CMXI: We Recommend Buying Cytomedix Post SAWC

Zacks Small Cap Research

By Jason Napodano, CFA

OTC:CMXI


Last week we attended the Symposium on Advanced Wound Care (SAWC) in Orlando, FL. We spent over three hours on the massive exhibit hall floor, having conversations with various companies and wound care professionals. Almost every major advanced product for the treatment of chronic wounds was there on display, including Dermagraft®, Apligraf®, Epifix®, Grafix®, Oasis® Wound Matrix, Regranex®, MatriStem®, and AutoloGel®. Exploring the exhibit hall floor, we observed the following:

1) The wound care market is highly fragmented, with no major player holding over 25% share. Prior to CMS packaging, which has taken effect in 2014, market share was driven by a combination of active and aggressive promotion from some of the industry’s top players and economic incentives from physicians.

2) The changes instituted by CMS in November 2013 for wound care reimbursement will have a dramatic and profound effect on new market share starting in 2014. Past leaders, Dermagraft and Apligraf, each having posted over $100 million in sales in 2013, will see their business struggle in 2014 (note that Shire has divested Dermagraft and privately held Organogenesis recently slashed its staff).

3) High quality data are lacking in the wound care market. Most data are retrospective and randomized controlled trials are small. Cytomedix (CMXI) is currently enrolling four clinical programs with a goal to have data on over 2,500 by the end of 2015. We believe additional programs are planned. This will help the company dramatically increase awareness for AutoloGel in the coming quarters.

4) Cost will play a much bigger role in the sustainability of wound care products than ever before thanks to CMS packaging. We believe AutoloGel has >70% gross margin under existing pay rules for HOPPS and PFS, and that should allow Cytomedix ample profitability for active promotion and favorable economics to the wound care professional. This should allow Cytomedix the opportunity to gain sizable market share in the coming quarters.

AutoloGel Poster Shows Impressive Results

At SAWC, Cytomedix presented at posted on Saturday, April 26, 2014, entitled, “Platelet Rich Plasma Gel Consistently Reduces Pressure Ulcer Size (Poster No. CS058, Carelyn P. Fylling, RN, MSN, CWS, CLNC Vice President, Professional Services and Laurie Rappl, PT, DPT, CWS Clinical Specialist – Cytomedix, Inc.). The purpose of the poster was to demonstrate that AutoloGel (autologous platelet rich plasma) could provide an effective topical treatment for difficult to treat pressure ulcers.

Pressure ulcers are notoriously difficult to treat. According to Markova, 50% of stage 2 pressure ulcers remain unhealed eight weeks after diagnosis. The number jumps to 95% for stage 3 and stage 4 ulcers. Pressure ulcers are a major problem for the elderly and significant financial burden on the U.S. healthcare system. For example, pressure ulcers are found in
- 15% of acute care patients
- 26% of hospitalized patients
- 43% of nursing home patients
- 39% of spinal cord injury patients

Data presented by Cytomedix at the SAWC conference notes 45,500 primary admissions to the hospital for pressure ulcers in 2006. The data shows a ten-fold increase in secondary diagnosis. These types of wounds can greatly increase hospital stays, increasing cost range between $50,000 and $125,000 per say. Data from Markova A., et al, 2012 concludes that chronic wounds, including pressure ulcers, account for an estimated $6 to $15 billion annually in U.S. health care costs.
The poster presented findings from 46 patients (58 pressure ulcers) treated at long-term acute care facilities in the U.S. with AutoloGel. The mean baseline wound for this study at an area of 27.6 cm2 and volume of 71.9 cm3, with an average duration of 45.9 weeks.

We present the key findings from the analysis. Cytomedix presented the data on weeks of therapy and number of AutoloGel treatments. 


On "Weeks of Treatment": Results show that after 3.4 weeks, 93.1% of all wounds treated responded to AutoloGel therapy, with a 49.6% reduction in area and 67.2% reduction in volume. Effect was seen in as little as 5 days.


On "Number of Treatments": Results show that that 94.1% of all wounds responded to AutoloGel treatment, with an average of 4.3 treatments per wound. Effect was seen in as little as one treatment, with >70% response. We believe these results show a consistent and impressive improvement in both wound area and volume following ~3.5 weeks and 4-5 treatments with AutoloGel.

Our rating on Cytomedix is now a 'Buy'. Our target price is $1.50 per share.

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