Though the markets are higher this morning, I don’t like how they’ve been acting lately. For that reason, I want to protect the hard fought gains we have on Cytori Therapeutics (Nasdaq: CYTX). We’re still going to give it plenty of room so we don’t get shaken out, but if the wheels come off the market or small caps, at least we’ll get out with a gain.
Place a sell stop at $6.16.
Meanwhile, we continue to see good news out of CYTX. This morning, the company said some pre-clinical data on fat grafting has been published in Annals of Plastic Surgery.
The article states that fat grafts that used adult-derived regenerative cells had double the retention rate over controls.
This is good news, though nothing earth shaking. Especially considering that Celution System is already approved in Europe and Asia and being used for these purposes. However, the more data supporting its use, the more comfortable doctors will be with the product.
First Commercial Implants of ATSI’s 3f Enable Valves
ATS Medical (Nasdaq: ATSI) announced the first commercial implants of its 3f Enable aortic tissue valve. The sutureless procedures were done in Switzerland and the patients are recovering well.
As I mentioned in Update #186, investors at the J.P. Morgan Healthcare Conference seemed much more interested in the company’s new technology, like 3f, than it was in the lowered guidance from two weeks ago.
This was backed up by a portfolio manager that I spoke with on Friday, who has a large position in ATSI. When I asked him his thoughts on the lowered guidance, he said, “The ATSI story isn’t about mechanical valves.”
I partially agree with that statement. ATSI’s growth will come from capturing share in tissue valves. However, I believe that it needs to continue to take share in mechanical valves to gain more exposure to surgeons who will then consider using ATSI’s tissue valves.
I still like the story very much, but will certainly be keeping a close eye on the numbers.
Mailbag
Along with some great emails telling me how well some subscribers have done with CYTX (one said he was up 355%!), I also received some excellent questions. As always, feel free to email me with your questions, feedback, results and Super Bowl predictions.
After informing me that he bought CYTX at an average price of $3.38 and selling half his position at $8.50, K.S. asked about Delcath Systems (Nasdaq: DCTH):
Q. It had made a huge jump in the year leading up to your recommendation. Does the rapid share price increase prior to your buy signal add any additional risk to the stock’s ability to continue to increase into the future?
A. I don’t think it adds any risk to the stock’s ability to climb higher. If the PHP System’s phase III data is as strong as I expect it to be, the stock should rally. If PHP gets approved, it should climb even higher. If the data is weak or the FDA rejects PHP, the stock will fall.
These are fairly binary catalysts that we are waiting for and I do not believe good news is priced into the stock. It’s not on enough people’s radar yet.
New Reco
I hope to have the new recommendation out by the end of this week. Early next week at the latest. It’s an incredibly exciting company that has the potential to revolutionize the stem cell industry. And I couldn’t be more impressed with management.
Stay tuned!
Marc Lichtenfeld
Director of Research
Access Research Group
Current Portfolio:
Name: Delcath Systems
Symbol: DCTH
Current Price: $4.68
Comments: Buy up to $7.00
Name: ATS Medical
Symbol: ATSI
Current Price: $2.79
Comments: Buy up to $3.30. Sell stop is $2.40.
Name: Rochester Medical
Symbol: ROCM
Current Price: $12.33
Comments: Buy up to $15.00. Sell stop is $8.88.
Name: Cytori Therapeutics
Symbol: CYTX
Current Price: $8.45
Comments: Buy up to $5.00. Sell stop is $6.16.
Name: Electro-Optical Sciences
Symbol: MELA
Current Price: $9.29
Comments: HOLD. Sell stop is $8.33.
Name: Immunogen
Symbol: IMGN
Current Price: $7.15
Comments: Buy up to $8.50.
Name: SciClone Pharmaceuticals
Symbol: SCLN
Current Price: $2.67
Comments: Buy up to $3.50. Sell stop is $1.86.
Name: Synovis Life Technologies
Symbol: SYNO
Current Price: $12.78
Comments: Buy up to $15.00. Sell stop is $10.34.
Name: Celldex Technologies
Symbol: CLDX
Current Price: $4.57
Comments: Buy up to $6.50