, no one yet understands exactly how stem cells do what they do, only that in trials they seem to do it to one extent or another. So, for example, it is extraordinarily difficult to visualize how bone marrow derived stem cells can repair damaged heart tissue as studies have shown they can. Visualization is much easier when we're talking breast reconstruction with small amounts of the woman's own fat and stem cells. That difference in visualization ability may be the key to Cytroi Therapeutics' recent dramatic increase in Market capitalization.
Cytori Therapeutics (CYTX), one of our Sector Companies, reported interim results of its European Restore II study on breast reconstruction last weekend. The headline of that report was as follows:
- Cytori's RESTORE 2 Interim Data Demonstrate High Level of Patient and Physician Satisfaction
Here is the reported evidence:
- The study reported a high degree of patient (73%) and physician (82%) satisfaction at the interim six-month observation period with the overall outcome after a single treatment in difficult to treat breast reconstruction patients. On a scale of zero to five (five is extremely satisfied and zero is extremely dissatisfied), mean patient satisfaction scores improved from 2.8 at baseline to 3.9 at six-month follow up. Mean physician satisfaction scores improved from 3.1 to 4.1. For the 32 patients, there was a mean age of 52 years and a mean defect volume estimated by the investigators of 106 milliliters (a little more than 7 tablespoons - between a third and a half a cup) in 33 treated breasts (one patient had both breasts treated).
The reported evidence is a good attempt at making a cosmetic effect seem as scientific as possible. We can be pretty certain the patients were biased toward finding any improvement good. As for the doctors, we're not told what exactly their 'satisfaction' means.
Fat grafting of the breast, once taboo in plastic surgery as practiced in the U.S., has been recently readdressed as a way to fill in some contour irregularities in breast reconstruction. While Cytori, which makes a machine that extracts and processes stem cells from autologous adipose tissue, has been working to create a market primarily in heart and cosmetic applications for these cells for several years now, we think the company's future is most likely in stem cell cosmetic therapy.
Since stem cell research is still at the stage where each new basic understanding dictates more questions than it answers, Cytori is fortunate in that it is easy for anyone to visualize fat being deposited to round out a breast deformity caused by the removal of a cancerous tumor. The problem, the corrective result, and the market available for such therapy, if it is safe and works in the longer term, can be easily understood by almost everyone, something that can't be said for scaffolds, 'patches' and organ regeneration with stem cells.And that may explain why Cytori's market capitalization has increased from $112 million on 8/31/09 to approximately $240 million as of today, an increase of 214% in about 100 days.
The September quarterly and nine month revenue couldn't have had anything to with this market cap increase as shown by the following revenue numbers:
- September 2008 three month revenue (millions): $2.319
- September 2009 three month revenue (millions): $1.386
- September 2008 nine month revenue (millions): $3.876
- September 2009 nine month revenue (millions): $4.576
In other words, while the first six months of the Restore II study was underway on the 32 patients, Cytori's reported third quarter revenue decreased year to year. This fact was ignored in the trading of Cytori stock over the last couple of months unless Cytori's per share price increase can be accounted for by the 18% increase in nine month revenues, which is unlikely.
There were some misleading (not by Cytori, by the way) revenue figures stated in the media. Yahoo Finance for some unknown reason continues to show revenues for Cytori of $5.963 million for the three months ended September 2009. When compared to the 10Q this number is exaggerated by a factor of four. Another lesson in the in the care that must be taken when examining sources for due diligence information.
Another misleading number was produced by the Motley Fool which at least in this instance lived up to its name. On November 27, a Motley Fool piece listed Cytori's 'trailing twelve month revenue' at $14 million. Given Cytori's most recent three and nine month revenues of 1.4 and 4.6 million respectively, we'd say the emphasis is definitely on "trailing".
Returning for a moment to the Restore II study, Dr. Eva Weiler-Mithoff, M.D., co-principal investigator for the Restore 2 Trial at the Glasgow Royal Infirmary, said: "Half my patients are at the 12 month stage and I have found a continued improvement of the skin, the tissues, how the breast feels, how it moves on the chest wall and in particular in the pain the patients often describe pre-operatively over the second six months. We are expecting even more improvement to happen in the latter part of the observation period. Considering that defects after breast conservation and radio-therapy are very difficult to correct and quite often only 50% can be improved with secondary treatment, the RESTORE 2 study outcome is a very good result."
In April 2009, Dr. Weller-Mithoff told the following to the Daily Mail about the procedure and the concerns she is hoping to overcome using Cytori's technology:
"...Until three years ago when some surgeons started filling these craters with fat liposuctioned from one part of the body, there was not much we could do. If it was really noticeable, we could take tissue, from the back, to put in the breast dip - but this is a big operation.Now we can inject stem cell-enriched fat into the dip. The big advantage of this over plain liposuctioned fat is that it boosts its chances of survival. Ordinary fat can struggle to get a decent blood supply and it can either die or be absorbed back into the body - or it can calcify and feel like another lump." (Note: calcification can be misleading in an MRI. It is basically indistinguishable from a tumor)
"We don't know why, but if you put stem cells into the breast, they become fat and blood vessels.
This stem-cell enriched fat also seems to restore the softness of the breast tissues. It almost uncrumples the skin, undoing some of the radiotherapy damage, and women are reporting that their pain has eased, too - possibly because it makes the skin more supple.
We won't have the final results of our trial until summer 2010, but I feel this technique will have a significant impact on breast reconstruction. Patients don't need a big operation and there are no scars.
As part of a two-stage procedure, patients have a general anaesthetic for the harvesting of the fat by liposuction (where a canula, a small tube, is stuck into the skin and fat sucked out) from the tummy or thigh. It takes about half an hour.
We liposuction about a pint of fat; if the woman is chubby this won't be noticeable, but a slim woman with a podgy stomach, may end up with a flatter tummy. (Some women may not have enough spare fat for us to liposuction out.)
Patients are then taken to the recovery room while we process the fat. Half is put to one side and the other is put through a machine which washes out the red blood cells and separates out the stem cells. It takes two hours and gives us a concentrate of 5cc - a teaspoon - of adult stem cells which we then mix with the set-aside fat.
The patient is then brought back into theatre and given a local anaesthetic. We inject the stem cell fat into the defect, overfilling it because some of the fat will be absorbed into the body over the next month or so.Patients have an MRI scan at six and 12 months to check breast volume - if some fat has been reabsorbed a top-up may be required. Patients have another mammogram at the one-year mark."
Assuming the Restore trial is completed with flying colors, with all the results desired by the doctors and Cytori, what will have been demonstrated will at least be another step forward in creating a regularly used therapy for breast reconstruction. If that happens, in fact, as the trial is occurring, other's are entering the field of adipose stem cell extraction and processing. Cytori will not have the field entirely to itself even given that the sponsored studies and expanding but nacent distribution system will provide it an initial advantage.
Cytori's market capitalization places it squarely in Osiris Therapeutic's league and puts the company at close to 50% of Geron Corporations market capitalization. Welcome to the market capitalization, stem cell big leagues Cytori.
Comments