Cytori Therapeutics (CYTX) 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.
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