Yesterday, Cytori Therapeutics announced it had secured a $20,0000,000 secured loan facility from a group led by GE Capital. The loan has a term of 3 years at 9.9%, with principal scheduled to amortize over the final 27 months of the term. Part of the loan will be used to retire an existing $4.4 million loan to GE Capital. Cytori issued warrants to purchase 101,266 shares to the lenders in connection with the loan at a strike price of $3.95. Cytori stated that this loan, along with the $30,000,000 raised over the last year through its funding agreement with Seaside 88 LLC, will fund its operations "into 2012".
The significance of this agreement is twofold. First and obviously, it provides the financial resources for Cytori to aggressively move forward on its FDA application to obtain approval for its flagship product, the Celution, the first and only regenerative cell extraction system before the FDA. Secondly, it provides an independent vote of confidence on the company's autologous regenerative technology as a platform for multiple therapeutic therapies using one's own cells.
The timing of the loan comes just one month prior to the scheduled expiration of an exclusive distribution agreement entered into by Cytori and GE 17 months ago (as discussed here in March). In the ensuing 17 months since the agreement was signed, physicians around the globe have made significant progress in showing the effectiveness of Cytori's technology in treating multiple patients with multiple afflictions. The recent presentation at the Jefferies 2010 Life Science Conference provides a great discussion on recent progress that has been demonstrated, not in a lab but on real patients. This progress should put Cytori in a strong position in its negotiations with GE. Will it replace or strengthen its ties with GE for some or all of the distribution rights? Will it carve out the hospital market from the plastic surgeon market?
These answers are now forthcoming. Cytori shareholders will soon have a better understanding of just how much value has been created in the last year in relation to the current stock price
In my opinion, despite the recent stock price weakness, Cytori is still a great and compelling story. But at the end of the day, the stark reality is that the stock market tells you what a company is worth at any moment in time. Do your own DD.
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2 comments:
On behalf of Cytori, I'd like to thank you for your balanced reporting.
I'm the new Cytori Director of Social Media & Connections and I just wanted to say thanks and introduce myself.
Matthew,
On behalf of Cytori shareholders (although I really can't speak for all of them) you are welcome. Leave me your e-mail and we can stay in touch more directly.
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