By Brady Huggett
Cytomedix Inc. entered a stock purchase agreement with Chicago-based Fusion Capital Fund II LLC, allowing Fusion to buy up to $14.7 million of Cytomedix stock.
The funding will occur periodically, once the Securities and Exchange Commission declares effective the registration statement covering the shares. The share price will be based on the market price at the time of sale with no fixed discount, with Cytomedix deciding both the timing and amount of stock sold to Fusion in each transaction.
James Cour, president and CEO of Cytomedix, said the company would use the funds for ¿the infamous general corporate purposes. We have a proprietary procedure for making platelet gels,¿ he added. ¿Our remaining hurdle is to get Medicare approval. We¿ll use [the funding] to cover some of our remaining investments until [approval], hopefully in July.¿
Deerfield, Ill.-based Cytomedix had about $2.1 million in cash at year¿s end and has about 10.6 million shares outstanding. The company has ¿one technology with two different delivery systems,¿ Cour said.
The Autologel Process and Procuren are proprietary wound-healing agents comprised of naturally occurring growth factors to treat chronic wounds, including diabetic foot ulcers and pressure ulcers, as well as venous stasis.
¿For Autologel, we harvest platelets from the patients, make the gel at the bedside and apply it,¿ Cour told BioWorld Today. ¿We put it in place, cover it with a mesh dressing, leave it for a week and then leave [the wound] open for a week. Then we do a second application.¿
Cour said Autologel requires, on average, two and a half to three treatments, and each costs about $625. For Procuren, the platelets are taken from the patient and shipped off to be made into the therapeutic, a process that takes seven to 10 days. Cytomedix acquired worldwide manufacturing, sales and distribution rights to Procuren from Curative Health Services Inc., of Hauppauge, N.Y., for $3.8 million early this year. Cour said Curative Health had seen as much as $16 million in sales per year with it.
At $625 per treatment for Autologel, the need for Medicare reimbursement is glaring, Cour said.
¿This is not something that patients can self-fund,¿ he said.
Now-retired Charles Worden in mid-1998 founded Cytomedix, when he was working as a lab technician for Curative. Worden ¿did something not unlike a garage shop in Silicon Valley¿ when he came up with the wound-healing technology, Cour said. In March 2000, the company raised about $7.5 million in a Series A financing, and then changed its name from Autologous Wound Therapy Inc. to Cytomedix in April.
Cour said the company¿s goal is to become less of a wound-and-tissue company and more of a cellular-therapy company. It has cast its eye on stem cells and cancer immunology as potential first expansion areas.
¿We are small and we¿re brave and we¿ll go after it,¿ Cour said. ¿But we still have a year or two before we go after it in a big way.¿
But the immediate obstacle in Cytomedix¿s way is the Medicare approval, which Cour said could come as soon as July. If not, Cytomedix cannot apply again until November, and wouldn¿t see potential approval until March 2002. Approval means funding for a sales program for Cytomedix¿s products, and increased sales of its two products.
¿It will materially alter life as we know it,¿ Cour said.
Cytomedix¿s stock (OTCBB:CYDX) rose 28 cents Monday, or about 13 percent, to close at $3.28.