ROCKVILLE, Md., March 31, 2009 (GLOBE NEWSWIRE) -- Cytomedix, Inc. (NYSE Amex:GTF) announced today that Chief Executive Officer Martin Rosendale issued the following letter to shareholders providing a general corporate update:
Dear Cytomedix Shareholders,
A few weeks ago, the Washington Business Journal published an article on Cytomedix and the AutoloGel(tm) System. The reporter interviewed one of our newer customers, and midway through the article the customer was quoted, "If I hadn't seen it, I wouldn't have believed it". That simple testimonial statement concisely sums up the most significant challenge and opportunity for a product that can appear unbelievable at first. In this update, I will tell you how we are addressing some of the challenges and opportunities we face in 2009 and beyond.
Roughly nine months ago and shortly after assuming the role of CEO, I issued an open letter to the company's shareholders and noted in the letter that one of the principal attractions of joining Cytomedix was the science and technology that underlies the company's current and potential future product applications. My conviction in this technology is even stronger today. The healing of wounds is a complex biological process that involves a complicated balance of many overlapping and cascading biological reactions. The company's basic technology and value proposition, specifically with regard to the AutoloGel(tm) System, is based on restoring a natural balance to the wound environment, allowing the body to complete its own natural healing process. Once you have experienced it in the way our new customer above did, the AutoloGel(tm) System becomes a compelling option for managing the care of patients who suffer with chronic wounds. As a company, we remain committed to bringing fundamental improvement to these clinically challenging situations while at the same time building a business with lasting and growing value.
We have filed our Annual Report on Form 10-K with the Securities and Exchange Commission. I will provide some financial highlights in this update. However, you may access the 10-K from our website at www.cytomedix.com for additional detail.
Our cash and cash equivalents balance at December 31, 2008 was $4.0 million, down $1.1 million from $5.1 million at December 31, 2007. The reduction was due to cash used in operations of $2.5 million partially offset by the capital raise last fall of $1.4 million. We continue making incremental investments in sales and marketing to promote wider commercial acceptance of the AutoloGel(tm) System. Based on our current operating and spending plans, including expected growth in sales, we expect our net cash used in operations will range between $3.4 and $3.9 million in 2009. While our proprietary formulation patent for AutoloGel(tm) remains in force until 2019, the licensing agreements covering the base platelet releasate patent, which have been the primary source of our revenues over the past several years, are set to expire in November this year. It should therefore come as no surprise that our most immediate short term goal is to grow our commercial product sales to the point where these royalty revenues are effectively replaced on a run rate basis as we enter 2010. I believe that the nature of the customer relationships we are pursuing and the size of the wound care market currently targeted and available to us are sufficient to make this goal achievable.
Given the current economic uncertainty and the ongoing capital market challenges that small emerging companies are facing, it is also not particularly surprising that our Independent Registered Public Accounting Firm has expressed substantial doubt about our ability to continue as a going concern. Consistent with this opinion, we recorded a one-time non-cash impairment charge for goodwill and patents. It is important to understand that these charges have no impact on our cash balances nor in any way impact the economics of the business. One consequence, however, is that our shareholder's equity has been reduced below the $6 million NYSE Amex guideline for continued listing. Therefore, we can also anticipate a NYSE Amex notice regarding the listing non-compliance. In the event we receive such notice, we will be prepared to submit our compliance plan outlining how we intend to regain compliance with the required listing criteria within the grace period allotted under the NYSE Amex guidelines.
Despite the domestic economic challenges, we are off to a good start in 2009. In January, we implemented a strategic shift in the commercialization tactics for marketing of the AutoloGel(tm) System that is driving encouraging early results. New emphasis has been placed on scientific and clinical messaging, and the commercial organization has been realigned to reflect a stronger requirement for clinical support during the sales process. We have added two new clinical support staff to facilitate clinical product evaluations and establish protocols for the standardized use of the AutoloGel(tm) System. I have asked our top company executives to join sales managers and clinical staff in the selling process to establish a greater sense of importance and commitment to the AutoloGel(tm) System and the positive patient outcomes it produces. Early results of the strategy indicate sales growth and broader customer acceptance. We have experienced a marked increase in the number of product evaluations and interest in the technology. Our intensive focus over the upcoming weeks and months will be to convert this heightened interest and resulting evaluations into lasting commercial relationships.
We continue to develop and pilot new approaches to the market intended to simplify the clinical process. Our scientific and clinical message is consistently reflected in our marketing communications (brochures, trade shows, website) clarifying the role of platelet rich plasma in the management of chronic wounds and the AutoloGel(tm) System. In addition, we have developed a new packaging concept, based on customer feedback, which will be introduced in the second half of this year. The new design will improve the customer experience, reduce process steps and simplify the preparation of AutoloGel(tm).
We continue to publish in trade journals and at industry conferences. Two abstracts demonstrating the use of the AutoloGel(tm) System have been accepted for publication at next month's Symposium on Advanced Wound Care (SAWC), and an AutoloGel(tm) case series authored by one of our customers is scheduled for May publication in the journal Wounds. These publications, other published literature, and the data we continue to collect through product evaluations, will support our marketing efforts and help build a compelling case for Medicare Part B reimbursement with the Centers for Medicare and Medicaid Services (CMS).
While we prepare to reengage CMS regarding coverage for the AutoloGel(tm) System, the new presidential administration and Congress are changing the leadership and resources available at CMS. The American Recovery and Reinvestment Act has authorized additional funds for CMS to compare the effectiveness of related therapies, and a committee has recently been named to make recommendations regarding the use of the funds. Through our network of contacts, and consultants we have retained to help us navigate the CMS process, we are monitoring and analyzing these changes to identify appropriate opportunities. I remain confident that additional data and publications, legislative support, patient and clinician advocacy, and the appropriate timing will convince CMS to allow coverage for the AutoloGel(tm) System.
Recent events, including the publicity of procedures for high profile athletes with sports injuries, have led to a heightened interest in using platelet rich plasma in orthopedic procedures. We have been developing a platelet rich plasma system appropriate for these orthopedic applications and anticipate filing a 510(k) submission with the FDA in the 2nd quarter of this year.
The development of our anti-inflammatory peptide, CT-112, is progressing well under the leadership of Dr. Pete Clausen. Pre-clinical in vivo and in vitro studies have been completed, and we are preparing for an IND submission to the FDA and a Phase I clinical study. In the fourth quarter of 2008, we entered into an agreement with a California based peptide manufacturer to synthesize and purify the first production lot of the CT-112 peptide. The manufactured peptide met purity requirements, and the anti-inflammatory activity was confirmed with both oral and subcutaneous dosing in a rodent model. The bioanalytical method to be used in the Phase I study for measuring levels of CT-112 in patient blood samples is currently being validated by an outside laboratory.
We have retained the Frankel Group, a New York, NY and Cambridge, MA based life science strategy consulting firm, to assist with the identification of commercially-relevant high value indications for CT-112 that may be pursued in early clinical trials. We expect the joint conclusions that arise from this effort to be available within a number of weeks. Efforts to raise additional capital for continued development of CT-112, including the expansion of its intellectual property position and possibly the Phase I clinical study, have been intensified. Potential collaborators have been engaged in early discussions, and the outcome of our work with the Frankel Group will help guide our efforts to find suitable strategic partners and sources of funding.
There is little doubt that economic conditions will continue bringing unique challenges for emerging companies in 2009. We are fortunate, however, in that we believe our current cash resources are sufficient to fund the business, as budgeted, through the remainder of the year. Our history of conservative financial management has kept us in a good position with no debt, and, unlike many emerging life science companies today, we have an FDA cleared product on which we can build a platform for our future success.
On behalf of Cytomedix, its employees and Board of Directors, I thank you for your continued confidence and support.
Sincerely, Martin P. Rosendale Chief Executive Officer
ABOUT CYTOMEDIX
Cytomedix is a biotechnology company that develops, sells, and licenses regenerative biological therapies, including the AutoloGel(tm) System, a device for the production of platelet rich plasma ("PRP") gel derived from the patient's own blood. The AutoloGel(tm) System is cleared by the Food and Drug Administration ("FDA") for use on a variety of exuding wounds. Additional information regarding Cytomedix is available at: http://www.cytomedix.com
SAFE HARBOR STATEMENT
Statements contained in this communication not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule for such statements under the Private Securities Litigation Reform Act of 1995. The information contained in the forward-looking statements is inherently uncertain, and Cytomedix's actual results may differ materially due to a number of factors, many of which are beyond Cytomedix's ability to predict or control, including among others, the outcome of development or regulatory review of CT-112, commercial success or acceptance by the medical community, competitive responses, the Company's ability to raise additional capital and to continue as a going concern, viability and effectiveness of the Company's sales approach and overall marketing strategies, and Cytomedix's ability to execute on its strategy to market the AutoloGel(tm) System as contemplated. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the reports filed with the Securities and Exchange Commission by Cytomedix, Inc. Cytomedix operates in a highly competitive and rapidly changing business and regulatory environment, thus new or unforeseen risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. Except as is expressly required by the federal securities laws, Cytomedix undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.