CYTX: Cytori Therapeutics Analysis and Research Report

2018-07-16 - by Asif , Contributing Analyst - 161 views

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General

The company's objective is to build a profitable and growing specialty therapeutics company. To meet this objective, Cytori Therapeutics has acquired and are developing two technology platforms that hold promise for treating millions of patients and represent significant potential for increasing shareholder value. The company's current corporate activities fall substantially into advancing these platforms: Cytori Nanomedicine and Cytori Cell Therapy.

The Cytori Nanomedicine platform features a versatile liposomal nanoparticle technology for drug encapsulation that has thus far provided the foundation to bring two promising drugs into mid/late stage clinical trials. Nanoparticle encapsulation is promising because it can help improve the delivery and metabolism of many drugs, thus potentially enhancing the therapeutic profile and patient benefits. The company's lead drug candidate, ATI-0918 is a generic version of pegylated liposomal encapsulated doxorubicin. Pegylated liposomal encapsulated doxorubicin is a heavily relied upon chemotherapeutic used in many cancer types on a global basis. The company believe that data from a 60-patient European study of ATI-0918 has met the statistical criteria for bioequivalence to Janssen’s Caelyx®, the current reference listed drug in Europe. The company intend that these bioequivalence data will serve as a basis for its planned regulatory submission to the European Medicines Agency, or EMA, for ATI-0918. Cytori Therapeutics is currently evaluating its strategic options to bring ATI-0918 to the U.S., China, and other markets. The company's second nanomedicine drug candidate is ATI-1123, a novel and new chemical entity which is a nanoparticle-encapsulated form of docetaxel, also a workhorse chemotherapeutic drug used for many cancers. A Phase I clinical trial of ATI-1123 has been completed and published, and Cytori Therapeutics is investigating possible expansion of this trial to Phase II, most likely in conjunction with a development partner. Finally, in connection with its acquisition of the ATI-0918 and ATI-1123 drug candidates, Cytori Therapeutics has acquired know-how (including proprietary processes and techniques) and a scalable nanoparticle manufacturing plant in San Antonio, Texas from which the company intend to manufacture commercial quantities of its nanoparticle drugs.

Cytori Cell Therapy, or CCT, is based on the scientific discovery that the human adipose or fat tissue compartment is a source of a unique mixed population of stem, progenitor and regenerative cells that may hold substantial promise in the treatment of numerous diseases and conditions. To bring this promise to health providers and their patients, Cytori Therapeutics is developing novel therapies prepared and administered at the patient’s bedside with proprietary technologies that include therapy-specific reusable, automated, standardized Celution devices, single-use Celution consumable sets, Celase reagent, and Intravase reagent. The company's lead product candidate, Habeo™ Cell Therapy, was evaluated in a Cytori-sponsored U.S. randomized, placebo-controlled, double-blind, multi-center clinical trial, STAR (Scleroderma Treatment with Celution Processed Adipose Derived Regenerative Cells), for the treatment of impaired hand function in patients with scleroderma. On July 24, 2017, the company announced top-line, preliminary data and presented the full data analysis on October 18, 2017. The STAR trial enrolled and evaluated 88 patients with scleroderma, including 51 patients within the diffuse cutaneous subset and 37 with limited cutaneous scleroderma. While the primary and secondary endpoints did not reach statistical significance at 24 or 48 weeks, the trial data reported clinically meaningful improvement in the primary and secondary endpoints of both hand function and scleroderma-associated functional disability, for Habeo treated patients compared to placebo, in the pre-specified subgroup of patients with diffuse cutaneous scleroderma. Further, on January 22, 2018, the company announced the investigator-initiated and Cytori-supported SCLERADEC-II clinical trial in France using Habeo Cell Therapy completed its enrollment and data is anticipated in the second half of 2018. Additional CCT treatments are in various stages of development in the areas of urology, wounds, and orthopedics. Further, its CCT platform is the subject of investigator-initiated trials conducted by its partners, licensees and other third parties, some of which are supported by it and/or funded by government agencies and other funding sources, detailed in an announcement on November 13, 2017. Currently, the company internally manufacture the Celution devices and consumables in the United States and the United Kingdom and source its Celase and Intravase reagents from a third-party supplier. Cytori Therapeutics is exploring contract manufacturing organization options for the Celution System to reduce overhead and product costs of goods sold. The company also have obtained regulatory approval to sell some of its CCT products, including its Celution devices and consumables and associated reagents, in certain markets outside the U.S. In those markets, Cytori Therapeutics has been able to further develop and improve its core technologies, gain expanded clinical and product experience and data, and generate sales.

Development Pipeline

Cytori Nanomedicine

In February 2017, the company completed its acquisition of the assets of Azaya Therapeutics, Inc., or Azaya, pursuant to the terms of an Asset Purchase Agreement, dated January 26, 2017. Pursuant to the terms of the agreement, the company acquired equipment and certain intellectual property, including a portfolio of investigational therapies and related assets, and assumed certain liabilities, from Azaya in exchange for the issuance of 1,173,241 of shares of its common stock in the amount of $2.3 million, assumption of approximately $1.8 million in Azaya’s payables, and the obligation to pay Azaya future milestones, earn-outs and licensing fees. The acquisition of Azaya brought two additional product candidates, ATI-0918 and ATI-1123, into the Cytori pipeline and the company intend to develop and potentially commercialize both, most likely in conjunction with a commercial partner.

ATI-0918 is a complex generic formulation of the widely used oncology drug, Doxil®/Caelyx®, which is a pegylated liposomal encapsulation of doxorubicin and approved in the U.S. for ovarian cancer, multiple myeloma, and Kaposi’s Sarcoma; and in the European Union for breast cancer, ovarian cancer, multiple myeloma, and Kaposi’s Sarcoma. The current approval pathway for ATI-0918 is to leverage existing bioequivalence data to Caelyx® for approval in the European Union and to demonstrate bioequivalence to Sun Pharma’s Lipodox®, the reference standard, in the U.S. A study to demonstrate ATI-0918’s bioequivalence to Caelyx®, for purposes of EMA approval, has been completed and the company intend for these data to serve as the basis for its submission of a marketing authorization application for ATI-0918 to the EMA. Cytori Therapeutics is also making plans to perform a bioequivalence study of ATI-0918 compared against Lipodox® to serve as the basis for submission of an abbreviated new drug application, or ANDA, for U.S. FDA approval. The company currently anticipate that any U.S. bioequivalence trial for ATI-0918 would be funded by a development partner or licensee.

ATI-1123 is a novel liposomal formulation of docetaxel. Generic forms of docetaxel are currently FDA approved and marketed for non-small cell lung cancer, breast cancer, squamous cell carcinoma of the head and neck cancer, gastric adenocarcinoma, and hormone refractory prostate cancer. Its side effects include hair loss, bone marrow suppression, and allergic reactions. There is currently no form of liposomal docetaxel approved or commercially available. There is a protein (albumin) bound form of a similar chemotherapeutic drug, paclitaxel known as Abraxane®, which demonstrated some clinical advantages to paclitaxel. ATI-1123 has shown promising results in preclinical animal models that suggest it may have superior qualities to docetaxel, including actions against some tumor types that are not amenable to treatment by docetaxel. A Phase I study of ATI-1123 has been completed and published (Cancer Chemother Pharmacol (2014) 74:1241–1250), in late stage refractory patients and has shown some activity in several tumor types (mostly stable disease). Cytori Therapeutics is currently evaluating opportunities to bring ATI-1123 into Phase II studies in several indications, including small cell lung cancer, via potential development partner or licensee.

Cytori Cell Therapy

The primary near-term goal is for Habeo Cell Therapy to be the first cell therapy product approved for the treatment of impaired hand function in patients with scleroderma, through Cytori-sponsored and supported clinical development efforts.

In the U.S., the STAR clinical trial evaluated the safety and efficacy of a single administration of Habeo Cell Therapy for impaired hand function in patients with scleroderma. The first sites for its STAR trial were initiated in July 2015 and final enrollment of 88 patients was completed in June 2016. As noted above, preliminary assessment of unblinded top-line data show that treatment of ADRC’s was safe and while not meeting the primary endpoint for all scleroderma patients, subjects with diffuse scleroderma appeared to exhibit clinically meaningful improvement in several parameters of both hand function and scleroderma-associated functional disability, for Habeo™ treated patients compared to placebo. In Europe, the investigator-initiated and Cytori-supported SCLERADEC-II (Subcutaneous Injection of Autologous Adipose Tissue-derived Stromal Vascular Fraction into the Fingers of Patients with Systemic Sclerosis) clinical trial is evaluating the safety and efficacy of a single administration of Habeo Cell Therapy for impaired hand function in patients with scleroderma. The first sites were initiated in October 2015 and final enrollment of 40 patients was completed in January 2018. Data is anticipated in the second half of 2018.

In Japan, Cytori held an informal consultation meeting with the Pharmaceuticals and Medical Devices Agency, or PMDA, to discuss the feasibility of potential Habeo development strategies and clinical trial designs for a single approval trial based on the results from the U.S. STAR clinical trial. Cytori believes that a single arm 20 patient clinical trial of Habeo Cell Therapy for diffuse scleroderma will be required to obtain approval.

With respect to the remainder of its current CCT clinical pipeline:

  • In July 2015, a Japanese investigator-initiated study of ECCI-50 Cell Therapy in men with stress urinary incontinence, or SUI, following prostatic surgery for prostate cancer or benign prostatic hypertrophy, called ADRESU, received approval to begin enrollment from the Japanese Ministry of Health, Labor and Welfare, or MHLW. Details of the ADRESU trial protocol were published in 2017. The basis for initiating ADRESU was a previously completed pilot trial, with short-term results of 11 patients published in 2014 and long-term results of 14 patients presented in 2017. In February 2018, the ADRESU trial had over 90% enrolled. The Japan Agency for Medical Research and Development, or AMED, has provided partial funding for the ADRESU trial.
  • Cytori Therapeutics is developing DCCT-10 Cell Therapy for thermal burns under a contract from the Biomedical Advanced Research Development Authority, or BARDA, a division of the U.S. Department of Health and Human Services. In April 2017, the company received approval of an Investigational Device Exemption, or IDE, from the U.S. Food and Drug Administration, or FDA, to conduct a pilot clinical trial, RELIEF (Safety and Feasibility of Adipose Derived Regenerative Cells (ADRCs) in the Treatment of Deep Partial Thickness and Full Thickness Thermal Wounds), of DCCT-10 administered intravenously in up to 30 patients with thermal burn injuries at up to 10 U.S. institutions. In May 2017, the company announced BARDA’s exercise of Option 2 of up to approximately $13.4 million to fund RELIEF. The company initiated RELIEF in 2017 and anticipate that the first patient will be treated in the first half of 2018.

In addition to its targeted therapeutic development, Cytori Therapeutics has continued to commercialize its CCT technology under select medical device approvals, clearances and registrations to customers in Asia-Pacific, Europe, Japan and other regions. These customers are a mix of research customers evaluating new therapeutic applications of CCT and commercial customers, including its licensing partners, distributors, and end user hospitals, clinics and physicians, that use its Celution System mostly for treatment of patients in private pay procedures. In Japan, its largest commercial market, the company gained increased utilization of its products in the private pay marketplace due to several factors, including increased clarity around the November 2014 Regenerative Medicine Law (implemented in November 2015 as it relates to regenerative medicine products like CCT) and the company project that its sales of Celution consumable sets and market presence in Japan will continue to grow in 2018. The sale of Celution devices and consumable sets, reagents, and ancillary products contribute a margin that partially offsets its operating expenses and will continue to play a role in fostering familiarity within the medical community with its technology. It also provides it with valuable product and customer feedback.

Scleroderma

Scleroderma is a rare and chronic connective tissue disease generally classified as an autoimmune rheumatic disorder. An estimated 300,000 Americans have scleroderma, about one-third of whom have the systemic form of the disease, known as systemic sclerosis, or SSc. SSc is further sub-classified as diffuse cutaneous and limited cutaneous SSc. Diffuse subset tends to produce more severe manifestations with significant hand dysfunction and internal organ involvement. Diffuse scleroderma accounts for between one third and one half of all cases of systemic sclerosis. Women are affected four times more frequently than men and the condition is typically detected between the ages of 30 and 50. More than 90% of scleroderma patients are afflicted with hand involvement that is typically progressive and can result in chronic pain, blood flow changes and severe dysfunction. A small number of treatments are occasionally used off-label for hand scleroderma, but they do little to modify disease progression or substantially improve symptoms with some challenging side-effects. Current treatment options are directed at protecting the hands from injury and detrimental environmental conditions as well as the use of vasodilators. When the disease is advanced, prostanoids, Endothelin-1 receptor antagonists, and immunosuppressants may be used but are often accompanied by side effects. If these medications are unsuccessful, health providers may perform a sympathectomy to remove nerves to increase blood flow and decrease long-term pain.

Some of the first scleroderma patients treated with Cytori Cell Therapy was through SCLERADEC I, a completed, investigator-initiated, 12-patient, open-label, Phase I pilot trial sponsored by Assistance Publique-Hôpitaux de Marseille, or AP-HM, in Marseille, France. The SCLERADEC-I trial received partial support from Cytori. The six-month results were published in the Annals of the Rheumatic Diseases in May 2014 and demonstrated approximately a 50 percent improvement at six months across four important and validated endpoints used to assess the clinical status in patients with scleroderma with impaired hand function. Two-year follow up data in the SCLERADEC I trial was presented at the Systemic Sclerosis World Congress in February 2016 and published in the journal Current Research in Translational Medicine in November 2016 and demonstrated sustained improvement in the following four key endpoints: the Cochin Hand Function Scale, or CHFS, the Scleroderma Health Assessment Questionnaire, Raynaud’s Condition Score, and hand pain, as assessed by a standard visual analogue scale. Further, on December 5, 2016, the company released topline results for three-year follow-up data showing sustained benefits materially consistent with those shown in two-year data.

In 2014, Drs. Guy Magalon and Brigitte Granel, under the sponsorship of AP-HM, submitted a study for review for a follow-up randomized, double-blind, placebo-controlled trial in France using Cytori Cell Therapy, partially supported by Cytori. The trial, named SCLERADEC II, received approval from the French government in April 2015. Enrollment of this trial commenced in October and the last patient treated was in January 2018. The company anticipate data in the second half of 2018. Patients will be followed at six-month post-treatment and compared with placebo treated patients. The SCLERADEC II trial includes an open-label crossover arm in which patients originally randomized to the placebo arm may be eligible to be treated with their cryopreserved cells after the aforementioned six-month data have been analyzed and reviewed by an independent monitoring committee. Eligible patients electing to receive treatment with these cryopreserved cells will be followed for both safety and efficacy for six months.

Based on the results of SCLERADEC I, the company initiated the STAR trial, a 48-week, randomized, double blind, placebo-controlled pivotal clinical trial of 88 patients at 19 sites in the U.S. to evaluate the safety and efficacy of Habeo Cell Therapy for scleroderma patients with impaired hand function. The STAR trial used the CHFS, a validated measure of hand function, as the primary endpoint measured at 24 weeks and 48 weeks (approximately 6 and 12 months) after a single administration of Habeo Cell Therapy or placebo. Of the 88 patients enrolled in STAR, 51 had diffuse cutaneous scleroderma while 37 had the limited form of the disease.

On July 24, 2017, the company announced top-line, preliminary data from the STAR trial. The results from the STAR Trial showed that that treatment of ADRC’s was safe and while not meeting the primary endpoint for all SSc patients, subjects with diffuse SSc appeared to exhibit clinically meaningful improvement in several hand parameters of both hand function and scleroderma-associated functional disability, for Habeo™ treated patients compared to placebo. The company recently released a more detailed assessment of STAR Trial data at the World Scleroderma Congress this past February. Further, the company anticipate feedback from its FDA pre-submission meeting later this quarter, which will provide it with a clearer picture of the optimal path forward with this therapy in the U.S.

In November 2016, the US FDA Office of Orphan Products Development granted Cytori an orphan drug designation for cryopreserved or centrally processed Habeo for scleroderma. In April 2016, the European Commission, acting on the positive recommendation from the European Medicines Agency Committee for Orphan Medicinal Products, issued orphan drug designation to a broad range of Cytori Cell Therapy formulations when used for the treatment of systemic sclerosis under Community Register of Orphan Medicinal Products number EU/3/16/1643.

Stress Urinary Incontinence

Another therapeutic target under evaluation by Cytori, led by the University of Nagoya and three other sites and partially supported by the Japanese MHLW, is stress urinary incontinence in men following surgical removal of the prostate gland, which is based on positive data reported in a peer reviewed journal resulting from the use of ADRCs prepared by its Celution System. The ADRESU trial is a 45 patient, investigator-initiated, open-label, multi-center, single arm trial that was approved by the Japanese MHLW in July 2015 and is being led by both Momokazu Gotoh, MD, Ph.D., Professor and Chairman of the Department of Urology and Tokunori Yamamoto, MD, Ph.D., Associate Professor Department of Urology at University of Nagoya Graduate School of Medicine. ADRESU is based on promising pilot trial data published in the International Journal of Urology in 2014 and presented at the International Continence Society in 2017. The primary endpoint for the ADRESU trial will be the number of patients who experience reduction of urinary leakage volume (as measured by the weight of diaper pads used over 24 hours) 52 weeks after treatment. If the endpoint is successfully achieved, the data will be used to seek approval of Cytori Cell Therapy for this indication. Trial enrollment began in September 2015, and in February 2018, the trial is over 90% enrolled. Full enrollment is expected by the second quarter of 2018 with top-line results available in late 2018 or 2019. This clinical trial is primarily sponsored and funded by the Japanese government, including a grant provided by AMED.

Cutaneous and Soft Tissue Thermal and Radiation Injuries

Cytori Therapeutics is also developing Cytori Cell Therapy, or DCCT-10, for the treatment of thermal burns. In the third quarter of 2012, the company were awarded a contract by BARDA valued at up to $106 million to develop a medical countermeasure for thermal burns. The total award under the BARDA contract has been intended to support all clinical, preclinical, regulatory and technology development activities needed to complete the FDA approval process for use of DCCT-10 in thermal burn injury under a device-based pre-market authorization, or PMA, regulatory pathway and to provide preclinical data in burn complicated by radiation exposure.

Pursuant to this contract, BARDA initially awarded it approximately $4.7 million over the initial two-year base period to fund preclinical research and continued development of its Celution System to improve cell processing. In August 2014, BARDA determined that Cytori had completed the objectives of the initial phase of the contract, and exercised its first contract option in the amount of approximately $12 million. In December 2014 and September 2016, BARDA exercised additional contract options pursuant to which it provided it with $2.0 million and $2.5 million in supplemental funds, respectively. These additional funds supported continuation of its research, regulatory, clinical and other activities required for submission of an IDE request to the FDA for RELIEF, a pilot clinical trial using DCCT-10 for the treatment of thermal burns. In April 2017, the company received approval of an IDE from the FDA to conduct a pilot clinical trial of CCT in patients with thermal burn injuries. This trial is referred to as the RELIEF clinical trial. In May 2017, the company announced BARDA’s exercise of Option 2 of up to approximately $13.4 million to fund RELIEF. The company initiated RELIEF in 2017 through amendments to its contract with BARDA, or the Amendments. The company anticipate that the first patient will be treated in the first half of 2018.

In accordance with the terms of the Amendments, BARDA will provide it with reimbursement of costs incurred, plus payment of a fixed fee, in the aggregate amount of up to approximately $13.4 million, or the Funding Amount. Cytori Therapeutics is responsible for further costs in excess of the Funding Amount, if any, to meet the objectives of the Pilot Trial. The Amendments also extend the term of the BARDA Agreement and the period of performance of Option 2 of the BARDA Agreement to November 30, 2020.

Sales, Marketing and Service

Cytori Nanomedicine™

The company's Cytori Nanomedicine pipeline includes both early and late stage nanomedicine product candidates, patented liposomal encapsulated docetaxel (ATI-1123) and generic pegylated liposomal encapsulated doxorubicin (ATI-0918), respectively. Cytori Therapeutics is actively seeking regional and global partnerships with either leading pharmaceutical companies or wholesale distributors for both of these product candidates, with priority on ATI-0918 in Europe where a generic form of liposomal doxorubicin is neither approved nor available.

Cytori Cell Therapy

The company sell Celution cell processing systems, or Celution Systems, StemSource cell and tissue banking systems, or StemSource Systems, and surgical accessories and instrumentation to hospitals, clinics, physicians, researchers and other customers for commercial and research purposes, including performance of investigator-initiated studies. The company's proprietary enzymatic reagents, which the company market and sell under the brand names Celase and Intravase, are sold as part of its Celution Systems and StemSource Systems (with respect to Celase), or under certain circumstances, are sold separately.

The company sell its Celution and StemSource Systems through a combination of a direct sales force, third-party distributors, independent sales representatives, and licensees. The company's strategy is to grow and leverage its installed base of Celution and StemSource devices at cell processing facilities, clinics, hospitals and research labs to drive recurring sales of its proprietary consumable sets and gain valuable customer feedback. To increase product familiarity and usage among current customers, the company launch product enhancements, expand the approved indications for use, perform clinical and technical training, provide on-site case support, and facilitate facility-level licensing with regional and/or national regulatory bodies.

In Japan, the company sell its products through its wholly owned subsidiary, Cytori Therapeutics, K.K., which has a direct sales capability. The company currently intend to increase its direct sales personnel in Japan over time. In the Bahamas, Chile, Europe, South Korea, Russia and Vietnam, the company sell its full product portfolio either directly to customers or through numerous third-party distributors. In the U.S., Cytori Therapeutics is limited to selling only research reagents and surgical accessories and instrumentation directly to customers. Bimini Technologies, LLC, through its wholly owned subsidiary Kerastem Technologies, LLC, has a global exclusive license to sell its Celution cell processing systems for hair applications. Lorem Vascular has an exclusive license to sell its full product portfolio in all fields of use, excluding hair applications, in Australia, China, Hong Kong, Malaysia and Singapore. The company also have engaged with partners to potentially leverage Managed Access Programs (also known as early access program or named patient programs) in various locations.

As of December 31, 2017, the company had two individuals in its global marketing team responsible for market assessments and business plans, competitive intelligence, distribution strategy, product management, social media and websites, forecasting, pricing and reimbursement, customer communication, relationship management, events and trade shows, and service. The company create awareness of and demand for its products among physicians and researchers through digital advertising, e-marketing campaigns, webinars, pre-clinical and clinical publications, patient advocacy group partnerships, sales collateral, and industry and medical society meetings.

As of December 31, 2017, the company had two Cytori employees/contractors in its field service team responsible for providing Celution and StemSource installations, maintenance, training, troubleshooting, and hardware and software update/upgrade services to new and existing customers. This team also initiates and closes sites participating in Cytori-sponsored clinical trials.

For the year ended December 31, 2017, its sales were concentrated with respect to five direct customers, which comprised 68% of its product revenue recognized. One licensee and one direct customer accounted for 77% of total outstanding accounts receivable (excluding receivables from BARDA) as of December 31, 2016.

Customers and Partners

In Japan, Europe, the Middle East, the Asia-Pacific region and Latin America, the company offer its Cytori Systems and StemSource Systems through direct sales representatives, distributors and licensing partners, to hospitals, clinics and researchers, including for purposes of performing investigator-initiated and funded studies.

Pursuant to its Sale and Exclusive License/Supply Agreement with Bimini Technologies, LLC, or Bimini Agreement, the company granted Bimini a global exclusive license to its Cytori Cell Therapy devices and consumable products for hair applications only, excluding systemic or intravascular delivery of adipose-derived regenerative cells, or ADRCs. Hair loss affects more than 40 million men and 21 million women in the U.S. alone. The global hair loss treatment market generates more than $7 billion annually and currently has limited options for men (grades I-III) and women (grades I-II) with early stage hair loss. Through Kerastem, its wholly owned subsidiary, Bimini completed a FDA-approved Phase II multi-center, randomized, single-blinded, and controlled clinical trial in the U.S., called STYLE (A Trial of Cell Enriched Adipose For Androgenetic Alopecia), to study the safety and feasibility of Kerastem’s therapy for female and male pattern baldness. The Kerastem therapy is a one-time treatment that utilizes adipose (fat) derived regenerative cells combined with purified fat delivered to the affected area of scalp. In September 2016, Bimini announced completion of its STYLE trial enrollment of 70 patients at four clinical trial sites within the U.S. In December 2017, Bimini announced six-month top-line data from STYLE. The low dose ADRC plus Puregraft fat treatment group achieved a statistically significant increase in mean terminal hair count, when compared to control, in men with early stage hair loss (Norwood Grades I-III). An average increase of 29 terminal hairs per cm2 of scalp was observed, corresponding to a 17% increase (p < 0.05) from baseline. All treatment arms of STYLE were safe with no serious adverse events reported. Outside of the United States, Bimini is engaged in market development efforts in Europe and Japan for the hair market. The Kerastem Hair Therapy is CE mark approved in the EU for sales to patients with alopecia, or hair loss. Under the Bimini Agreement, Bimini is required, among other things, to pay an eight percent (8%) royalty on its net sales of its products for contemplated hair applications.

Pursuant to its Amended and Restated License/Supply Agreement, or Lorem Agreement, with Lorem Vascular Pte. Ltd., or Lorem Vascular, the company granted Lorem Vascular an exclusive license in all fields of use (excluding hair applications subject to Bimini’s license) to its Cytori Cell Therapy products for sale into China, Hong Kong, Malaysia, Singapore and Australia. In April 2015, Cytori and Lorem Vascular announced that China Food and Drug Administration had granted regulatory clearance to the Celution System. Under the Lorem Agreement, Lorem Vascular committed to pay up to $500 million in license fees in the form of revenue milestones. In addition, Lorem Vascular is required to pay Cytori 30% of their gross profits in China, Hong Kong and Malaysia for the term of the Lorem Agreement. Lorem Vascular has certain minimum product purchase obligations, including purchase obligations triggered by achievement of applicable regulatory clearance for its products in China, which regulatory clearance was achieved as of April 2015. Lorem Vascular has partially satisfied these related product purchase obligations, and as a result, Cytori Therapeutics is currently in discussions with Lorem Vascular regarding restructuring of its obligations and its rights under the Lorem agreement. The company cannot guarantee that its restructuring discussions with Lorem Vascular will be successful. Should the company be unable to conclude these negotiations to its satisfaction, a dispute may ensue. See, also, its discussions of the regulatory landscape in China for its products as well as discussions regarding its relationship with Lorem Vascular in the “Risk Factors” section and in the “Competition” and “Governmental Regulation” sections of this “Business” section below.

Refer to Note 2 of the Notes to Consolidated Financial Statements for a discussion of geographical concentration of sales.

Manufacturing

Cytori Nanomedicine

Cytori Therapeutics is in the process of obtaining facility validations at its recently acquired nanoparticle manufacturing facility located in San Antonio, Texas. Once validation is complete, the facility and processes are designed to comply with cGMP per FDA and EMA regulations to manufacture drug candidates for clinical, research, development and commercial use. Upon approval of its drug candidates, its manufacturing capabilities will include validated manufacturing processes for drug product as well as a quality assurance product release process with the ability to ultimately scale-up the process to meet increasing market demands. The company believe its strategic investments in the analytical and manufacturing capabilities, including personnel from drug discovery through drug development, will allow it to advance its product candidates more quickly. Expertise gained in manufacturing ATI-0918 may be applied to other formulations in the future, further leveraging its capabilities. The company's San Antonio facility enables it to produce drug substance in a cost-effective manner while retaining control over the process and timing. As needed, the use of a qualified Clinical Manufacturing Organization may be utilized to perform various manufacturing processes as the company deem appropriate to meet its operational objectives.

The company's current principal suppliers for its Cytori Nanomedicine business are LGM Pharma, which supplies its active pharmaceutical ingredient, or API (doxorubicin HC1), as well as Lipoid, LLC and Dishman Netherlands, B.V., which supply it with other raw materials used in the manufacture of its ATI-0918 and ATI-1123 drug candidates. Each of these suppliers is currently a sole source supplier.

Cytori Cell Therapy

The company currently manufacture Celution Systems in its headquarters in San Diego, California. As a part of its September 2017 corporate restructuring, Cytori Therapeutics is in the process of consolidating manufacturing of its disposable systems to a single third party manufacturer. Cytori Therapeutics has sufficient inventory on hand to meet global demand while the company execute and complete its outsourcing plan. As a manufacturer, its products are subject to periodic inspection by regulatory authorities and distribution partners. Manufacturers of devices and products for human use are subject to regulation and inspection from time to time by the FDA for compliance with the FDA’s Quality System Regulation, or QSR, requirements, as well as equivalent requirements and inspections by state and non-U.S. regulatory authorities, such as Notified Bodies in Europe and the California Food and Drug Branch.

Raw materials for the Celution device, Celution consumable kit and other products are sourced from a variety of suppliers. Most of these components are available from multiple vendors either as off-the-shelf items or as custom fabrication. However, the company purchase its Celase and Intravase regents exclusively from Roche Diagnostics Corporation, or Roche. While Cytori Therapeutics has significant inventory of these reagents in inventory, the company do not have a second source to provide it with these reagents should its supply arrangement with Roche terminate or be suspended, or should Roche be unable to meet its supply obligations thereunder.

Competition

The company compete primarily on the basis of the safety and efficacy of its therapies across a broad range of clinical indications to address significant unmet medical and market needs, supported by its brand name, pricing, products, published clinical data, regulatory approvals, and reimbursement. The company believe that its continued success depends on its ability to:

  • Develop and innovate its product and technology platforms;
  • Initiate new and advance existing clinical development programs;
  • Secure and maintain regulatory agency approvals;
  • Build and expand its commercial footprint;
  • Produce high quality products per its specifications and in line with customer expectations
  • Achieve improved economies of scale and scope;
  • Generate and protect intellectual property;
  • Hire and retain key talent; and
  • Successfully execute acquisition, licensing, and partnership activities.

Cytori Nanomedicine

ATI-0918, its generic pegylated liposomal encapsulated doxorubicin product candidate is expected to face competition from both patented and generic nanomedicine products for the treatment of breast cancer (BC), ovarian cancer (OC), multiple myeloma (MM), and/or Kaposi’s Sarcoma (KS) in all geographies. New nanoparticle-doxorubicin monotherapies and drug combination therapies represent next generation approaches intended to be safer and more effective than today’s patented and generic pegylated liposomal doxorubicin (PLD).

U.S

CompanyProductFormulationStageIndications
JNJ JanssenDOXILPLDCommercialBC, OC, MM, KS
SunLipodoxPLDCommercialBC, OC, MM, KS
Dr. Reddy’sDoxorubicin HCl LiposomePLDCommercialBC, OC, MM, KS
IpsenDoxorubicin LiposomePLDANDA SubmittedBC, OC, MM, KS
Fudan ZhangjiangLibodPLDBE Study vs Sun LipodoxOC
TolmarDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC
Panacea BiotechDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC
EmcureDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC
CadilaDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC
CiplaDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC
AuromedicsDoxorubicin HCl LiposomePLDBE Study vs Sun LipodoxOC

Europe

CompanyProductFormulationStageIndications
JNJ JanssenCAELYXPLDCommercialBC, OC, KS
TevaMyocetNon-PLDCommercialBreast (with cyclophosphamide)
Taiwan Liposome CoDoxisomePLDMAA SubmittedBC, OC
Sun PharmaLipodoxPLDBE Study vs Janssen CAELYXBC, OC
Dr. Reddy’sDoxorubicin HCl LiposomePLDBE Study vs Janssen CAELYXBC, OC
TevaDoxorubicin HCl LiposomePLDBE Study vs Janssen CAELYXBC, OC

Rest of World

CountryCompanyProductFormulationStageIndications
ChinaFudan ZhangjiangLibodPLDCommercialBC, OC, KS
ChinaCSPCDuomeisuPLDCommercialBC, OC, KS, MM, lymphoma
ChinaChangzhou JinyuanLixingPLDCommercial
Hong KongNAL PharmaNAL1872PLDPreclinicalBC, OC, KS
IndiaIntas PharmaPegadriaPLDBE Study vs DOXILBC, OC, KS
IndiaAlkem LabsLipisolPLDCommercial
IndiaCelon LabsLippodPLDCommercialBC, OC, MM, KS
IndiaCiplaOncodox PEGPLDCommercialBC, OC, MM, KS
IndiaNatco PharmaNatdox-LPPLDCommercialOC
IndiaSRS PharmaDox HCl LiposomePLDCommercialBC, OC, KS
IndiaParenteral DrugsDoxoparPLDCommercialBC, OC, KS
IndiaZuventusRubilongPLDCommercialBC, OC, KS
IndiaZydus CadilaNudoxaPLDCommercialBC, OC, KS
JapanJNJ JanssenDOXILPLDCommercialOC, KS
PhilippinesTTY BiopharmLipo-doxPLDCommercialBC, OC, MM, KS
Sri Lanka
Taiwan
Thailand
Vietnam
PhilippinesTTY BiopharmCAELYX IIPLDDevelopmentBC, OC, MM, KS
Sri Lanka
Taiwan
Thailand
Vietnam
RussiaOasmiaDoxophosNanoparticle doxorubicinCommercialBC, OC, MM, others

The company's ATI-1123 product candidate is expected to face competition from both Sanofi’s Taxotere, which is approved for 11 indications and available in 90 countries with a majority of sales from China, Japan, Korea, and Taiwan, and generic docetaxel which is available from major suppliers in the U.S., Europe and Japan including, but not limited to, Accord, Actavis, Dr. Reddy’s Labs, GLS Pharma, Hospira, Sun Pharma, Teva, and Winthrop. Further competition may result from advances made by companies currently developing nanoparticle-docetaxel products including, but not limited to, Adocia, Cristal Therapeutics, Merrimack, and Oasmia Pharmaceutical.

Cytori Cell Therapy

According to the Alliance for Regenerative Medicine, there over 700 companies worldwide and 801 clinical trials underway within the global regenerative medicine market. Per Allied Market Research, this market is projected to reach $30.2 billion by 2022 and to be dominated by the cell therapy segment.

Today, the company compete directly against companies within the autologous adipose-derived cell therapy segment offering manual, semi-automated, or full automated cell processing and/or banking systems used with or without tissue dissociation reagents. The company's primary competitors include, but are not limited to, Adisave, Biosafe Group, GID Group, Healeon Medical, Human Med AG, InGeneron, Medikan International, PNC International, SERVA Electrophoresis GmbH, and Tissue Genesis. None of these companies are conducting clinical trials for the treatment of hand dysfunction in scleroderma patients. However, they are engaged in a number of clinical trials around the world.

Clinical Trial

CompanyAffiliationLocationIndication
AdisaveSponsorCanadaWounds and Soft Tissue Defects
GID GroupSponsorU.S.Alopecia
GID GroupSponsorU.S.Erectile Dysfunction
GID GroupSponsorU.S.Knee Osteoarthritis
Healeon MedicalSponsorU.S.Alopecia
Healeon MedicalSponsorU.S.Chronic Obstructive Pulmonary Disease
Healeon MedicalSponsorU.S.Inflammatory Bowel Disease
Healeon MedicalSponsorU.S.Neurological Disorders and Disease
Healeon MedicalSponsorU.S.Systemic Pain Conditions
Healeon MedicalSponsorU.S., HondurasMultiple Sclerosis
Human Med AGCo-CollaboratorFranceKnee Osteoarthritis
InGeneronSponsorU.S.Rotator Cuf Tears
InGeneronSponsorU.S.Chronic Venous Leg Ulcers
Tissue GenesisSponsorU.S.Critical Limb Ischemia
Tissue GenesisCollaboratorU.S.Rotator Cuff Tears

A study published in 2016 reported that there were 570 medical clinics in the U.S. advertising and offering stem cell treatments, including those derived from adipose tissue, directly to patients. It is unclear whether the FDA will allow these clinics to continue to operate in this fashion and whether they will pose a threat to its business if and at such time that the company obtain PMA approval to commercialize Habeo Cell Therapy in the U.S.

In the future, the company also anticipate encountering competition from companies developing and offering drugs for the treatment of scleroderma including, but not limited to, Actelion Pharmaceuticals, Allergan, Apricus Biosciences, Bayer, Corbus Pharmaceuticals, Covis Pharma, CSL Behring, Genentech, and United Therapeutics. No companies today have approved drugs indicated for improving hand function in scleroderma patients while only Tracleer® (Bosentan) is approved in Europe for the prevention of new digital ulcers in scleroderma patients. Habeo Cell Therapy is expected to compete with or be used in conjunction with second and/or third line therapies including, but not limited to, phosphodiesterase inhibitors, botulinum toxin A, angiotensin II receptor blockers, ACE inhibitors, alpha blockers, selective serotonin reuptake inhibitors, topical nitrates, IV prostanoids, endothelin receptor antagonists, immunosuppressants, and surgical interventions.

Research and Development

Research and development expenses were $11.7 million and $16.2 million for the years ended December 31, 2017 and 2016, respectively. These expenses have supported the basic research, product development and clinical activities necessary to bring its products to market.

The company's research and development efforts in 2017 focused predominantly on the following areas:

  • Completion of enrollment in the STAR (hand manifestation of scleroderma) trial and data analysis and trial close out costs related to its previous conducted Phase IIACT-OA (knee osteoarthritis) trial;
  • Support of ongoing preclinical and other research activities towards BARDA contract milestones;
  • Support of the investigator initiated trials ADRESU in Japan and SCLERADEC-II in France;
  • Planning and development of next generation Celution Cell Therapy products, including detailed product roadmaps for the device, consumables and accessories;
  • Development of new configurations and expanded functionality of its Celution platform to address the current Japanese regulatory approval as a medical device (Japan Class I) and other markets;
  • Conduct ADRC viability and transport studies in support of clinical trial requirements;
  • Conduct presentation and publishing of research efforts related to ADRC characterization and potency to further establish scientific leadership in the field; and
  • Continued optimization and development of the Celution System family of products and next-generation devices, single-use consumables and related instrumentation.

Intellectual Property

The company's success depends in large part on its ability to protect its proprietary technology, including the Celution System product platform, and to operate without infringing on the proprietary rights of third parties. The company rely on a combination of patent, trade secret, copyright and trademark laws, as well as confidentiality agreements, licensing agreements and other agreements, to establish and protect its proprietary rights. The company's success also depends, in part, on its ability to avoid infringing patents issued to others. If the company were judicially determined to be infringing on any third-party patent, the company could be required to pay damages, alter its products or processes, obtain licenses or cease certain activities.

To protect its proprietary medical technologies, including the Celution System platform and other scientific discoveries, Cytori Therapeutics has a portfolio of over 100 issued patents worldwide. The company currently have 34 issued U.S. patents and 68 issued international patents. Of the 34 issued U.S. patents, eight were issued in 2017. Of the 68 issued international patents, seven were issued in 2017. In addition, Cytori Therapeutics has over 45 patent applications pending worldwide related to its Cytori Cell Therapy and Nanomedicine technologies. Cytori Therapeutics is seeking additional patents on methods and systems for processing adipose-derived stem and regenerative cells, on the use of adipose-derived stem and regenerative cells for a variety of therapeutic indications, including their mechanisms of action, on compositions of matter that include adipose-derived stem and regenerative cells, and on other scientific discoveries. Regarding its Cytori Nanomedicine program, as part of its asset acquisition transaction with Azaya Therapeutics, the company acquired Azaya Therapeutics’ patent portfolio consisting of two issued patents, one pending patent application and valuable proprietary liposome manufacturing know-how. Since the Azaya asset acquisition, Cytori Therapeutics has filed one patent application relating to Cytori Nanomedicine, and intend to actively continue to enhance its nanomedicine portfolio.

The company cannot assure that any of its pending patent applications will be issued, that the company will develop additional proprietary products that are patentable, that any patents issued to it will provide it with competitive advantages or will not be challenged by any third parties or that the patents of others will not prevent the commercialization of products incorporating its technology. Furthermore, the company cannot assure that others will not independently develop similar products, duplicate any of its products or design around its patents. U.S. patent applications are not immediately made public, so the company might be surprised by the grant to someone else of a patent on a technology Cytori Therapeutics is actively using.

There is a risk that any patent applications that the company file and any patents that the company hold or later obtain could be challenged by third parties and declared invalid or infringing of third party claims. For many of its pending applications, patent interference proceedings may be instituted with the U.S. Patent and Trademark Office, or the USPTO, when more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued patent. At the completion of the interference proceeding, the USPTO will determine which competing applicant is entitled to the patent, or whether an issued patent is valid. Patent interference proceedings are complex, highly contested legal proceedings, and the USPTO’s decision is subject to appeal. This means that if an interference proceeding arises with respect to any of its patent applications, the company may experience significant expenses and delay in obtaining a patent, and if the outcome of the proceeding is unfavorable to it, the patent could be issued to a competitor rather than to it. Third parties can file post-grant proceedings in the USPTO, seeking to have issued patent invalidated, within nine months of issuance. This means that patents undergoing post-grant proceedings may be lost, or some or all claims may require amendment or cancellation, if the outcome of the proceedings is unfavorable to it. Post-grant proceedings are complex and could result in a reduction or loss of patent rights. The institution of post-grant proceedings against its patents could also result in significant expenses.

Patent law outside the United States is uncertain and in many countries, is currently undergoing review and revisions. The laws of some countries may not protect its proprietary rights to the same extent as the laws of the United States. Third parties may attempt to oppose the issuance of patents to it in foreign countries by initiating opposition proceedings. Opposition proceedings against any of its patent filings in a foreign country could have an adverse effect on its corresponding patents that are issued or pending in the United States. It may be necessary or useful for it to participate in proceedings to determine the validity of its patents or its competitors’ patents that have been issued in countries other than the United States. This could result in substantial costs, divert its efforts and attention from other aspects of its business, and could have a material adverse effect on its results of operations and financial condition. The company currently have pending patent applications or issued patents in Europe, Brazil, Mexico, India, Russia, Australia, Japan, Canada, China, Korea and Singapore, among others.

In addition to patent protection, the company rely on unpatented trade secrets and proprietary technological expertise. The company cannot assure you that others will not independently develop or otherwise acquire substantially equivalent techniques, somehow gain access to its trade secrets and proprietary technological expertise or disclose such trade secrets, or that the company can ultimately protect its rights to such unpatented trade secrets and proprietary technological expertise. The company rely, in part, on confidentiality agreements with its marketing partners, employees, advisors, vendors and consultants to protect its trade secrets and proprietary technological expertise. The company cannot assure you that these agreements will not be breached, that the company will have adequate remedies for any breach or that its unpatented trade secrets and proprietary technological expertise will not otherwise become known or be independently discovered by competitors.

Government Regulation – Nanoparticle Oncology Drugs

The company's nanoparticle oncology drug products must receive regulatory approvals from the EMA and the FDA and from other applicable governments prior to their sale.

The company's current and future nanoparticle oncology drugs are, or will be, subject to stringent government regulation in the United States by the FDA under the Federal Food, Drug and Cosmetic Act. The FDA regulates the design/development process, clinical testing, manufacture, safety, labeling, sale, distribution, and promotion of oncology drugs. Included among these regulations are drug approval requirements and the current Good Manufacturing Practices, cGMP. Other statutory and regulatory requirements govern, among other things, cGMP inspection, prohibitions against misbranding and adulteration, labeling and post-market reporting. The recent CURES Act legislation regarding drugs in the United States has yet to be implemented and may yield additional regulatory requirements on therapeutic drugs while providing some relief in selected regulatory burdens. The FDA’s interpretation and implementation of the CURES Act has yet to be published.

The company's nanoparticle oncology drugs must also comply with the government regulations of each individual country in which the products are to be distributed and sold. These regulations vary in complexity and can be as stringent, and on occasion even more stringent, than FDA regulations in the United States. International government regulations vary from country to country and region to region. For instance, its ATI-0918 drug candidate relies on an expedited approval process referred to as ‘bioequivalence’ or BE approved under an ANDA. ANDA and BE products require a ‘reference drug’, ‘reference standard’, or RS, and/or ‘reference listed drug’, or RLD, to with which to show equivalence. The reference drug may not be the same in all territories or countries, which could require different and unique BE clinical studies for some territories. Furthermore, the level of complexity and stringency is not always precisely understood today for each country, creating greater uncertainty for the international regulatory process. Additionally, government regulations can change with little to no notice and may result in the elimination of the BE regulatory pathway in some regions, creating increased regulatory burden.

Worldwide, the regulatory process can be lengthy, expensive, and uncertain with no guarantee of approval. Before any new drugs may be introduced to the U.S. market, the manufacturer generally must obtain FDA approval through either ANDA process for generic drugs off patent that allow for bioequivalence to and existing reference listed drug, or the lengthier new drug approval (NDA) process, which typically requires multiple successful Phase III clinical trials to generate clinical data supportive of safety and efficacy along with extensive pharmacodynamic and pharmacokinetic preclinical testing to demonstrate safety. Approval of an ANDA could take four or more years from the time the development process is initiated due to the requirement for clinical trials. NDA drugs could take significantly longer due to the additional preclinical requirements along with the typical requirement for two successful Phase III clinical trials.

The company's lead ATI-0918 drug candidate is eligible for the ANDA regulatory pathway in the U.S., while its ATI-1123 drug candidate is subject to the significantly lengthier NDA process. Changes to the RS and RLD for drugs eligible for the ANDA process can result in significant delays in the regulatory process as BE clinical studies may need to be repeated for regions / countries that no longer recognize the RS or RLD utilized in BE clinical studies. Failure to comply with applicable requirements can result in application integrity proceedings, fines, recalls or seizures of products, injunctions, civil penalties, total or partial suspensions of production, withdrawals of existing product approvals, refusals to approve new applications or notifications, and criminal prosecution.

Drugs are also subject to post-market reporting requirements for deaths or serious injuries when the drug may have caused or contributed to the death or serious injury, or serious adverse events. If safety or effectiveness problems occur after the drug reaches the market, the FDA may take steps to prevent or limit further marketing of the drug. Additionally, the FDA actively enforces regulations prohibiting marketing and promotion of drugs for indications or uses that have not been approved by the FDA.

The company must comply with extensive regulations from foreign jurisdictions regarding safety, manufacturing processes and quality. These regulations, including the requirements for marketing and authorization, may differ from the FDA regulatory scheme in the United States.

Government Regulation – Medical Devices

As a specialty therapeutics company, the company operate under stringent regulations and its companies and products are subject to a variety of distinct regulations around the world that are subject to modification or change.

Cytori Cell Therapy

Cytori Cell Therapy technology is regulated through a variety or agencies and approaches around the world. The company's products must receive regulatory clearances or approvals from regulatory bodies such as the EMA in the European Union, the FDA in the U.S., PMDA and MHLW in Japan, and the China Food and Drug Administration in China and from other applicable governments prior to their sale or in some cases prior to clinical trials. This technology platform incorporates multiple elements including devices, reagents and software that in combination yield an autologous cellular product. As a result of the complex nature of its products and differing regulations through the world, there is no single unified of global set of regulatory requirements or common approach to regulation and is therefore region specific.

Cytori Cell Therapy technology is, and will be, subject to stringent government regulation in the United States by the FDA under the Federal Food, Drug and Cosmetic Act. The FDA regulates the design/development process, clinical testing, manufacture, safety, labeling, sale, distribution and promotion of medical devices and drugs. Included among these regulations are pre-market clearance and pre-market approval requirements, design control requirements, and the requirements to comply with Quality System Regulations/Good Manufacturing Practices. Other statutory and regulatory requirements govern, among other things, registration and inspection, medical device listing, prohibitions against misbranding and adulteration, labeling and post-market reporting. In the U.S., the company must currently obtain FDA clearance or approval through the PMA application process, which requires clinical trials to generate clinical data supportive of safety and efficacy. Approval of a PMA could take four or more years from the time the process is initiated due to the requirement for clinical trials. Failure to comply with applicable requirements can result in application integrity proceedings, fines, recalls or seizures of products, injunctions, civil penalties, total or partial suspensions of production, withdrawals of existing product approvals or clearances, refusals to approve or clear new applications or notifications, and criminal prosecution.

Recently, the U.S. government enacted the 21st Century Cures Act, or the CURES Act, in the United States that has many provisions that could be favorable for it. However, the provisions of the CURES Act are broad and lack enough detail currently to determine its effect on its regulatory pathway. Further interpretation and implementation of the CURES Act must occur before any definitive assessments can be made.

Outside the U.S., the Cytori Cell Therapy family of products must also comply with the government regulations of each individual country in which the products are to be distributed and sold. These regulations vary in complexity and can be as stringent, and on occasion even more stringent, than FDA regulations in the United States. International government regulations vary from country to country and region to region. For example, regulations in some parts of the world only require product registration while other regions/countries require a complex product approval process. Due to the fact that there are new and emerging cell therapy and cell banking regulations that have recently been drafted and/or implemented in various countries around the world, the application and subsequent implementation of these new and emerging regulations have little to no precedent. Furthermore, the level of complexity and stringency is not always precisely understood today for each country, creating greater uncertainty for the international regulatory process. Furthermore, government regulations can change with little to no notice and may result in up-regulation of its products, thereby, creating a greater regulatory burden for its cell processing and cell banking technology products.

In Europe, Cytori Cell Therapy is CE Mark approved as the Celution device and consumable product and is sold for commercial and research use. Expansion of use of Cytori Cell Therapy in Europe will likely require an expansion of its regulatory claims that would likely include disease-specific claims obtained through the completion of clinical trials. It is possible that Cytori Cell Therapy may be regulated as a device, similar to its regulatory pathway in the U.S., or as an advanced tissue medicinal product or ATMP, or some combination of the two in Europe. Cytori is currently working with both European authorities and country-specific competent authorities to clarify the proper path for Cytori’s Habeo Cell Therapy in Europe.

Regulations in the Asia-Pacific and Japan regions are currently evolving for cell therapy products. For example, the Japan Diet enacted a regenerative medicine law in November of 2014 following sweeping changes in Japan’s medical device regulations in 2014. In China, the regulatory landscape for cell therapies such as ours is subject to increasing regulation, and success in this market will depend heavily on a firm understanding of applicable regulations and a commitment to pursuing appropriate regulatory approvals, including any required approvals from the National Health and Family Planning Commission of the People’s Republic of China, and other governmental entities. These regulatory uncertainties further complicate the regulatory process in the Asia-Pacific region and may lengthen approval timelines and/or market entrance or penetration.

Regulatory Developments

EU Orphan Designation

In April 2015, the European Commission, acting on the positive recommendation from the European Medicines Agency Committee for Orphan Medicinal Products, granted an orphan drug designation to Assistance Publique Hopitaux du Marseille (France), the sponsor institution for the SCLERADEC I and SCLERADEC II trials using Cytori Cell Therapy, for the treatment of systemic sclerosis.

In April 2016, the European Commission, acting on the positive recommendation from the European Medicines Agency Committee for Orphan Medicinal Products, granted orphan drug designation to a broad range of Cytori Cell Therapy formulations when used for the treatment of systemic sclerosis under Community Register of Orphan Medicinal Products number EU/3/16/1643.

In November 2016, the U.S. FDA Office of Orphan Products Development granted Cytori an orphan drug designation for cryopreserved or centrally processed ECCS-50 Habeo for scleroderma.

Employees

As of December 31, 2017, the company had 37 full-time employees. Of these full-time employees, three were engaged in manufacturing, 13 were engaged in research and development, seven were engaged in sales and marketing and eight were engaged in management, finance and administration. From time to time, the company also employ independent contractors to support its operations. The company's employees are not represented by any collective bargaining agreements and Cytori Therapeutics has never experienced an organized work stoppage.


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