Cytonics

Growth Stage

Developing diagnostics and therapeutics for osteoarthritis

Analytics

Raised to Date:
$509,689 - RegCF
$718,012 - Total

Aggregate Commitments $

Platform

SeedInvest

Start Date

04/20/2022

Close Date

10/28/2022

Min. Goal

$25,000

Max. Goal

$5,000,000

Min. Investment

$1,001

Security Type

Equity - Preferred

Funding Type

RegCF / RegD 506(c)

Series

Series C

Price Per Share

$2.30

Pre-Money Valuation

$58,915,996

Rolling Commitments $

Status

Active

Reporting Date

05/26/2022

Days Remaining

155

% of Min. Goal

2,039%

% of Max. Goal

10%

Likelihood of Max
unlikely
Avg. Daily Raise

$14,158

Momentum
warm.svg
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Location

Jupiter, Florida

Industry

Healthcare & Pharmaceuticals

Tech Sector

HealthTech

Distribution Model

B2B2C

Margin

Low

Capital Intensity

High

Business Type

Growth

Cytonics Corporation, with a valuation of $58.9 million, is raising funds on SeedInvest. The company is a leader in regenerative medicine and has developed innovative therapies for musculoskeletal diseases like osteoarthritis. Cytonics has created an Autologous Platelet Integrated Concentration system concentrating A2M from patients’ blood to treat their own damaged joints. The company has a strong IP portfolio with 22 issued US and international patents. Gaetano Scuderi founded Cytonics Corporation in July 2006. The current crowdfunding campaign has a minimum target of $25,000 and a maximum target of $5,000,000. The campaign proceeds will be used for IND-enabling preclinical study and GMP production of CYT-108.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$307,500

$591,056

COGS

$2,205,358

$503,906

Tax

$0

$0

 

 

Net Income

$-2,544,189

$-995,850

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$967,757

$537,354

Accounts Receivable

$341,193

$283,676

Total Assets

$1,756,758

$1,466,746

Short-Term Debt

$554,929

$2,400,661

Long-Term Debt

$0

$107,502

Total Liabilities

$554,929

$2,508,163

Financials as of: 04/20/2022
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Raise History

Offering Name Close Date Platform Valuation/Cap Total Raised Security Type Status Reg Type
Cytonics 10/28/2022 SeedInvest $58,915,996 $718,012 Equity - Preferred Active RegCF / RegD 506(c)
Cytonics 04/30/2021 SeedInvest $46,701,000 $4,667,638 Equity - Preferred Funded RegA+
Cytonics 05/18/2019 SeedInvest $32,400,000 $494,344 Convertible Note Funded RegCF / RegD 506(c)
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

Today, more than 27 million Americans suffer from pain and discomfort caused by osteoarthritis.  Osteoarthritis is a type of arthritis that occurs as joint cartilage begins to significantly break down. This cartilage breakdown is often caused by injury or overactive proteases, naturally occurring enzymes in the body. Although osteoarthritis can damage any joint, the disorder most commonly affects joints in the hands, knees, hips, and spine. As osteoarthritis develops, it can damage all the areas of the joint, including tendon, ligaments, synovium, and bone. Despite osteoarthritis’ prevalence, there are no effective long-term treatment options. Current short-term treatment options include pain management medications, physical therapies, assistive devices, and corticosteroids

Cytonics Corporation is a biopharmaceutical company developing therapies for osteoarthritis and other inflammatory diseases. The company has developed a long-term solution to help ease pain caused by limited cartilage within joints. The process uses Cynotics Corporation’s FDA-approved device, the Autologous Protease Integrated Concentrate system. It concentrates alpha-2-macroglobulin (A2M), a naturally occurring bloodstream protein that can slow and eventually halt the progression of osteoarthritis. Cytonics Corporation’s technology has been sold since 2015 in the human and veterinary market and has proved to be a huge success. The company is now in the process of creating a synthetic form of the naturally occurring A2M molecule called CYT-108. This synthetic version is expected to be between two times to four times more potent than the naturally occurring A2M molecule. 

Cytonics Corporation’s current SeedInvest raise has been rated a Neutral Deal by the KingsCrowd investment team. 

Price

Cytonics Corporation is raising capital via preferred equity at a pre-money valuation of $58.9 million. The company has been primarily focused on research and development efforts, patenting its technology, and testing in the human and veterinary market as it prepares for pre-clinical and human clinical trials. The company has yet to become profitable, but it saw $307,500 in 2021 revenue despite being in a pre-human clinical trial phase. Cytonics Corporation has successfully raised $18 million to date from securities, grants, Regulation A SeedInvest raises in 2019 and 2021, and $4 million direct investment from Synthes. Based on Cytonics Corporation’s current stage of development, $58.9 million is a large valuation, but it reflects the years of research, testing, market traction, and previous investments that have gone into creating the company’s cutting edge technology. Overall, Cytonics Corporation’s valuation is fair given its early positive results and monetization. 

Market

Cytonics Corporation operates in the US osteoarthritis market. In recent years, this market has seen significant growth as the silent generation and Generation X age and experience new healthcare needs. The US osteoarthritis market has an estimated value of $2.7 billion with a decent annual growth rate of 8.7% from 2020 through 2025. With more than 27 million Americans suffering from joint pain caused by osteoarthritis, there is strong demand for personalized solutions to limit pain and improve mobility.  

The pain management space for osteoarthritis therapeutics is divided into over-the-counter treatment options and prescription treatments. The prescription drug segment commanded the largest share of the osteoarthritis therapeutics market with viscosupplementation agents and corticosteroids as the most common options. However, these existing options are all short-term treatments for the condition. None can offer permanent healing. 

Cytonics Corporation stands out by offering a long-term treatment option for osteoarthritis. The company should benefit from market growth as an early mover in this regard. Additionally, the osteoarthritis treatment market is not a winner-takes-all market. Although there is existing competition, Cytonics may be able to carve a niche for itself. The company also has many opportunities ahead to expand into additional niches, as its technology could be applied to many other inflammatory diseases where the alpha-2-macroglobulin molecule or its synthetic cousin CYT-108 is useful during treatment.

Team

Cytonics Corporation founder and Chairman of the Board Gaetano Scuderi is an experienced orthopedic surgeon curious about spine and joint surgeries. Scuderi began his career in orthopedic surgery, was a clinical assistant professor of orthopedic surgery at Stanford University, and has been published in more than 45 scientific articles. After a motorcycle crash in 2001 that changed the course of his career, however, he began to research outcomes of spine and joint surgery based on biologic signatures. These discoveries led to Scuderi establishing a lab facility and founding Cytonics Corporation. Scuderi studied medicine at State University of New York and completed his residency at the University of Miami School of Medicine. 

Joey Bose serves as the CEO, president, and director of Cytonics Corporation. Bose began his career in biotechnology research and development at the University of Virginia and later John Hopkins University. After studying phosphatase activity within cancer biology and protein engineering, he worked in biotechnology investment banking with boutique banks. Bose has a Bachelor of Science in biomedical engineering from the University of Virginia and a Master of Science in biomedical engineering from Johns Hopkins University. 

Lewis Hanna has served as Cytonics Corporation’s chief scientific officer since February 2008. Dr. Hanna has more than 28 years of research experience in pharmaceutical and biotechnology companies. He has focused on better understanding the structure and function of proteins. Dr. Hanna earned a Bachelor of Science from Cairo University, PhD from City University of New York, and postdoctoral fellowship from Cornell University.  

Phil LoGrasso, Tracy Goeken, and Gordon Ramseier serve as directors to Cytonics Corporation. Cytonics Corporation is further supported by scientific, medical, and business advisors. David Yeomans, Vanessa Gabrovsky Cuéllar, and Jason Cuellar serve as scientific advisors. Wayne Olan, Thomas San Giovanni, Martin Angst, Geoffrey Abrams, and Joseph Buckwalter serve as medical advisors. Raymond Johnson serves as a corporate strategy advisor. Having a wide variety of advisors with different specialties encourages diversity of thought and experience, which will serve Cytonics Corporation as it grows and expands its offering. 

Overall, the Cytonics Corporation founder, supporting team members, and advisors have noteworthy educational and technical experiences. This team is well qualified to create life-changing medical technology. Cytonics Corporation, however, does suffer from a lack of expertise in sales, marketing, branding, and legal skills. Cytonics Corporation has the right team to develop its osteoarthritis solutions, but it’s unclear if this team can later launch and grow a successful biotechnology company. 

Differentiators

Cytonics Corporation offers unique osteoarthritis treatments. Osteoarthritis can be caused by overactive proteases, a type of enzyme that chews away at the cartilage matrix within joints. Current treatments are widespread in application and effectiveness: topical pain medicines and oral analgesics like nonsteroidal anti-inflammatory medications, exercise, hot and cold compresses, and supportive braces, to name a few. These solutions vary in cost, time required, and effectiveness, but all only offer only temporary symptomatic relief with many potential side effects to follow. 

Cytonics Corporation reimagines a long-term solution through its Autologous Protease Inhibitor Concentrate (APIC) system and alpha-2-macroglobulin (A2M) technology. Using a unique centrifugation and filtration process, APIC concentrates plasma proteins of A2M from a patient’s own blood. The outcome is an injectable blood serum protein that essentially binds and inhibits the overly active proteases to slow and eventually halt the progression of osteoarthritis. The increased A2M allows the body’s regenerative mechanisms to heal the damaged cartilage tissue naturally. 

Not only is this the first product of its kind on the market, but Cytonics Corporation is also in the process of developing a synthetic form of the naturally occurring A2M molecule called CYT-108. Furthermore, this synthetic version is expected to be 2x to 4x more potent than the naturally occurring A2M molecule. A helpful parallel here might be insulin and insulin aspart. Insulin is a naturally occurring hormone in people’s bodies that helps process sugar from the blood and carry this sugar into other tissues where it is used for energy. Those who can’t regulate their blood sugar levels naturally rely on insulin aspart, a synthetic version of insulin, to process sugar. Creating a synthetic version of A2M is no small feat, but it could drastically help patients with managing osteoarthritis effectively and in a timely manner. Cytonics Corporation’s cutting-edge technology has 22 patents and an additional five pending, which should help defend it against future competitors that wish to compete more directly. Overall, its innovations have excellent potential and give the company a first-mover edge.

Performance

Cytonics Corporation has made noteworthy progress since its crowdfunding raise in 2020 despite operating in the highly regulated pharmaceutical industry. It has grown a strong team, gained in-market traction, began further testing for a new product offering, and taken steps to eventually gain FDA approval. 

To date, Cytonics Corporation boasts a portfolio of 22 issued US and international patents. These patents cover both the Autologous Protease Inhibitor Concentrate (APIC) device and the new CYT-108 biologic therapy. Cytonics Corporation has an additional five patents pending for its technologies. A focus on patenting ensures strong defensibility against others that might enter this market and revenue-earning potential through licensing. In fact, Cytonics Corporation has been proactive in establishing licensing agreements for the sale of its APIC therapy in the human and veterinary markets, valuing up to $7 million and 10% royalties on net sales. This progress and early focus on patenting will continue to enable revenue generation through royalties and licensing fees. Meanwhile, the company could continue to refine other aspects of its technology and service offering.  

Between 2020 and 2021, Cytonics Corporation’s revenue decreased from $591,056 to $307,500. The decline could be related to the company’s focus on clinical trials, and investors likely don’t have much to worry about at this point. Cytonics Corporation also raised more than $18 million through crowdfunding, grants, and securities, which has helped the company sustain its research and development efforts over the years. Overall, the company is still far from profitable, but it has demonstrated good early market traction. As a biotechnology company, Cytonics will likely need more time to fully develop its products and enter the market. It may be a while before the company is able to improve its financial standing, but its strong history of prior funding offsets this risk for investors.

Risks

Despite some early traction, Cytonics Corporation is overall a high-risk investment. Much of this risk results from the company operating in the highly regulated biopharmaceutical industry. FDA approval is challenging to secure, and it is imperative that clinical trials are completed correctly. If trials are delayed or FDA approval is not granted, it would slow Cytonics Corporation’s growth and in-market adoption. 

Cytonics Corporation also faces some team risk stems. The current team lacks expertise in sales, marketing, branding, and legal fields. Cytonics Corporation has the right team to develop its osteoarthritis solutions, but it’s unclear if this team can later launch and grow a successful biotechnology company. Cytonics Corporation might need to bring on additional team members with these experiences to soften potential team risk.  

Lastly, investors should also be aware of funding risks for Cytonics. The company will need ample time to develop its products, secure FDA approval, and enter the market. Throughout that process, it will need capital to continue operating. However, this risk is somewhat offset by Cytonics’ strong history of prior funding.

Updates Since Last Round

Cytonics Corporation has had two successful regulation crowdfunding rounds to date. Both past raises were hosted on SeedInvest. Cytonics Corporation’s first Regulation Crowdfunding round closed in May 2019 and was rated a Deal to Watch. The second round closed in April 2020 and raised through Regulation A funding

Since Cytonics Corporation’s most recent round in 2020, it has made considerable progress concerning its product development. The company’s technology has come a long way, and it is very close to developing a synthetic version of alpha-2-macroglobulin (A2M). Cytonics Corporation’s team size and revenue has seen a small decline since the last round, going from $591,056 in 2020 to $307,500 in 2021. A small dip in revenue could be due to a variety of factors, likely the focus on progressing clinical trials, and shouldn’t be too much of a concern for investors. Given extreme product growth and possibly downsizing of the team to improve management functions, its valuation since the last round has drastically increased. Cytonics Corporation’s valuation climbed from $32.4 million during its first raise in 2019 to a valuation of $58.9 million during the current raise. Due to its higher valuation, decreased revenue, and smaller team, Cytonics Corporation’s previous rating has been downgraded to a Neutral Deal.

Bearish Outlook

Cytonics Corporation’s biggest concerns are rooted in its product development, regulatory hurdles, and team skills. The company has had to commit considerable time to developing its technology, and it now must achieve FDA approval, assuming a successful clinical trial. Cytonics Corporation will likely be challenged in new and possibly unexpected ways despite having completed past research and testing on similar products in the past. If the company is unable to obtain FDA approval, its technology could fail to make it to the market. This is a considerable time risk for investors, and there is no guarantee as to whether or not the technology will be welcomed into the market. 

If Cytonics Corporation does complete testing and receives FDA approval, the current team may not have the right skills to lead the company through marketing and product adoption needs. Patients might be concerned with the new material and its inorganic origin. Having proper communication and market education could be vital to Cytonics’ success. Investors face uncertainty surrounding Cytonics’ new product launch and product-market fit.

Bullish Outlook

Cytonics Corporation is developing cutting-edge osteoarthritis treatment technology, putting in work to receive FDA approval, and securing the proper scientific, medical, and business advisors to guide its growth. Despite being in the heavily regulated pharmaceutical industry, the company has made strides to patent its technology, test to the best of its ability, gain market traction with a similar product type, and gain approval to begin FDA trials. This commitment to progress and growth should be very encouraging for investors. 

While there is competition in the pharmaceutical industry to manage symptoms of osteoarthritis, it is not a winner-take-all industry. If Cytonics Corporation can gain FDA approval quickly and find product-market fit with the new CYT-108 technology, its revenue could climb high after rolling out into the market. There’s also ample room for the company to develop further treatments for other musculoskeletal conditions and establish itself within a strong biotechnology niche.

Executive Summary

Cytonics Corporation is aiming to transform the way patients navigate osteoarthritis through its APIC system, which utilizes alpha-2-macroglobulin (A2M), and its new CYT-108 technology. Its technology has the power to drastically improve the lives of patients suffering from joint pain. Unlike existing therapies and solutions that offer only temporary relief, Cytonics Corporation’s technology offers a long-term solution that inhibits overly active proteases to slow and eventually halt the progression of osteoarthritis. The market for osteoarthritis is growing, and there is absolutely room for a long-term solution. Cytonics Corporation’s team is medically accomplished and supported by industry professionals. The company has yet to launch its new technology, but past performance and product-market fit with its APIC system and A2M technology is indisputable. With a focus on clinical trials and securing FDA approval, the company could quickly attain commercial success and gain widespread market adoption. 

Cytonics Corporation is beginning to establish a track record of success, but it is still very young. Being in such a highly regulated industry could prove to be challenging and limit immediate financial returns for investors. Although the company has had some traction, its current valuation is rather high. Overall, Cytonics Corporation is a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com

Analysis written by Carolyn Price, May 2, 2022.

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Cytonics Corporation on SeedInvest 2022
$
Platform: SeedInvest
Security Type: Equity - Preferred
Valuation: $58,915,996
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