This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

What Cytori Therapeutics Isn't Telling Investors About Its Asian Partner

Cytori Therapeutics (CYTX - Get Report) isn't divulging much information about the background and capabilities of its new Asian stem-cell therapy partner Lorem Vascular. Thanks to some enterprising work by an investor who shared his findings with me, I think I know why.  

Lorem Vascular is a brand new company set up less than two weeks ago by a Malaysian real estate developer, Kian Thiam "K.T." Lim, according to Australian registration records. 

Lim has no experience running a healthcare company, according to a biography posted on his real estate company's web site. 

Cytori announced the new partnership on Monday night under which Lorem Vascular is supposed to sell doctors in China, Hong Kong and Australia on treating heart disease and diabetes patients with their own stem cells processed from belly fat by a Cytori machine. 

Cytori has not conducted clinical trials proving its stem cell therapies are effective or safe treatments for any disease, but regulatory agencies in certain countries still allow the company to sell its stem-cell processing device. Cytori revenue has been declining, however, because there is no proof its stem-cell therapies help patients.

Can Lorem Vascular turn around Cytori's failing business? That's what Cytori wants investors to believe. Lorem Vascular brings "the required resources, market knowledge, dedication and focus to commercialize this innovative treatment and pioneer the introduction of cell therapy products for patients with the most serious conditions," Cytori touted in its Monday night announcement.

But Cytori didn't disclose Lorem Vascular was incorporated as a new Australian company on Oct. 24, according to a registration document filed with the Australian Securities & Investments Commission. An investor tracked down the document and passed it along to me Tuesday afternoon. A Cytori spokeswoman confirmed the document's authenticity.

Lorem Vascular was incorporated just five days before entering into the licensing agreement with Cytori, according to an 8-K filed with the Securities and Exchange Commission.

Lorem Vascular's lead director listed on the Australian document is Kian Thiam Lim. Its business address is Level 12, 2 Queen St, Melbourne, Australia.

This is the same business address for Victoria Investments and Properties, a real estate development and services company run by Kian Thiam Lim. 

A Cytori spokeswoman confirmed Kian Thiam Lim is the  "K.T. Lim" mentioned in the company's Monday night press release.

Lorem Vascular is "well capitalized" and was "vetted" by Cytori before the partnership was signed, the spokeswoman said. "As a courtesy, Cytori offered to assist in building out a website for them [Lorem Vascular] so there would be something available on the day of the announcement."

The Lorem Vascular web site -- a single-page introductory message -- was registered on Oct. 24 by a Cytori employee. 

Cytori says the Lorem Vascular partnership is worth up to $531 million but almost all of this potential cash is contingent on stem-cell therapy sales not yet realized. 

Lorem Vascular is buying 8 million shares of Cytori common stock at $3 per share. Lorem Vascular is also spending $7 million to purchase Cytori's stem-cell harvesting machines and another $2 million on consumables used with the machines. 

Cytori won't receive any additional revenue from the Lorem Vascular until sales derived from stem-cell therapies reaches $50 million, according to terms of the agreement.

The Asian partnership comes at time when Cytori's business is struggling. Revenue in the second quarter totaled $1.4 million, down from $1.95 million in the year-ago quarter. Revenue for the first six months of 2013 fell 18% to $2.8 million compared to the same period in 2012. 

Cytori shares rose 60% to $3.35 on Monday but the stock is still down 41% over the past year. 

 

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CYTX $1.12 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs