Why Cytori Therapeutics Inc (CYTX) Shares Collapsed Today

Monday turned out to be a nightmare for shareholders of Cytori Therapeutics Inc (NASDAQ:CYTX), after the drug maker announced disappointing top-line, preliminary data from its pivotal STAR trial of Habeo Cell Therapy in patients with scleroderma. Specifically, the primary endpoint, Cochin Hand Function Score (CHFS), did not reach statistical significance at 24 or 48 weeks. However, the trial data reported clinically meaningful improvements in the primary and secondary endpoints of both hand function and scleroderma-associated functional disability, for Habeo treated patients compared to placebo, in a subgroup of patients with diffuse cutaneous scleroderma.

Following the announcement of the trial findings, shares of Cytori collapsed, down nearly 63%.

The U.S. multi-center STAR trial enrolled and evaluated 88 patients with scleroderma, including 51 patients within the diffuse cutaneous subset and 37 with limited cutaneous scleroderma. In the combined study population, the primary endpoint, specifically mean improvement in the Cochin Hand Function Score, did not show statistical difference between treated patients and those receiving placebo at 24 weeks and 48 weeks as determined by both analysis of covariance and mixed model repeated measure analysis.

The Raynaud’s Condition Score, a secondary endpoint, improved in both the treatment and placebo group but was not statistically different between the Habeo treated and placebo groups.

However, in the pre-specified subgroup analysis of patients with diffuse cutaneous scleroderma, a more severe form of the disease, improvements in the Cochin Hand Function Score and the Health Assessment Questionnaire-Disability Index (HAQ-DI), a measure of functional disability and an important secondary endpoint, met or exceeded the published criteria for minimally important clinical differences in these measures (6.5 points for Cochin1, 0.22 points for HAQ-DI2).

“The safety and efficacy results from this trial in the diffuse subset of patients with scleroderma are impressive and represent important new information for the field,” said Dinesh Khanna, MD, Frederick G.L. Huetwell Professor of Medicine and Director of the University of Michigan Scleroderma Program. “The STAR trial suggests that Habeo may provide clinically meaningful improvements in the hand function and functional disability to patients with diffuse form of the disease who have no other treatment options. The diffuse subset has a more severe disease burden with significant hand dysfunction and internal organ involvement as well as the highest mortality rate among all rheumatic diseases. It is important for these patients that this innovative technology moves forward in the clinical and regulatory process.”

“We are disappointed that the study missed the primary and secondary endpoints. However, we are very encouraged by the trends toward improved hand function and scleroderma-related health status in patients with diffuse cutaneous scleroderma,” said Marc H. Hedrick, MD, President and Chief Executive Officer of Cytori Therapeutics, Inc. “We thank the STAR investigators and patients for participating in this trial, which has yielded new insights into scleroderma and shows yet again that discrete patient populations may respond differently to investigational therapies – an important consideration for individuals currently lacking treatment options for rare diseases. After we review the complete data set, we will work collaboratively with our team, trial investigators, patient advocates and the regulatory bodies in our key markets, to chart the next steps for this therapy.”

In general, the adverse events were rated as mild to moderate in the majority of cases and there were no significant safety issues identified for Habeo or the procedure itself (including liposuction and finger injection in the placebo group) during the trial.

“We are pleased with both the efficacy trends as well as the safety profile of Habeo,” said Dr. Mark Marino, MD, Senior Vice President and Chief Medical Officer of Cytori Therapeutics, Inc. “Following the evaluation of the full STAR data set, Cytori, in conjunction with the investigators, intends to submit the full data set, as a late-breaking abstract, to the American College of Rheumatology meeting in November 3-8, 2017. Simultaneously, we anticipate seeking a post-trial meeting with FDA as soon as possible to define next steps. We further plan to continue to support the investigator-initiated SCLERADEC-II trial in France, which is over 50 percent enrolled.”

On the ratings front, Maxim analyst Jason Kolbert reiterated a Buy rating on CYTX, with a price target of $10, in a report issued on July 10. The current price target represents a potential upside of 801% from where the stock is currently trading. According to TipRanks.com, Kolbert has a yearly average loss of 9.4%, a 34% success rate, and is ranked #4556 out of 4608 analysts.

Cytori Therapeutics, Inc. is a late stage cell therapy company. that engages in the developement of autologous cell therapies from adipose tissue, using its proprietary technology, to treat a variety of medical conditions. Data from preclinical studies and clinical trials suggest that Cytori Cell Therapy acts principally by improving blood flow, modulating the immune system and facilitating wound repair.

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