Medical Device Daily Washington Editor

WASHINGTON — Stents are still the talk of the day where catheter-based treatment of cardiac disease is concerned — as a look at the agenda for Transcatheter Cardiovascular Therapeutics 2007 conference readily confirms.

So when a company in attendance is offering the use of stem cells drawn from fatty tissues as an alternative therapy for heart disease, it’s an attention-getter.

That’s precisely the aim of Cytori (San Diego, California), which has clinical trials underway evaluating its stem-cell sorter, the Celution, for using stem cells derived from a liposuction procedure to help the diseased heart regain functional capacity.

Perhaps most remarkably, Cytori intends to prove both that the Celution can provide stem cells that will aid the damaged heart, and also turn those cells around in 60 minutes at the point-of-care. If the company’s plans pan out, this will turn adipose excess to success — cardiac and financial.

If the U.S. market doesn’t support the device, Cytori may target sales to hospitals in Japan, said to be interested in banking stem cells as part of the nation’s recent interest in regenerative medicine.

Alexander Milstein, MD, VP of clinical development at Cytori, sat down with Medical Device Daily at TCT 2007 to describe the therapeutic trajectory of the Celution.

“The fundamental challenge [in stem cell therapy] is that stem cells are few and far between,” he said, and that the company got serious about this idea when “we found out that fat is probably one of the richest sources of stem cells per unit of volume” — even more so than bone marrow.

“This is a bedside device that is processing at point of care,” Milstein said, adding that the amount of fat “needed to fill a soda can would be enough for most indications,” including those for heart disease.

“We currently have two studies for cardiac indications. One is the Apollo, a randomized, controlled, double-blinded study that evaluates safety and feasibility of adipose-derived progenitor cells in patients with acute myocardial infarction,” Milstein said.

Cytori persuaded Patrick Serruys, MD, the director of interventional surgery at Erasmus University (Rotterdam, the Netherlands), to serve as the lead investigator for Apollo which launches this quarter in Europe. It will enroll up to 48 patients, 12 in each of four arms in this dose-escalation study.

Apollo will evaluate the use of the stem cells for patients with myocardial infarction and coronary arteriosclerosis, its primary safety outcome determined by major adverse cardiac and cerebral events; and the assessment of cardiac function obtained via imaging studies using echocardiography, MRI and single-photon emission CT.

Precise, the second study, is a randomized controlled, double-blinded trial to evaluate safety/efficacy for severe myocardial ischemia, which typically presents as end-stage heart disease. Precise will be conducted in part at the Hospital Gregorio Marañón (Madrid, Spain). Co-lead investigators are Francisco Fernandez-Aviles, MD, chief of cardiology at Gregorio, and Emerson Perin, MD, director of new cardiovascular technology at the Texas Heart Institute (Houston). Precise is a three-arm dose escalation study with 12 patients in each arm.

In the animal study leading to it, stem cell treatment of seven pigs produced a 13% improvement in ejection fraction over the six pigs treated with a saline sham. Heart structure preservation was demonstrated by ventricular wall thickness, which was 37% greater in study subjects compared to controls.

So what do the stem cells do once they’re introduced percutaneously into the heart?

Milstein ascribed the primary mechanism of action to vascular regeneration via vascular endothelial growth factor (VEGF). One of the anticipated effects will be prevention of apoptosis, with the production of various growth factors other than VEGF also boosting cardiac function. However, Milstein emphasized that these stem cells do not generate replacement cardiac tissue, but instead repair intracellular damage to existing cells.

Tom Baker, director of investor relations at Cytori, said that most important understanding for investors is “that we bring a viable business model to stem cell therapy,” not just strong research.

The strategy, he said, is to “sell a device and related consumables with an entirely different set of economics” than those of most companies in the sector.

By setting up the Celution unit in a hospital, administrators have no shipping costs or lag times, “nor are we manufacturing donor cells that can be repackaged as pharmaceuticals,” Baker said. “We can provide an affordable product with high margins.”

Other cell therapies range from $20,000 to $100,000 per treatment, according to Baker, while the Celution unit costs “much less than $100,000 to manufacture. If we can show equivalent efficacy, we can compete on a cost basis with a very attractive price.”

The units may end up being leased rather than sold, however, because the business plan allows Cytori to make its money on the associated reagents and disposables that go with the system, consisting of treatment chambers and a centrifuge to finish off the separation process.

So far, Baker said, the financing strategy “has been minimally dilutive to shareholders.”

“In the future, Olympus (Tokyo) will be manufacturing the unit,” he said with Cytori “the sole customer of that venture.” The firms teamed up in 2005 in a joint venture giving manufacturing responsibilities to Olympus and allowing Cytori to explore the therapeutic methods.

Baker said that Olympus bought $22 million worth of Cytori stock between May 2005 and August 2006, those purchases not directly connected to the Celution transaction, which included an up-front payment of $11 million and a milestone payment of the same sum paid in January 2006.

In August Cytori sold Green Hospital Supply (Osaka, Japan) 1 million shares, opening the door to the stem cell banking idea. Green has a customer base of 350 hospitals, and as many as 250 of these might end up being customers for stem cell banks.

Such a facility will not be cheap, Baker said, even for well-funded hospitals. He projected the up-front costs in the low seven figures for the installation of cryogenic equipment, computers and software, and other costs, not including salaries. Cryogenically preserved cells “maintain indefinitely,” Baker said, though acknowledging this view as theoretical.

Will the venture fly in Japan?

Baker noted Tokyo’s emphasis on regenerative medicine, but said that the government is not about to foot the bill for stem cell banking, which he projected at $4,000 to $5,000 per person for cell isolation, plus lower storage charges.

Given the price tag and the reluctance of humans in their 20s to believe we might actually be mortal, the demographic for this service is certainly an older group with middling incomes, but Baker was reluctant to pin down the exact market.

On Oct. 22, Cytori shares closed at $5.65 after opening at $5.80. The company’s shares, trading on the Nasdaq board, hit a 52-week high of $7.43 in December 2006 and a 52-week low of $3.87 the previous month.