Many people believe aches and pains from the breaking down of cartilage is a normal part of aging. It is not. Cartilage functions as a cushion between bones, by supplying a gliding surface for joint motion. When cartilage breaks down it is a disease called Osteoarthritis (OA).

Today there is no cure for OA, yet we spend an average of $126 million a year in direct costs to treat the symptoms of the more than 30 million Americans affected by OA. These symptoms range from pain to joint replacement. By 2030, 67 million adults or 25% of the US adult population will have doctor diagnosed OA.

While 80% of OA suffers are over the age of 65, traumatic injury dramatically increases a person’s risk of OA. The types of injuries which can lead to OA occur in athletes and military veterans. One in three military veterans have arthritis.

Scientists have determined Alpha-2-Macroglobulin (A2M), a naturally occurring blood-serum protein, at high concentrations could slow and even halt OA. Cytonics has developed the Autologous Platelet Integrated Concentration (APIC) System, which concentrates A2M, naturally found in the bloodstream, and injects it back into the person’s OA affected joint. The APIC system has FDA approval. To date, APIC has successfully treated over 6,000 patients worldwide.

While APIC has been effective, naturally occurring A2M levels are too low to be therapeutically beneficial to already-damaged joints. Utilizing all the A2M knowledge, Cytonics created a synthetic compound, CYT-108, which is up to four times more potent than naturally occurring A2M.

Cytonics anticipates beginning pilot pre-clinical trials in late 2019. Assuming clinical trials progress as planned, Cytonics anticipates completing Phase I trials by late 2021. Phase II and Phase III clinical trials tend to attract strong interest from investors, as 70% of Phase I clinical trials move on to Phase II, while only 48% of Phase II clinical trials move on to Phase III.

Cytonics has three products. The company has licensed out the first two products. FACTS (Fibronectin-Aggrecan Complex Test), is licensed to Johnson & Johnson. A national medical distributor has the distribution license for APIC. Cytonics remaining product, CYT-108 does have direct and indirect competition.

CYT-108 is a cure for OA, currently there is no cure so the indirect competition with CYT-108 is treatments to manage the symptoms of OA, pain. These are Acetaminophen, Nonsteroidal anti-inflammatory drugs, and Cymbalta. Alternatively, patients can try physical therapy, injections, or joint replacements.

The closest known direct competitor to CYT-100 is Ampio Pharmaceuticals Ampion compound. It has great promise to reduce the pain associated with OA in the knee. In April 2019, the FDA announced Ampion did not pass phase III clinical trials. According to Joey Bose, president of Cytonics, Ampion is not a threat because when CYT-108 enters FDA phase III clinical trials, CYT-108 will have a more robust study to support its application. Getting to Phase III clinical trials takes an average of 6 years, plus over 70% of compounds which make it to phase III clinical trials receive approval. Ampion is likely to pass if phase III is repeated with necessary corrections.

While Ampion is way ahead in the FDA approval process, Ampion reduces pain associated with OA, but will not cure OA. Ampion is a strong step towards a cure for OA. Ampion’s market release may cause a lot more excitement for CYT-108 as opposed to taking market share away from CYT-108.

Cytonics relies on its strong board and consultants for the operation of the company. Cytonics has only one full time employee, Joey Bose. Bose joined the company about a year ago. Bose’s education was in the life sciences. In the seven years prior to joining Cytonics, he worked in investment banking focusing on biotechnology and life sciences. This would be Bose’s first experience running a company, working through the FDA approval process.

The board’s chairman is founder, Gaetano Scuderi, MD, a leading spinal orthopedic surgeon. Antonio Carvaiho is the CEO and CFO. Mr. Carvaiho worked at Novartis for 15 years before he retired last year. The final member of the management team is Lewis Hanna, Chief Scientific Officer. Hanna has more than four decades of experience leading biotech research teams.

1. FDA Approved Products: Cytonics successfully shepherded two products through FDA approval and into the market. The success of these two products validates the team’s ability to move through the complicated FDA approvals. Additionally, CYT-108 builds on the knowledge gained from the two earlier products.
   
2. Partner Relationships: Cytonics expects to leverage relationships like the one with Johnson & Johnson and the medical distributor when CYT-108 is ready for market. These agreements will net up to $6mm and 10% royalties on net sales. Both arrangements supply the current revenue source for Cytonics.
   
3. Patents: Cytonics has a total of seven granted patents and another seven pending worldwide. These patents along with the FDA approved products provide Cytonics with foundational assets to build upon.
   
4. Market: The bubble of an aging population of the US and many other 1^st world countries is well documented. OA affects elderly people at a high rate. If CYT-108 is FDA approved, it will supply a cure to a significant population of elderly and military veterans in the US whose medical coverage is paid for by the government. There is nothing else available or in the known pipeline which will cure OA.

Cytonics is a Deal To Watch. Cytonics has a proven record of getting products through FDA approval, licensing products, and staying lean. If CYT-108 was Cytonics first product, the company might seem too lean, but they have proven it works. Cytonics is already serving patients with OA, and its products are currently known to those treating OA. Cytonics has a team of advisors and consultants with experience in the field of OA.

Before you run out to invest in Cytonics, make sure you are clear, only 14% of compounds in pre-trial receive FDA approval. There are many factors which can prevent a compound from reaching FDA approval. Cytonics is betting on the approval of CYT-108 as the key to its success.

The Cytonics team has deep knowledge and experience in medicine and research. The addition of Bose, provides Cytonics with finance leadership. If CYT-108 receives FDA approval for its current use, it will be a blockbuster drug. The earliest this can occur is 6 to 7 years from now. As Bose made clear, once CYT-108 reaches phase II, institutional investors or leading pharma companies are likely to be interested in Cytonics, as a cure for OA will be lucrative. If you choose to invest in Cytonics, you will have to be patient, but that patience may reap significant rewards.