Scimitar Equity Blog

 The FDA has granted Cytori marketing clearance for the PureGraft™ System.

CYTX will launch the first and only device in the United States cleared for aesthetic body contouring using autologous fat. PureGraft™ allows a patient’s own fat tissue to rapidly be prepared in approximately 15 minutes for re-injection back into the same patient for aesthetic contouring.

• This clearance provides CYTX with a new product for addressing the cosmetic and reconstructive surgery market in the US and  a strategically important product that helps establish and grow relationships with plastic and cosmetic surgeons.  Upon clearance in the EU; PureGraph  will offer a complementary product to the tissue processing systems already cleared in Europe,
• PureGraft™ is able to prepare both small and large volumes of fat grafting tissue ranging from 50 mL to 250 mL.  Puregraft™ maintains sterility while optimizing the yield of tissue to be grafted, which provides significant utility to physicians. In contrast to traditional methods of graft preparation, PureGraft™ washes the graft and drains the tumescent fluid, free lipid and debris in a closed sterile system, allowing for a cleaner graft in less time than it would take to prepare a comparable volume of graft tissue traditionally,
• There are several advantages this product offers physicians performing autologous fat grafts, which can improve efficiencies in the operating room, decrease surgery time and, by being able to process greater volumes, to include large defects,
• PureGraft™ will be sold in the United States directly by CYTX as well as through select distribution partners on a non‐exclusive basis. The product will be available in Q1/10 and will be formally launched at the American Society of Aesthetic Plastic Surgeons in May 2010,
• Cytori is also seeking marketing approval (CE Mark certification) for PureGraft™ in Europe, which is expected in the first half of 2010. In Europe, PureGraft™, in addition to being sold as a standalone product will be used to complement Cytori’s currently available autologous tissue processing system asa means to expand the potential number of clinical applications,
• According to the American Society of Plastic Surgeons’ most recent report of Plastic Surgery Statistics, over 46,000 fat grafting procedures were performed in the US in 2008.  Currently, over 5,000 plastic surgeons are registered with the American Society of Plastic Surgeons.

The Bottom Line: Pre-open 1/8/10, CYTX is trading at $6.48, a market cap of $251.12 M with an enterprise value of $244.02 M; outstanding shares are listed at 36.75 M with a float of 29.79M shares.  Hopefully, Q4/09 sales of systems should track with expectation; the current sales cycle has been extremely slow for many companies.

• What I  – still truly like is that 24.24 % of the stock is held by insiders while 27.70% is held by institutions,
• Our new target price has been pegged at $8.00  in a cursory review – without a full model.

Updating our posts: 11/3, 11/10, 11/17, 12/12 of 2009.