No wonder why John Paul Dejoria increased his position in Cytomedix.
John Paul Dejoria increases his share position in Cytomedix
John Paul DeJoria
Net Worth$4 B
John Paul Mitchell Systems, has roughly $1 billion in annual sales. His Patron Spirits, started as a hobby with pal Martin Crawley in 1989, sold more than 2.4 million cases of tequila in 2011. DeJoria gives to charities that help people help themselves. Chrysalis provides L.A. homeless with a fresh start; Grow Appalachia hands people the supplies and knowledge needed to grow their own food.
From: John Paul DeJoria 4,021,726
To: John Paul DeJoria (22) 7,125,974
That's good news, right?
“That's very good news for Cytomedix! Prior to the decision there was virtually no government business for AutoloGel; and the lack of government business significantly impeded uptake in the private pay market. CMS-NCD provides a pathway for reimbursement of AutoloGel to Medicare and Medicaid beneficiaries, which make up over half of the approximate 2.0 million pressure ulcers and 1.5 million diabetic foot ulcers treated in the U.S. each year”.
On July 10, 2013, Cytomedix, Inc. CMXI announced that the Centers for Medicare and Medicaid Services (CMS) has issued proposed payment regulations under the Physician Fee Schedule (PFS) and the Hospital Outpatient Prospective Payment System (HOPPS) that include proposed guidelines covering Medicare reimbursement for AutoloGel.
What the heck does that mean?
Before we get into that, let's take a step back and review where we've come with respect to Medicare reimbursement and AutoloGel over the past year.
On August 2, 2012, the CMS issued a National Coverage Determination (NCD) for autologous blood-derived products for the treatment of chronic non-healing wounds. The decision reversed nearly 20 years of non-coverage for autologous platelet rich plasma (PRP) treatments, including Cytomedix's AutoloGel - the only FDA approved PRP treatment option for wound care (view the CMS memo). Essentially, the CMS decision to cover PRP treatment options for wound care opens the door for reimbursement of AutoloGel to Medicare and Medicaid beneficiaries in both the inpatient and outpatient market.
That's good news, right?
That's very good news for Cytomedix! Prior to the decision there was virtually no government business for AutoloGel; and the lack of government business significantly impeded uptake in the private pay market. CMS-NCD provides a pathway for reimbursement of AutoloGel to Medicare and Medicaid beneficiaries, which make up over half of the approximate 2.0 million pressure ulcers and 1.5 million diabetic foot ulcers treated in the U.S. each year.
That sounds like a fairly large market.
It's an enormous market! For example, Frost & Sullivan estimates the U.S. chronic wound care market is $2.3 billion in size, with more than 6 million chronic non-healing wounds treated annually. PRP products like AutoloGel represent only a small fraction of the market share despite strong clinical and pharmacoeconomic data supporting their use.
But don't get lost on that $2.3 billion number. Truth be told, there are dozens of alternative therapies that compete with AutoloGel, some of them commodity types of products that have established habitual use patterns or set provider contracts to encourage standardized use. So AutoloGel isn't fighting for market share of $2.3 billion. The product competes more directly with skin substitutes (~$250 million) or enzymes and growth factors (~$150 million). See this fancy chart below:
(click to enlarge)
But what is important to note is that there is virtually no government business for AutoloGel now. Instead, management has been focusing on private pay procedures, long-term acute care hospitals (LTAC), veterans administration (VA) facilities, and certain state Medicaid agencies. However, the lack of a national coverage decision on the product has limited uptake in this area as well. So the CMS coverage decision not only kicks open the door to Medicare and Medicaid, it also meaningfully expands private pay coverage as well as many private insurance companies follow the CMS's lead.
Can you explain the CMS coverage, because it looks like there is still work to be done with respect to finalizing the decision?
So CMS granted coverage to AutoloGel under its Coverage with Evidence Development (CED) program. Now I want to be clear - CED is full coverage by the government to Medicare and Medicaid beneficiaries, but the coverage comes with a stipulation that Cytomedix will continue to generate meaningful clinical data on AutoloGel to support the continued coverage over time. It's kind of like CMS saying, "Yes, but can you send us more data in a year or two so we can all feel better about this decision?"
Remember that AutoloGel is an FDA-approved product. The FDA establishes hurdles, guidelines and regulations to protect patients from potentially dangerous experimental drugs and devices. Cytomedix cleared that hurdle, many years ago. However, use of AutoloGel to date has been limited due to a lack of reimbursement coverage. And Cytomedix is a small company with limited financial flexibility, so for years they have been stuck in Catch-22 of, "How do we generate data without coverage / How do we obtain coverage without data." Quite the conundrum. CED provides the pathway from CMS to provide the coverage in order for Cytomedix to collect additional data while selling the product on the market for a profit. It's the perfect solution.
Can you talk a little about what data Cytomedix has generated to date?
Sure! AutoloGel, in our view, is a potential significant leap forward in the treatment paradigm for chronic non-healing wounds. Not only is the product more effective than the more commonly used Dermagraft (~$195M in sales in 2011) and Apligraf (~$125M in sales in 2011), but it costs less. The data below was compiled by B&D Consulting in September 2007. B&D is an independent advisory and advocacy firm located in Washington. The firm completed a cost effectiveness analysis of AutoloGel compared to alternative therapies for patients with diabetic foot ulcers. Results of this study demonstrate AutoloGel offers a lower cost and better healing outcomes than the other therapies analyzed. This study was published in the Journal of Advances in Skin and Wound Care in December 2008.
Cytomedix has conducted its own market research and clinical studies to assess the cost and effectiveness of AutoloGel when compared to readily available, and fully covered, alternative therapies. For example, included in the company's dossier requesting reconsideration on NCD in May 2011 was a number of case studies collected over the previous seven years.
Also, prior to filing the reconsideration application, Cytomedix published a comprehensive systematic review and meta-analysis (statistical pooling) of the use of PRP gel in wound healing in ePlasty, an open access to the Journal of Plastic Surgery. Data at SAWC in April 2011 highlighted comparing the use of PRP gel (AutoloGel) and negative pressure wound therapy (NPWT) in the long-term acute care setting. Results demonstrate that PRP greatly improved the wound healing outcomes while also cutting costs associated with the overall treatment. The study was conducted at the Asheville Specialty Hospital, in Asheville, NC.
So you're pretty confident that Cytomedix will be able to generate the necessary data in the next few quarters to satisfy the CED requirement?
Yes. Cytomedix has already announced they are working with wound care centers around the country to build the registry program. The company will be using Intellicure to aid in the collection and analysis of the data as it is being generated. Management tells us that each use of AutoloGel will generate a profit to the company. That's important for investors to understand. CED allows Cytomedix to earn a profit as it collects the data and funnels that back to CMS for review. That's different from a traditional clinical trial, which normally cost companies money. Cytomedix will be selling AutoloGel with CMS coverage, and booking revenues as it ramps.
Back in May 2013, when Cytomedix held its first quarter 2013 conference call, CEO Martin Rosendale said he expects to be able to treat 1,000 patients with AutoloGel in 2013 (see conference call transcript). That's a significant acceleration from the approximate 300 patients treated in 2012. I think we'll hear more about this on the company's second quarter call in early August 2013. I wouldn't be surprised to see Cytomedix either expand their sales force to start actively promoting AutoloGel, something they have not been doing prior to this year, or strike a co-promotional agreement with a larger organization in the chronic-wound market.
Ok, so take us back to the press release last week on the proposed payment regulations.
Sure. So investors need to understand the progression here. The process starts with CMS granting NCD. The next step is granting of the temporary reimbursement coding and claims payment instructions. CMS put this memo out in March 2013. The assignment of a Healthcare Common Procedure Coding System (HCPCS) establishes the reimbursement mechanism for physicians and other providers submitting claims for services provided to Medicare beneficiaries. The next step after that is the payment procedure. This is what Cytomedix released last week. The press release was a little bit of a mixed bag.
With respect to physicians' offices, CMS has proposed that Medicare Administrative Contractors (MACs) determine the payment amount for AutoloGel for claims as they are submitted. Historically, Medicare contractors have paid these types of claims based on product invoices presented by the healthcare provider. That's perfect! Cytomedix will essentially get paid under the Physician Fee Schedule for what they bill - around $450 per single use. This took effect July 1, 2013. That means that Cytomedix can immediately now go out and promote AutoloGel to physicians, mostly podiatrists and wound-care specialists, for in-office use of AutoloGel and get reimbursed full price for each sales. Beautiful - the system is working!
For hospital outpatient services, CMS has placed the reimbursement code for AutoloGel in an Ambulatory Payment Classification (APC) that provides limited reimbursement for use of the product. Therefore, under the HOPPS guideline, AutoloGel will be reimbursed only comparable to a Level-2 debridement product. The reimbursement of which is less than $100 per use. That puts Cytomedix at a significant disadvantage trying to charge $450 for a product hospitals are only authorized to reimburse at around $100 per use. Cytomedix tells us that they are already in communication with CMS on revising the APC listing to authorize reimbursement of AutoloGel similar to a skin substitute, which would put the reimbursement for the product and associated application service in the area of $875 to $1375 per use.
If this can be accomplished by January 1, 2014, which Cytomedix management thinks it can, then AutoloGel immediately jumps from "extremely disadvantaged" on a reimbursement standpoint to "extremely advantaged" given the cost of only $450 per use and the potential for reimbursement at 2-3x that level. Products like Dermagraft and Apligraf cost $1500 or more per use, so wide-scale implementation of these new procedural codes could have a profound impact on the chronic wound market in 2014. I don't think people have realized that yet, so keep an eye on the preliminary and final CMS decision with respect to this topic coming later in the year.
Very interesting. Anything else to note on this topic?
Well, I think investors need to realize that these changes to the reimbursement process for AutoloGel are not incremental, they are monumental. AutoloGel is going from no reimbursement to potentially very favorable reimbursement. Cytomedix expects to see a meaningful pick-up in AutoloGel sales as soon as this quarter. Above we noted essentially two avenues for growth: in-patient hospital settings that include acute long-term care facilities and VA hospitals, and out-patient settings that include the physician's office or hospital outpatient facility. We think the market is pretty evenly split here for AutoloGel between in-patient and out-patient, and within out-patient, it's pretty even between the physician's office and the hospital facilities. So on about 75% of the market, AutoloGel is ready to go. On the proposed guidelines under HOPPS, we're optimistic this can be resolved by the start of 2014.
Any final thoughts on Cytomedix?
So we've been Neutral on Cytomedix since earlier in the year given some of the challenges we previously noted on enrollment in the company's Phase 2 RECOVER-Stroke trial. We love the Angel business and think that AutoloGel may finally be poised for a hockey-stick like ramp in revenues starting in 2014. We'd like a little more visibility on this ramp, an update on enrollment in the Phase 2 stroke trial, and an update on the cash position following the $27.5 million committed financing secured in February 2013.
• partnership picking up steam....
dots now in place...
I want to make sure that’s clear, that nobody has walked away. Secondly, the process is beginning to pick up steam because we’ve now turned up a number of uncertainties. There are uncertainties around coverage revenue development and uncertainties around our own financial position. And so with that clarity the discussions are beginning to pick up speed. As far as what we’re looking for with AutoloGel, what we’re talking about is a supply and distribution agreement. So we would continue to supply the product and the partner would be responsible for the sales and marketing and distribution to the customer base. Ideally for us it would be an upfront payment, a royalty with milestones built in along the way. I don’t want to get into specific numbers, Ren only because I don’t want to inhibit or impair our negotiations.
• 2013 S/B very exciting for Cytomedix...
Good morning everyone and thank you for joining us today. Cytomedix had a year of strong execution in 2012, making significant progress in both commercial operations and research and development. In the second half of the year we achieved important milestones for our two commercial products, Autologel and Angel, which we believe will contribute in a material way to our topline in 2013.
We delivered solid financial performance throughout the year and in the fourth quarter. As we pre-announced in our press from February 20, we reported overall fourth quarter product sales of just over $2 million, representing an increase of 27% over the same period in 2011 and a 20% sequential increase over the third quarter of 2012. Both the Angel system and the Autologel showed double digit growth, with Angel achieving record quarterly sales of $1.9 million. We are confident that our efforts to enhance market penetration will continue to build momentum.
In August last year, we announced that the Center for Medicare and Medicaid Services, CMS, had agreed to provide reimbursement for Autologel in the treatment of chronic non-healing wounds. This national coverage determination was a significant development for Cytomedix and gives us the opportunity to re-launch Autologel into the marketplace with Medicare coverage. CMS will provide coverage through CED, Coverage with Evidence Development, a program intended to provide access for Medicare beneficiaries through promising medical technologies by providing coverage and reimbursement while generating additional clinical data to demonstrate the impact and help the outcomes.
Since August of last year, we have collaborated with CMS to prepare the protocols for collecting evidence in support of the use of Autologel. Earlier this month we announced that CMS granted formal approval of the clinical outcomes to find in all four of our clinical protocols submitted to CMS. In addition, we announced yesterday that CMS has issued guidance to Medicare administrative contractors and fiscal intermediaries, which includes the building codes and procedures that will be used to process claims for Autologel.
While the process has taken longer than we anticipated, the outcome is what we predicted. There was specificity in the claims process to identify and monitor Autologel. Beginning on the implementation date of July 1, 2013, all Medicare claims for Autologel provided after August 2 of 2012 and within the guidelines of the CED protocols will be processed for reimbursement. To clarify, actual claims processing will begin July 1 of this year and claims for Autologel provided since August 2 of last year will be eligible. Obviously including treatments under the approved data collection protocol which we expect to begin shortly.
The national coverage decision opens up a very large market for us. The market for advanced products addressing clinic wounds in the U.S is estimated to be over $2.3 billion annually, with 6 million wounds primarily diabetic foot ulcers, venous leg ulcers and pressure ulcers per year. Importantly, significantly more than 50% of the patients are Medicare beneficiaries, with Medicare coverage now secured for Autologel. In 2013 we will expand our sales and marketing efforts, starting with outpatient wound care centers.
Coverage with evidence development provides us with a unique market development opportunity to expand the use of Autologel while continuing to collect evidence on the effectiveness in diabetic ulcers, pressure ulcers and venous ulcers through the U.S. Wound Registry. In a few minutes, Dr. Jim Hinson, our Chief Medical Officer will discuss in more detail the progress we have made in achieving coverage with evidence development for Autologel.
CMS coverage is also driving partnering discussions. Our plan continues to be to secure an appropriate commercial partnership for Autologel. Discussions are now ongoing with several potential partners with the possibility of (inaudible) cash in the transaction. Although I cannot predict the timing of an agreed upon transaction, the possibility of us securing a partner who can help us unlock the true commercial potential of Autologel remains favorable.
Turning to the Angel cPRP system. Angel remains a product that is driving the majority of our sales today. Most of our growth today is in orthopedic procedures, especially in sports medicine to treat tendinitis and tendonosis . Angel continues to be used in cardiovascular surgeries, specifically open heart surgery where it’s being used to facilitate fusion of the sternum and to prevent infection. We have now placed over 425 Angel devices in the U.S market and over 100 internationally. Angel is currently used in the treatment of close to 40,000 patients every year.
The second important milestone we achieved in 2012 was the addition of a second indication for the Angel system. In November we received the 510(K) clearance from the FDA and the CE mark to process bone marrow. This significantly expands our opportunity in the orthopedic surgical market and should further contribute directly to our topline sales in 2013. The new indication creates potential for physician use in bone repair and regeneration procedures that include spinal, periodontal and joint revision surgery.
Let me put some numbers around that. There are approximately 400,000 spinal fusion procedures performed every year in the United States alone and as many as 90% of these would be eligible for use of the Angel system. The biologics market associated with spinal fusion procedures is worth approximately $700 million annually.
On the strength of our new indication, we have engaged in partnering discussions with companies focused in orthopedic surgery. Our plans for Angel are to pursue additional orthopedic indications, explore expansion opportunities in pain management, and evaluate options for use as a delivery vehicle for other biological therapies.
In support of our sales growth plans for 2013, we are currently increasing the size of our field sales force and adding technical and scientific specialists. We have begun sponsoring a series of PRP workshops. The first workshop was held in February and was an unqualified success. Today, participants in that workshop are preparing to begin using the Angel system in their medical practices. Outside the U.S, our focus in 2013 is to help the international distribution partners we have established to expand their angel business in the regions they serve. Our international business should deliver robust growth in 2013.
This week we are exhibiting at the American Academy of Orthopedic Surgeons, AAOS conference in Chicago. Immediately following this earnings call, Ed Field, our Chief Operating Officer, will be presenting at the Annual Canaccord Musculoskeletal Conference which is held each year in proximity to the AAOS meeting. Ed’s presentation will be webcast and recorded.
So let’s talk about our Bright Cell technology pipeline. We have two Phase 2 studies ongoing. The first of these is the recovery stroke trial designed to treat ischemic stroke. It is a 100 patient, double blind placebo controlled study. We are now in the open enrolment period and reasonably expect to be fully enrolled by the end of the year, with topline data released about four months post the final enrolment. We have enrolled 26 of the target 100 patients and our enrolment rate continues to improve.
My optimism for our ability to enroll the study by yearend stems from a number of things. We recently received FDA approval for protocol amendments that modify the inclusion and exclusion criteria that allow more patients to qualify for the study. I recently toured the country with our Chief Medical Officer visiting a number of our trial sites and saw firsthand the enthusiasm for the study and commitment to success by our investigators.
Ultimately we expect to have up to 15 sites. There are nine sites up and running today and several more are indicative of the strong desire to participate. Our plan continues to be to seek a partner for ALD-401 and to the extent we show a positive clinical benefit in this study, we anticipate that we will be able to attract a partner to fund the Phase 3 study and take this product onto commercialization.
We also announced in late 2012 an NIH sponsored Phase 2 Bright Cell clinical study with ALD-301 in peripheral arterial disease, PAD. The phase study is an 80 patient, double blind, placebo controlled clinical trial in patients diagnosed with intermittent claudication which make up a significant subset of the PAD population. This is the first randomized clinical trial to look at the benefits of autologous stem cell therapy in this specific indication. We anticipate enrolment for the phase study to begin in the coming weeks and to be fully enrolled by the end of the year. The study is fully funded by the NIH in collaboration with the Cardiovascular Cell Therapy Research Network, the CCTRN. So there will be very little direct expense for Cytomedix aside from what we will incur in manufacturing the product.
In 2012, we also announced an open label clinical study funded by the Duke University Medical Center to treat cognitive disorders in patients that have been treated for malignant glioma. One of the 12 patients has been enrolled to date. The initiation of this study further demonstrates the potential value of Bright Cells in regenerative medicine.
Before I conclude, I want to draw your attention to the comprehensive strategic financing plan we put into place in February. It included an equity raise, a trust senior secured term loan facility and a committed equity facility. We received approximately $9.5 million in gross proceeds with the closing of the transaction and have commitments for up to an additional $18 million. While we expect our commercial product to get us to profitability, it is important that we have sufficient capital to continue to execute on our growth plans in the near term. The capital will be used to fund our priority activities in 2013 which include the launch of Autologel with CED, sales expansion for the Angel cPRP system, business development and partnering activities and completion of the recover stroke Phase 2 study. Drew will provide more details on the financing.
Sentiment: Strong Buy
Gotta luv those facts.
Cytomedix read 8-16-13
Angel Licensed To Arthrex, Inc. For Cash & Royalties
Cytomedix announced that it had signed a five-year exclusive worldwide licensing agreement with Arthrex, Inc., for the commercialization of the Angel Concentrated PRP System. Under the terms of the agreement, Cytomedix will retain ownership of Angel, but has granted Arthrex an exclusive worldwide right to develop, manufacture, and commercialize the product. Arthrex paid Cytomedix an upfront payment of $5 million, and will make royalty payments on future sales in the low teen range (we model 13.5%). The term of the agreement is five years, with a three year renewal option.
…A Little Background On Angel…
Angel is the company's concentrated PRP device and associated disposable products used in surgical settings for the separation of concentrated platelets from whole blood or bone marrow aspirates. Angel has been the main bright spot for Cytomedix over the past year. In fact, sales have continued their impressive march upwards ever since the company acquired the product from Sorin in April 2010. Angel sales in the second quarter 2013 totaled $2.25 million, up 38% year-over-year and 7% sequentially from the first quarter 2013. Below is a graph depicting the impressive recovery and solid growth Cytomedix has been able to achieve with Angel.
Cytomedix has placed nearly 600 units into the market to date, that's up nicely from the 500-525 placed at the end of 2012. What's more impressive is that the company has been doing this with only a handful of sales representatives. The company exited 2012 with 8 full-time sales reps, and only recently increased the number to 10 as of May 2013.
Much of the growth is coming from orthopedics (sports medicine). In November 2012, Cytomedix announced U.S. FDA approval for the use of Angel for processing a small sample of blood or a mixture of blood and bone marrow aspirate (BMAC). The 510(k) approval now allows for PRP produced from either blood or a mixture of bone marrow aspirate to be combined with bone graft material and used in appropriate orthopedic procedures such as spinal fusion, healing of nonunion bone fractures and other bone grafting applications. Concentrated PRP produced from blood and bone marrow may be used in up to 90% of spinal fusion procedures. In the U.S., approximately 400,000 spinal fusion procedures are performed each year and the application of bone marrow or bone marrow concentrates has been the historical gold standard. The U.S. biologics market associated with spinal fusion procedures is approximately $700 million annually. We think an equal opportunity exists in Europe.
…A Little Background On Arthrex…
Arthrex is a global medical device company and leader in new product development and medical education in orthopedics. The company pioneered the field of arthroscopy and developed more than 6,000 innovative products and surgical procedures to advance minimally invasive orthopedics. Arthrex has twenty locations worldwide, with over 60 international distribution locations, shipping products to over 100 countries. As of year-end 2012, Arthrex had more than 1,500 employees in Southwest Florida, 700 national and international employees and about 2,000 sales associates around the world (source: company spokeswoman Lisa Gardiner).
Arthrex, Inc. - National & International Locations
Arthrex has a large commercial infrastructure supporting sales throughout the world and will immediately take responsibility for all sales and marketing activities for Angel. Angel is currently approved in the U.S., and various countries in Europe and in the Middle East, as well as in Canada and Australia.
…Why This Makes Sense For Cytomedix…
Above we noted that Cytomedix was able to generate roughly $10 million in annualized revenues from Angel with only 10 full-time sales representatives. Arthrex has 2,000 sales representatives. The company has a core focus on orthopedic products, with a strong emphasis on orthobiologics. A quick trip to the Arthrex website shows key product groups in autologous blood products, bone grafting, cartilage, cellular products, and soft tissue repair. Angel fits right in with this core focus. We can see Arthrex promoting Angel alongside its existing bone marrow aspirate cell suspension products, its BioCartilage® matrix, its Autograft osteochondral repair system, or its existing PRP autologous systems.
There are several things we believe Arthrex can do to drive Angel sales. The first is increase the Angel average selling price. To date, Cytomedix has been focusing on cardiovascular surgery and only just starting to penetrate the orthopedic market. Arthrex, with a strong foothold in orthopedics can co-mingle Angel with existing products to create kits or solutions for orthopedic surgeons. Secondly, we expect Arthrex to dramatically ramp-up the marketing and promotion on Angel - something cash-strapped Cytomedix has been unable to do. Previously, Cytomedix was relying on PRP workshops and peer-to-peer networking to get the word out about Angel. Arthrex can throw significant marketing dollars at the product to drive uptake, both in and outside the U.S. Finally, Arthrex scale dwarfs what Cytomedix had. Even if only 10% of the Arthrex sales force carries Angel, that's still a 200% increase over what Cytomedix was doing.
Angel held about 10% market share in the concentrated PRP market. With sales annualizing around $10 million, that puts the entire market at around $100 million in size. However, this is a market that is growing rapidly. Cytomedix estimates the market was only $40 million in size in 2009. Sales of concentrated PRP devices have been soaring as more data becomes available in orthopedics and sport-related injuries. Evidence that using PRP to shorten and improve healing with knee, ankle, elbow, or an ACL or MCL sprains is growing rapidly. We have seen clinical data demonstrating PRP is effective at treating chronic tennis elbow, severe Achilles tendonitis and osteoarthritis of the knee. Tiger Woods was reported to use PRP to shorten his recovery time after his ACL tear in 2008. Pittsburgh Steelers' Hines Ward and Troy Polamalu both used PRP to recover from an injury during the 2008 NFL season in which the team won the Super Bowl. New York Mets all-star center fielder Carlos Beltran used PRP to aid in his recovery from a bone bruise on his right knee. The LA Dodgers, Seattle Mariners, Denver Nuggets, and Dallas Cowboys have all embraced the use of PRP.
…How PRP Works In Sports Injuries…
Source: Jenny Vrentas & Michael Guillen, NJ Star Ledger
From a forecasting standpoint, we previously believed that Cytomedix could drive Angel sales to $12.5 million in 2015. We believe Arthrex can double that number. We suspect that Arthrex will eventually take over the manufacturing of Angel as well, reducing overhead cost at Cytomedix. We believe many of the existing 10 sales representatives at Cytomedix previously promoting Angel will be swapped over to AutoloGel. At Cytomedix, Angel was a peak $15 million product. In the hands of Arthrex, sales could easily hit $40 million in five years. Thus, our estimated 13.5% royalty payment on top-line sales from Arthrex to Cytomedix actually equates to greater net cash flow to the company starting in 2015. And finally, it allows Cytomedix to focus on increased promotion of AutoloGel, a product set for a significant re-launch into the market later this year