Plastic Surgeon Discusses the Cytori's Celution

As Cytori followers painfully know, Cytori's share price took a big hit when the FDA determined that its Celution technology would need clinical trials. The good news being, classified as a medical device, the path to approval is much shorter than it would otherwise have been had it been classified as a drug. Here's one plastic surgeon's opinion on why its worth waiting for:

AHEAD OF THE CURVE

Here's another plastic surgeon in Arizona who's not waiting for FDA approval and neither are his patients. Apparently he is using the Cytori's research version called the Stem Source to provide natural breast augmentation today.

All great stuff right? And this is just one application. However, as Cytori investors have learned the hard way, the key question now is ....when will the market recognize Cytori's potential for future growth? Still waiting..................

Cytori Secures $20,000,000 Credit Line

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.

Merge Health Care - An Insider Story

Merge Health Care (MRGE $2.35) is a small cap health care technology company that according to its website:

...develops solutions that automate healthcare data and diagnostic workflow to enable a better electronic record of the patient experience, and to enhance product development for health IT, device and pharmaceutical companies. Merge products, ranging from standards-based development toolkits to sophisticated clinical applications, have been used by healthcare providers, vendors and researchers worldwide for over 20 years.

So what?...you may ask...and rightfully so. After all, small cap software companies are a dime a dozen AND the market sucks. Well, in my opinion, there are a several factors that make MRGE an interesting investment idea. However, it may be prudent to first take a look back its ugly corporate history to get a sense of how MRGE got where it is:

• 12/05 - MRGE stock price peaks at $30, as recent quarterly EPS hits $ .28. Only problem...few knew at the time that the numbers weren't real.
• 11/06 - MRGE announces restructuring plan as stock drops below $7.
• 10/07 - Accounting scandal breaks and the sh*t hits the fan, as MRGE delays earnings and announces that prior earnings will be restated downward. Wall Street analysts start dropping coverage. Stock price plummets to below $2.
• 06/08 - On the verge of insolvency, with a stock price south of $1.00, Merrick RIS, LLC steps up to the plate to rescue MRGE with a $20,000,000 investment. Turnaroun begins.
  

In my opinion. there are three primary reasons to consider Merge Health Care at this time:

1. The successful turnaround history of the new management team and recent heavy insider buying by Michael Ferro through Merrick RIS, LLC.
2. The $787 billion American Recovery and Reinvestment Act passed in 2009 that provides $20,000,000,000 over the upcoming years to encourage hospitals and physicians to automate electronic health records and also provides future penalties if they fail to do so.
3. The 2009 $124 Billion Chinese government stimulus package to automate its health care system. MRGE has an important presence in China and should be well positioned to capitalize.
   

MERGE has been on an acquisition binge since Ferro took over, following a similar game plan he successfully used in growing a company called Click Commerce:

• July 2009 - Acquired E-Trials Worldwide
• September 2009 - Acquired Confirma
• April 2010 - Outbid a rival private equity firm to acquire Amicas

In all honesty, as an outside investor, it is difficult to independently judge with certainty whether Merge management's strategy to grow revenues and take advantage of synergies through these acquisitions will prove successful. Furthermore, it should be noted that Merge took on $200,000,000 of debt in the form of 5 year notes to finance its most recent acquisition of Amicas, increasing both the risk and the reward profile of this investment. However, when you look at the the continued insider buying from an insider who has already purchased over 30,000,000 shares, in combination with all the global stimulus money being put into this sector in the upcoming years, MRGE seems like a reasonable investment and I have taken a position. If Ferro follows with his Click Commerce playbook, he will likely put MRGE up for sale once its presence as a leading medical imaging technology company has become established.

These are the personal views of Wall Street Titan and should not be the basis of your investment decisions. Multiple links are provided in this note that all readers are encouraged to click and do their own due diligence.

Judge Rules You Can't Patent Life: What about Cytori?

Last week, in a ruling with great implications for the biotech industry. the District Court for the Southern District of New York ruled that patents on two human genes held by Myriad Genetics are invalid. In layman's terms, my interpretation is that the judge essentially ruled that "you can't patent life". While the ruling will certainly be appealed and and may eventually end up in the Supreme Court, the importance of this issue cannot be over emphasized by investors. Without patent protection, the billions of dollars being invested by the private sector in areas of genomics and stem cells will likely slow down dramatically as revenue and profit projections needed to justify research and development investments could be thrown out the window. The issue of patenting life was tackled by 60 minutes last night.

Interestingly, the path chosen by Cytori would not be affected this ruling, should it be upheld. Unlike many other companies in the regenerative medicine field, Cytori does not hold patents on stem cells or any other form of life. For those new to Cytori, its main technology is a medical device called the Celution, that efficiently and economically extracts adipose derived regenerative cells (ADRCs) from a patient's own fat. The ADRC's which include stem cells, are not owned by Cytori, they are owned by the patient and are reinserted back into the patient in a concentrated therapeutic dosage. These cells are not cultured and reproduced like other leading stem cell technologies such as those used by Osiris Therapeutics or Geron Corp. The business plan for these companies involves the extraction and mass reproduction of a donor stem cells that are cultured to provide thousands of doses of what is basically a "living pharmaceutical". Whether this ruling holds and how it applies to stem cells is still to be determined. However, while the issues of autologous cells (the use of one's own cells) versus allogenic cells (donor extracted cells) are many, at least with regard to this issue, autologous cells certainly seem have the clear advantage.

How big pharma views this ruling when evaluating potential joint ventures and/or acquisitions of small stem cells companies has yet to be determined. However, logic would indicate that the uncertainty surrounding this ruling puts Cytori and its patented medical device in a relative advantage to stem cell companies that have taken the allogenic path, all other things being equal.

Do your own due diligence.

Cytori - Down But Not Out - GE Next Up?

After reporting earnings on March 12th, shares of Cytori Therapeutic have been hit hard. Shares have fallen from $7.50 to below $5. The impetus for the decline was clear, news that the company flagship product, the Celution, would require a Pre-Market Approval application for 'soft tissue filling" in order to get FDA approval. From a practical standpoint, the process requires a U.S pivotal / approval study and the end result is that there will be no quick commercialization for the Celution in the U.S. It is clear now that traders in CYTX were speculating on a more expedient path to FDA approval but it is unclear as to why, as there was no indication from the company as to how the approval process would play out. I refer readers directly to Cytori's Shareholder's Letter and a recent Presentation at the Roth Growth Conference to learn the details of the FDA issue.

Going forward, many are anticipating the May 7th clinical results from the cardiac related Precise and Apollo clinical trials. However, there is another potential catalyst that may not be a focus of market participants.

In January 2009, Cytori signed a commercialization partnership with GE Healthcare:

"The partnership provides GE Healthcare with exclusive commercialization rights for 18 months in the U.K., France, Germany, Norway, Finland, Denmark, Sweden, Austria, and Switzerland for the cosmetic and reconstructive surgery market, translational medicine, and stem cell banking. The same terms apply in Belgium, The Netherlands and Luxembourg for translational medicine and stem cell banking. GE Healthcare was granted a two year right of first refusal to sales and distribution rights in the United States and all remaining European countries."

This partnership agreement will expire in mid July 2010. In my view, the many examples of impressive therapeutic success, in numerous indications over the ensuing 18 months, by patients treated with cells from the Celution should put Cytori in a much stronger negotiating position compared to January 2009 when the original agreement was signed. This opens up the possibility of a bidding process and a much better deal from GE or any potential large player looking to enter the promising market of regenerative medicine. Of course, it's not possible to predict what terms will be reached and with who but it could potentially include a substantial up front cash investment as Cytori is the leader in autologous regenerative technology and already impressive commercial unit sales growth in Europe and Asia.

As I've mentioned before on this blog, the best time to buy a story stock is when the story is still great but investor enthusiasm has waned. The recent Cytori stock price certainly seems to indicate that we have reached this point as downside momentum has seemingly fed upon itself and the tremendous growth potential of Celution technology is temporarily being ignored.

As always, I urge all investors to do their own due diligence.

Update on Verenium

In a replay of the news from March 1, 2010, Verenium and BP extended their Joint Development and License Agreement for one additional month to April 1, 2010 under the same terms as the prior extension. It is apperant that BP and Verenium are taking this month to month approach in anticipation of approval of DOE debt guaratees needed to finance their cutting edge cellulosic ethanol plant in Highlands, Florida scheduled to break ground this year. Verenium will recieve an additional $2,500,000 as part of the extension.

This news represents nothing new and the timing of DOE financing is still anyone's guess. However, it should be noted once again that there are substantial long time links between BP and Energy Secretary and scientist Stephen Chu that would seem to give this project a strong push. Nonetheless, I still see a strong likelihood of news on DOE financing no latter than the first half of 2010.

Do your own due diligence.

Fertilizer Misuse - India Learns the Hard Way

Today's Wall Street Journal has a very interesting and relevant article to the long term prospects of China Green Agriculture (CGA $14.10), one of the few stocks recently profiled here. The story focuses on rapidly declining agricultural production in India as a result of years of fertilizer misuse for short term production gains The result is unproductive, damaged soil and an increasing reliance of food imports to feed its population.

China Green Agriculture is a fast growing fertilizer company, also in an emerging market, that manufactures and distributes a balanced organic humic acid based fertilizers that are customized so as to produce the most effective and productive long term benefit to soils based upon geographic region and crop. The raw material in their product line is weathered coal, a cheap and widely abundant resource in China. The Chinese government, having learned learned from India's mistakes, recently eliminated the VAT tax on CGA's organic product production for five years. To learn more about CGA, read this blog's article from December 18, 2009. CGA was at $15.00 back then and subsequent rallied to over $18. The recent weakness represents a good entry point on top of a very positive earnings report.

Do your own due diligence.

Good Sign - Verenium and BP Extend Collaberation Agrement

Verenium an BP, whose 18 month cellulosic ethanol joint development agreement signed in August 2008 was set to expire, extended the agreement by one month to March 1, 2010. BP will pay Verenium $2,500,000 as part of the extension. The most important portion of Verenium's short press release, was the disclosure that the one month extension is intended give BP and Verenium the additional time required to "negotiate the terms of a multi-year extension of their collaboration program".

A multi-year extension of the collaboration agreement will certainly help remove some of the simmering doubts that have kept the share price of Verenium depressed and should be a catalyst to future share appreciation. The two companies continue to await word from the DOE regarding their application for financing of their proposed 36 million gallon Highlands, Florida cellulosic ethanol plant scheduled to break ground this year. Many investors in Verenium expected the DOE financing would have been in place by the end of 2009. This delay, beyond market expectations, has certainly weighed on Verenium's share price over the last six months.

As I noted in my entry on January 5, 201o with VRNM was selling at $4.80, : "Verenium...Is This Dog Ready to Start Barking?", VRNM has been the single dog of the handful of stocks profiled on this blog since its inception. I also made the case that it seemed that a turnaround could be imminent. The news today represents one small, but important step in a turnaround that could certainly lead VRNM to new 52 week highs.

As always, do your own due diligence.

The Cytori Story - On the Verge of Going Viral?

Those who have followed Sirtuin Investor understand that one of the key aspects that make Cytori Therapeutics a compelling investment, aside from it's platform for regenerative medicine therapies is the beauty of it's story. Although the science behind the platform is complex and the result of decades hard work and hundreds of millions of dollars in R&D spending, the story is simple and has mass appeal to a John Q. Public. It's a story that can be broken down into a simple 4 step process.

1. Extract fat from the body.
2. Extract a concentration of stem and regenerative cells from a portion of the the fat.
3. Mix those "miracle"regenerative cells back into the fat.
4. Insert the enriched fat back into the body to cure or treat multiple afflictions.

Its a story that generates excitement and amazement and rightfully so. It's also a story that plays well into the media. Throw in the angle about natural breast augmentation (no more implants!) and you have a recipe for media hype. It doesn't take a genius to understand what media hype can do to a stock price even WHEN the underlying story is unsustainable, which does not seem to be the case here..

We have already seen several local news broadcasts, a few posted on this blog, that indicate that the Cytori story is starting to go viral. Here's just one more that was recently shown on NBC in Northern California - Click Here. As mentioned before on this blog, this is the type of story that can lead to the Holy Grail of Investing: IRRATIONAL EXUBERANCE. We are not there yet given Cytori's huge potential but when it comes you'll know.

As always, everyone is obligated to do your their own due diligence.

Cytori Gets Its First FDA Approval

This summary is not available. Please click here to view the post.

Verenium..Is This Dog Ready to Start Barking??

Since the inception of the Sirtuin Investor on December 1, 2007, only a select handful of stocks have been profiled. Within a year of their profiles, Sirtris Pharmaceuticals (SIRT) and Quadramed QDHC, were the subject of cash buyouts at hefty premiums, with the QDHC buyout still pending. A third, Cytori Therapeutics is up about 100% in the 3 months since the company was first highlighted. The latest two companies profiled, China Green Agriculture (CGA), a value/growth story and Apollo Commercial Real Estate Finance (ARI), a yield play are still too early to judge but have done well so far. A pretty impressive record over two years. However, among the big winners, there has been one hell of a dog, Verenium Corporation (VRNM).

Most bloggers would likely not bring attention to their losers. So why do I even mention this dog of an alternative energy play? The answer is simple...this dog may be about to get its bark back.

For those new to Verenium, let's first review a little history. It was on May 21st, 2008 that I first profiled VRNM when it was trading at about $2.75 per share. A year and three months later its selling at about $4.80 per share. Not bad, huh? There's only one problem.....it did a 1:12 reverse split on September 10, 2009, meaning it is down about 80% since the first profile here. VRNM shares were killed as a result of its weak balance sheet and some misunderstood debt covenants that got it into trouble in February 2009. This risk was duly noted in my original profile. Those problems have since been mitigated, at least for the time being, by a capital raise and debt restructuring, but the stock has remained weak.

Now may be the time too take another look at Verenium. In August 2008, VRNM signed a VERY IMPORTANT partnership agreement with BP to commercialize its primary cutting edge technology in the production of cellulosic ethanol. The joint venture, called Vercipia, is one of a handful of companies positioned to help the country meet federal mandates for the shift to cellulosic ethanol production from much the criticized corn based ethanol. Vercipia has an application before the Department of Energy to obtain financing for a 36,000,000 gallon cellulosic ethanol plant in Highlands, Florida. I expect the procurement of this financing to be approved and to take place in the first half of 2010. This is the catalyst that should get the shares moving. Once that first plant is built and proven commercially viable, others are sure to follow and the market should recognize this.

Follow the links on this page in order to do your own DD and invest at your own risk. VRNM is still a risky stock but the catalyst to move it much higher could be close by, and in my opinion, a 100% short term move is not out of the question.

Cytori's Celution to the Aging Face--Make it New Again

A picture is worth 1,000 words:

The face of a 55 year old office manager before a stem cell enhanced face lift performed by Dr. Aamer Khan in the UK:

Three months later:

Just one application in a platform of potential therapies that could make Cytori Therapeutics the story stock of the next decade. You can see the entire story here. Do your own due diligence.

China Green Agriculture: A Green Growth Story

Those who had the opportunity to see any part of the 2008 Beijing Olympics, observed the sophistication of the world's most populous country. A country with a long and great culture and currently with the fastest growing economy in the world.

Along with this rapid growth has come numerous environmental issues, as evidenced for example, by the terrible smog problem in Beijing. Fortunately, as living standards have improved, China's leaders are now beginning to get serious about environmental sustainability. One of environmental issue makes China Green Agriculture (CGA, $15.00) a compelling story, in my opinion, is the overuse of chemical fertilizers that is has prolonged long term negative implications on soil quality and sustainability. As a result, the obvious concerns of China's ability to feed its population puts CGA in an enviable position.

CGA develops, manufactures and distributes humic acid liquid compound fertilizers in 21 provinces, 4 autonomous regions and 3 municipal cities in China. Humic acid is an essential natural and organic material needed for well balanced fertile soil. CGA gets all its humic acid from from weathered coal, a cheap and abundant material in China. The primary value of CGA's franchise lies primarily in its significant research and development program. CGA's research program is unique in that is self financed. CGA tests and formulates its compounds in intelligent greenhouses and actually sells the produce it grows during the process to finance its R&D costs. CGA has a healthy balance sheet with no long term debt, very healthy margins and sells at a forward P/E of only 10.

CGA's recent shelf offering, that raised $24.5 million to finance its expansion plans, have put pressure on its share price making for a very attractive entry point, in my opinion. At these levels (around $15), the market is overlooking the very favorable news that China Green Agriculture released on November 18, 2009 that will be a catalyst for earnings improvement on top of its growth potential. The Chinese government gave CGA a 5 year exemption from a 13% value added tax due to the organic nature of its product. This tax relief goes right to the bottom line in the form of a 3-5% margin improvement, according to Mr. Tao Li, Chairman and CEO. The benefits of this exemption seem to have been overtaken by the usual concerns of dilution following to the company's recent private placement. This represents an opportunity, IMHO.

China Green Agriculture has extensive resources on its website for those interested in doing their own due diligence. Here are a couple of links I found useful:

CGA Fact Sheet
CGA Investor Presentation

I've been purchasing CGA this morning at these levels but I urge all those considering an investment to do their own due diligence.

Cytori Poster Presentations from San Antonio Conference Now Available

Here are the links to the Posters that were presented at the San Antonio Breast Cancer Symposium on Saturday December 12th by Cytori Therapeutics:

Restore II - Stem Cell Breast Reconstruction

Adipose Derived Regenerative Cells - Pre-Clinical Growth Factor

The internet certainly makes performing your own due diligence rather easy, doesn't it?

Cytori's Restore II 6 Month Clinical Data Very Encoraging

Today, Cytori Therapeutics released the 6 month interim Clinical Phase II results of one of the many potential applications of its Celution technology that extracts stem and regenerative cells from a patient's own fat tissue (adipose). The Restore II trial was related to the treatment of cell enriched breast reconstruction and was presented at the San Antonio Breast Cancer Symposium. The results where very promising and showed a high level of patient satisfaction. No need for me to interpret the results when you can read the press release here. The clinical data is presented in a video interview and is a must see if you really want to get a better understanding of the clinical results. Cytori also issued a complementary second press release today that that supported the safety of cell enriched fat grafting.

Followers of the Sirtuin Investor know that Cytori Therapeutics was first featured here on September 9, 2009 when CYTX was selling about $3.20 per share. Although I had been following the company for a couple of years it seemed to me that this was the time when the risk/reward characteristics of CYTX, as an investment, looked the most promising. In the September 9th entry, the investment case that was laid out for Cytori was not one based upon a single therapy for a single ailment but on a platform of therapies where doctors around the world could potentially treat multiple ailments and improve upon many cosmetic procedures. To keep thinks in perspective this is just one of those therapies. I urge all those that are new to Cytori go back to that entry as part of their due diligence process to get the bigger picture.

Things continue to look promising for Cytori Therapeutics.

Apollo Commercial Real Estate Finance? If not now...When?

Ever since the onset of the financial crisis, it has been in the back of my mind that there will come a time when it will make sense to put some money in commercial real estate finance in order to earn a healthy current yield with the potential for long term appreciation. As anybody who has access to any business channel knows, the commercial real estate market reached a tremendous bubble a couple of years ago that continues to burst. The ability to refinance these properties is extremely difficult at this time and this represents an opportunity in my opinion. With short term interest rates at near 0% and long term bond rates at levels too low to compensate for the risk of rising interest rates, I believe that now may be the time to take the plunge into the secured commercial real estate market.

The vehicle I have chosen to use to make this investment is Apollo Commercial Real Estate Finance (ARI $17.60), a REIT that IPO'd at $20 on 9/23/09 . I've built up a position in the $17.25-$17.50 range. Why did I chose this vehicle to gain exposure? There are a few reasons:

1. Apollo is a large well respected money manager with seasoned professionals that will invest in senior secured commercial real estate loans, etc.
2. ARI currently trades at a healthy discount to net asset value. ARI IPO'd at $20 per share. Knock off $.50 to pay the underwriters and essentially what you have here is $19.50 in cold hard cash that can be purchased for below $18 per share. Nice discount that effectively boosts your yield to above the actual yield of the portfolio once it is constructed.
3. Since this is an IPO, there is no concern as to the valuation of assets already on the balance sheet. No concerns about buying mismarked assets.
4. When I listened to the road show a few months ago, I recall the expected yield of the portfolio of commercial mortgages and CMBS investments was expected to be in excess of 12%. Not bad for a secured medium term investment as commercial real estate loans typically have 5 year effective terms.

In my opinion, now is the time to take the plunge although this is not an investment that one should expect a quick pop. . Since there has been no information released by the company, to date, and the dividend yield is still unknown the NAV has drifted to a substantial discount that will not likely last long. Read the IPO and do your own DD. Conference call at 11:20 AM today (sorry for the short notice) might get the shares moving.

Quadramed - Gets $8.50 Cash Buyout Offer

Today, Quadramed (QDHC) became the second stock profiled by the Sirtuin Investor to receive an all cash buyout offer. While it wasn't at the 100% premium that Sirtris Pharmacueticals obtained from Glaxo last year, at $8.50 cash per share it represents a healthy 33% premium over Quadramed's closing price of $6.41 and a 93% annualized return since the company was profiled by Sirtuin Investor on July 28, 2009. It's difficult to determine if a bidding war will start but it is certainly a possibility.

Congratulations to all who did their own due diligence and purchased shares.

Quadraned Snags Another McKesson Executive

Quadramed today announced the appointment of Michael J. Simpson, a former McKesson executive, to the post of Senor Vice President, Product Strategy and Development. As part of his signing, he was granted warrants controlling 90,000 shares of QDHC common stock. He becomes the second executive, along with CEO Duncan James, to be brought on by the Quadramed Board of Directors from McKesson, a $16,000,000,000 health care and information technology behemoth. In my view, this is another good sign that the Board of Directors is serious about turning this company around after a prolonged period of lackluster results. To learn more about my reasons for owning QDHC NOW read my blog entry dated July 28, 2009. Quadramed hasn't done much since my profile on it last July, but I do believe it is well positioned to take advantage of the billions of Obama dollars put forth in the stimulus package with the goal of automating the health care industry. Apparently so do two former executives of McKesson. Do your own DD.

Cytori Insider Buying Continues as Shares Rise

Trading and investing decisions are often driven by the psychological battle between fear and greed, confidence and doubt. You do your due diligence, you study financials and examine valuation and most importantly make your assessment of a company's future prospects. You finally make the decision to pull the trigger and you feel good about it because you know you've done your homework. Next day. the overall market takes an unexpected steep decline and all your due diligence becomes irrelevant. Self doubt gnaws at you and you realize that all your analysis doesn't matter if your investment is floating on a tide that continues to retreat. Well this is what the investing textbooks call "systematic risk" and there is not much you can do about it other than to buy expensive insurance on the entire market or just stay out completely.

On the other hand, there is the risk related to the particular company you just did your due diligence on. With regard to Cytori Therapeutics, a company that has been covered extensively on this blog (see below), while the potential is incredible, the risks are still there. There is always a lot that can go wrong. Are the clinical trials really going well? Are sales ramping up as they should be? Can the company raise capital as it needs it? Is there some unexpected side effect that suddenly turns up? As an outside investor, you are always at a disadvantage, especially in a story stock whose story hasn't really started yet that can always take an unexpected turn in an unforeseen direction. You can't possible know as much as the insiders or the hedge funds that ignore the rules in pursuit of illegal insider information. That is why when a speculative stock like Cytori continues to enjoy buying interest from insiders, even as the stock makes a strong move upward, one must take notice. This continued insider buying effectively lowers the risk that anything beyond the limited view of the of the average investor could be amiss. In the last few weeks, even as CYTORI stock has rallyed from a low of $3.08 to $4.25, insider buying has continued buy one director:

• 11/18/2009 Paul Hawran-Director Bought 20,000 shares @$4.24
• 11/17/2009 Paul Hawran-Director Bought 5,000 shares @$3.98
• 11/12/2009 Paul Hawran-Director Bought 10,000 shares @$3.50

In my view this is a strong indication that the clinical trials are going well and that the inflection point discussed by Cytori management is for real. Do your own due diligence.

Cytori Therapeutics - The Story is Getting Out

In my September 9th entry on Cytori Therapeutics, I focused on a company with an exciting platform for delivering multiple stem cell therapies and a compelling, easy to understand, story.

Now, even as the stock of Cytori Therapeutics has drifted lower over the last couple of weeks, the story certainly seems to be spreading. Ironically, the media interest is not necessarily related to the potential as a therapy to repair damaged hearts, cure incontinence or treat periodontal disease but as a natural alternative to breast implants.

While the Cytori's stem cell extracting Celution machine has been approved for use in Europe and Asia for therapeutic purposes, it is approved only for research purposes by the FDA in the U.S. However, that little detail hasn't stopped a handful of surgeons, who see this as the next great big thing in cosmetic surgery, to commence the use of the Celution in cosmetic therapies, without a requirement for FDA approval.

The idea of taking fat from one part of the body and replanting it into one's breasts, with a stem cell nourishment that enhances its stability, is not only an irresistible concept to women across the world but its a great lead in story to media outlets across the nation. In recent conference calls, Cytori disclosed that it earns $2,500 per procedure on the disposables used in each procedure. The Celution machine itself sells for about $100,000. So, while this is truly a great story that alone can be feed a stock price, the economics for Cytori seem to be in place as adipose stem cell therapies catch on.

Here are a couple of examples of the story starting to spread in the U.S. by a single doctor in Arizona:

How long will it be before we see the same stories in the bigger media markets of New York and California and, of course, national news networks. Women across the nation are sure to be clamoring for this procedure (if of course they can afford it).

Just to put things in perspective, let's not forget there are several more medically critical potential therapies of Cytori's platform other than natural breast enhancement. This is just the beginning of the story, in my opinion and as I stated in a previous entry, I do own Cytori stock and I recently picked up some warrants (CYTXW) so I am not unbiased. I impatiently wait along side other Cytori shareholders for irrational exuberance to turn a legitimately promising story into something even bigger. Do your own DD and decide for yourself.