Cytori Therapeutic today announced a strategic equity deal with Astellas Pharma, a leading Japanese Pharmacuetical company with over $11.8 billion in sales and over 16,000 employees. Cytori will sell 1.43 million unregistered shares to Astellas for $10,000,000. The $7.00 per share price represents a 35% premium to the last closing price and a 53% premium over the closing price from just 3 days prior (it certainly appears that trading on material non-public information occurred in advance of the announcement). Just a couple of months ago Cytori sold 4.6 million registered shares at $4.50 raising $19.3 million in a secondary offering.
What I find striking about this deal is how little Cytori has given up other than raising a nice chunk of capital at a hefty premium over current prices. Astella gets:
- Two year right of first refusal for a worldwide research, development and/or commercialization partnership using Cytori's products and technologies in the treatment of liver disease;
- Non-voting observer seat on Cytori's board-of-directors; and
- Participation in a newly formed scientific advisory board.
To reiterate, Astella hasn't purchased exclusive rights to liver disease therapies under this agreement. Their purchase of
restricted stock just gives them a two year
right of first refusal for a potential partnership for liver
disease treatment using Cytori's patented adipose derived regenerative cell technologies. If there is an agreement within two years it will likely involve an up front cash payment by Astellas and some form of revenue sharing. ...and here's the kicker,
"Per this agreement, Cytori and Astellas will further explore a collaboration for an advanced regenerative drug technology." This is the just the initial transaction with Astellas and, in my view other transactions with Astella, and/or other leading companies, are in Cytori's future as the value of their
therapeutic platform begins a long and lucrative road to monetization.
