Access Update- #19

After digging around all weekend and most of today, our take is that we agree with Cytori Therapeutics’ (Nasdaq; CYTX) stance that the recent loss in a patent dispute should not impact the company’s business.

Here’s why:

The judge in the case said the patent covered isolated stem cells that were free of other cellular or extracellular materials. As you’re probably aware, the output of Cytori’s Celution System is filled with other cellular and extracellular materials. If the system simply isolated the stem cells and those cells were put back into the body, we would be concerned. But that is not the case. In fact, in order to obtain just the isolated stem cells, you’d have to undergo a process beyond what Celution is capable of.

A company spokesman used the analogy, “It’s like saying you have a patent on coffee because you have a patent on caffeine.”

We have been in touch with some of the large institutional holders and they are not spooked by the situation.

The situation will likely continue to be a distraction for some time but we do not believe it will materially affect the company’s revenue or bottom line.

The recent sell-off has created an opportunity for investors who did not get in when we first recommended the stock last month. If you do not yet own the stock, we believe this is an excellent entry point for risk tolerant investors.

Marc Lichtenfeld
Director of Research
Access Research Group

Stock
Symbol
Current Price
Comments

Cytori Therapeutics

CYTX

$6.10

Buy up to $8

Electro-Optical Sciences

MELA

$7.93

Buy up to $5.75