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Cytori Therapeutics, Inc. Message Board

  • eyesandears51 eyesandears51 Oct 9, 2012 1:42 PM Flag

    A Deal or No Deal That Is The Question?

    As others have pointed out, the stock technicals of Cytori are showing signs of stress for two reasons, the macro environment today is tough XBI down 1.68%, the NASDAQ 100 breaking below it's 100 day SMA and the obvious uncertainty of attaining funding to replenish the companies fast depleting cash. All of this is known to management, and we can reasonably assume that they are working hard to deliver funded partnerships in Q-4, albeit one quarter after previous assurances. BARDA is positive, but will not provide near term funding relief and may be further delayed by negotiations over the fiscal cliff and the potential for sequestration. A secondary will certainly solve the funding problem but at the expense of dilution to existing shareholders. While this option is clearly far less desirable than funded partnerships in Q-4 the clock is timing out. Realistically, management has between now and Thanksgiving to conclude agreements. Beyond that date, the imperatives of Cytori's prospective partners to meet YE revenue, EBITDA, and operational objectives will likely defer their focus until after New Year. Since these potentials partners can read balance sheets, they must all be aware that Q-4 is imperative to Cytori leadership but not necessarily to them. It is hard to conclude an attractive deal when one side needs it more urgently than the other. Shareholders may face the painful prospect of CC concluding deals in the next 6-7 weeks that transfer disproportionate rewards to funding partners, denying shareholders substantial medium/long term value, or floating a secondary and concluding superior agreements from a position of cash strength. Consequently, the stock may decline in the near term to the mid $3's, but be better positioned by mid Q-1.

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    • EyesandEars

      For those who are investing for the longer term and believe in the Cytori opportunity, building a stronger more sustainable company that has the cash to capitalize on the emerging market to deliver medium/long term stock holders rewards this may be an alternative. Those with less conviction or a nearer term investing horizon may find this unattractive. I do concur that in either case the share price will be under consider negative pressure in the near term and could decline to the mid $3's as you have suggested. It has unsuccessfully struggled to maintain $4 today.

 
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