|Cytomedix Puts Full Force behind AutoloGel|
|By Brian Wilson-Lead Contributor|
|Wednesday, 25 September 2013 08:10|
Along with the Aldagen acquisition came the aldehyde dehydrogenase bright (ALDHbr) cell technology, which is an autologous stem cell therapy. The PACE Phase II trial is attempting to demonstrate the utility of a specific bone marrow cells (ALD-301) in patients with severe muscle pain. Another line (ALD-401) is being tested in ischemic stroke in another Phase II trial referred to as RECOVER-Stroke.
Unfortunately, development of these stem cell lines in these indications is expensive. Cytomedix has been pushed into an uncomfortable situation indeed. Commercialization of AutoloGel will require investments into sales representations and production/distribution, while clinical trials will require large amounts of cash with no hope for monetization for years to come. Autologel, which addresses a very large indication, is easily the safer bet.
Unfortunately, for the company, a major problem with the product’s hospital outpatient reimbursement came with a recent proposed rule change by the Centers for Medicare and Medicaid Services (CMS). Under the new rule, AutoloGel received a particular classification for its reimbursement code that essentially labeled it as a product for wound preparation.
This incorrect classification also puts a reimbursement cap on the product that is only a fraction of the fair market price for AutoloGel, which makes it economically unfeasible for Medicaid patients using the product. The cap grows in 2014, although it is still not enough to offset production costs for the product.
Cytomedix issued a letter of complaint to CMS, detailing the exact specifications of the error and the exact method to fix it. After announcing that it had concluded a direct meeting with CMS, the November decision still stands. The company believes that CMS is fully informed about the decision, which suggests that the error will be corrected soon.
Resolution of the error should significantly expand opportunity for AutoloGel, due to the importance of Hospital Outpatient Prospective Payment System (HOPPS) in future sales generation. Physician offices, have not caused major reimbursement problems for AutoloGel, although the market there is limited. Cytomedix needs to target hospitals if it wants to see success with its AutoloGel-centered strategy.
Going forward, expect the company to either continue its search for a buyer/parter for the ALDH bright cell assets as development dies down in the next two months. Investors should also expect a final decision of the CMS reimbursement situation in November 2013. This decision should have a very noticeable impact on the stock, since it will drastically affect the prospects and valuation of Cytomedix’s most important asset going forward.