Monday, 09 January 2012 16:03

Cytori´s history- the years 2000-05

Article- History untill 2005.

 

Cytori became Cytori on July 11 2005 when the name change from MacroPore Biosurgery became official. Before that date, MacroPore obviously had some history too. That history started in 1997 when the company was founded by Chris Calhoun, Stefan Lemperle and Ralph Holmes. Holmes was a surgeon who left relatively soon thereafter to become CEO of Leonardo MD, a private company developing medical practice software, which he co-founded together with Calhoun

 

.macropore-logo Lemperle was a German from the Frankfurt area, who probably had some influence in the decision, that the Company hired a German CFO- Ari Bisimis, who again arranged the IPO in August 2000 at the Frankfurt exchange (instead of in the US) in the twilight of "the big bubble". 60 Mio Euros were collected- now worth 90 Mio$, but in those days only half of that i.e 45Mio$. About 4 Mio shares were sold to the German public at 15 Euro per share. Lemperle also left in those days, collected big money and founded Artes, located in San Diego which developed a method to permanently combat facial wrinkles and which went on Nasdaq around 2007 (ARTE), but filed for bankrupty in 2009/2010.

MacroPore´s business was the development and sales of bio-resorbable orthopedic implants made of a poly-lactide polymer. Calhoun is a named inventor of about 8 patents granted in that field. The business plan presented at the IPO could not be fullfilled by a lot of mileage (actually not even 10%) and the agreement announced on November 1, 2002 was basically the nail in the coffin of MacroPore.

 

MacroPore Biosurgery´s development agreement with Medtronic for spinal implants, which had an initial term of 5 years starting in January 2000, will be extended to 2012. "Both of us have focused significant energies to get where we are today," says Sharon Schulzki, Senior Vice President Marketing and Development, MacroPore Biosurgery, "and we are in the process of launching a new generation of bioresorbable musculoskeletal implants over the remainder of the year, both domestically and internationally. The potential for these products is significant and both companies have an interest in a strong and stable relationship."

As it turned out-Medtronic had no genuine interest in selling MacroPore´s bioresorbable products, but preferred to stick to their higher margin InFuse bone growth product combined with titanium implants and in retrospect, MacroPore was basically doomed in this field of bm-buildingusiness, because of the sole reliance and dependence on Medtronic as an EXCLUSIVE marketer.(!!!)

 

MacroPore kept its head afloat though by selling two of their three product lines- the CMF (head implants) productline to Medtronics in October 2002 for a total of 21 Mio and in December 2003 the SurgiWrap ThinFilm rights (except for Japan) to MAST for approx. 17 Mio. The remaining HydroSorb (spine bioresorbable implants) product line would not have raised the appetite for investors to fund Cytori with any money and in the end was sold in 2007 after a prolonged battle for more money, for a meager 3,4 Mio to Kensey Nash- just to get rid of a distraction to management.

 From the "old" MacroPore days, only the thin film wrap technology rights for Japan remain, for which the company has had fast track approval rights in Japan for since 2004. Even a Phase 4 additional trial on men of Japanese origin sofar didnt persuade the Japanese authorities.  The competing product produced by Genzyme (SepraWrap) had over 100 Mio revenue in that country in 2008, so its not totally neglectable- just highly unlikely to materialize in anything substancial near term though. As we now know (2012) Genzyme has had a lot of influence on FDA decision making in the US in respect of CYTX tech. Apparently their influence (or money) goes as far as Japan too. What was Calhouns masterpiece though, was the acquisition of StemSource in October 2002, which is why I am writing all this stuff...............

On October 9, 2002 MacroPore announced the acquisition of all remaining shares of StemSource Inc-link here in exchange for 1,44 Mio MacroPore shares. In the early days most adult stem cell companies were focused on bone growth, for which reason before October 2002 already aJohn Fraser cooperation existed. Interestingly enough I have heard that in those days, Martin McGwynn, CEO of Stemcells Inc., had made advances to acquire StemSource also. Calhoun beat him to it.

From the announcement: StemSource began generating revenues from its autologous stem cell banking service in early 2002 and anticipates tissue-based revenues in 2-3 years. "We are adopting an aggressive, pragmatic, clinically-oriented focus toward placing this remarkable capability in the hands of surgeons sooner rather than later," added Calhoun. "We expect to see a visible contribution to revenues in 2003, without a significant increase in operating expenses." That was somewhat optimistic of course- as we know the first revenues came in Q2 2008 and even that was somewhat of a surprise, in view of the early introduction of Celution in Europe. I do recall however also a statement from Hedrick back in 2003, where he said that he believed it would take 5-6 years before the technology can be put in the hands of surgeons. That statement was more like it from a realism perspective.

 

I have read also that Adam Katz (picture below on the right), the opponent in the "231 saga", was a co-founder and director of StemSource. He obviously did not come over to MacroPore, but surely must have possessed quite a few shares in MacroPore, since the purchase price was paid with shares. The "brother in arms" in respect of developing the science with Marc Hedrick, was John Fraser, a New Zealander, (picture above left) who was instrumental in the US regulation of stem cell banking before his MacroPore days. I have seen the patent filings building up in the 2003-2006 Adam Katztimeframe- that sure looked like a lot of work to me- and now starting 2008-09 you see the approved patents coming out at the other end of the funnel. Fortunately also, Cytori recognized the importance of the EPC´s in fat tissue early on and switched from the bone focus to vascularization just in time. In 2005-6 this focus was solely cardiac though, but as an example, if one has to wait 18 -20 months for IRB approval to start the APOLLO trial in the Netherlands, one realizes that a lot of patience and perseverance is required to move a brandnew technology along.

The more recent Cytori history is better known, Olympus sharedeal in 2005 followed by the Olympus-Cytori JV agreement in November 2005. Link here. In December 2005 Cytori also was listed on the Nasdaq. From that point onwards, a new life started for the Company, which wasnt always easy, but we are all hanging in there.

 

Last modified on Monday, 22 February 2016 02:07

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