Platform technology is based on a bone marrow fractionation process.

Cytomedix, a developer of regenerative therapies for wound care, inflammation, and angiogenesis, has bought Aldagen by issuing preferred shares valued at $16 million. Cytomedix will issue additional common stock upon the successful attainment of several clinical milestones. As part of the transaction, certain Aldagen investors purchased $5 million of Cytomedix common stock in a private placement concurrent with the closing of this acquisition.

Aldagen develops cell therapies based on its ALDH bright cell (ALDHbr) technology. “This strategic acquisition of Aldagen provides Cytomedix with a novel, patent-protected cell selection technology that fits well with our existing commercial products and strengthens our long-range growth profile,” noted Martin P. Rosendale, CEO of Cytomedix. “In combination, we now touch the three pillars of regenerative medicine with autologous stem cells, platelet-derived signal molecules, and plasma scaffolds.”

Aldagen is a clinical-stage biopharmaceutical company developing patent-protected autologous cell-based therapeutics for tissue repair and regeneration. “We believe these autologous technologies are complementary and hold potential to produce more therapeutics than either one could on its own,” adds Richard Kent, M.D., chairman of Aldagen’s board and a partner with Intersouth Partners, Aldagen’s largest shareholder.

“The commitment of additional capital into Cytomedix by certain Aldagen investors underscores our confidence in the very promising potential for the combination of these regenerative technologies to change how we treat a variety of large disease areas with continued unmet medical need.”

At the closing, Cytomedix issued 135,398 newly designated Cytomedix Series E preferred shares to Aldagen shareholders. Aldagen shareholders will own approximately 17.3% of Cytomedix common shares outstanding after the concurrent conversion and/or redemption of all existing Cytomedix preferred shares. Aldagen is now a wholly owned subsidiary of Cytomedix and will retain manufacturing and product development facilities in Durham, NC.

There are also contingent clinical milestone payments totaling up to 20,309,723 shares, which will be issued to Aldagen shareholders upon the achievement of predetermined clinical milestones associated with an ongoing Phase II trial in post-acute ischemic stroke. Notably, 80% of this contingent consideration is issuable only upon a favorable clinical efficacy signal in the above-mentioned trial.

The costs of the clinical trial will be funded, in part, by the $5.0 million investment made by Aldagen shareholders, $3.0 million in proceeds from completed or committed warrant exercises by existing Cytomedix shareholders, as well as a portion of Cytomedix’ cash on hand.

Besides ALD-401, Aldagen’s pipeline comprises ALD-301 for the treatment of peripheral arterial disease and critical limb ischemia as well as ALD-201 for ischemic heart failure. Aldagen’s bone marrow fractionation process identifies and isolates metabolically active cells expressing high levels of the enzyme aldehyde dehydrogenase, or ALDH, which is a key enzyme involved in the regulation of gene activities associated with cell proliferation and differentiation. The selected biologically instructive cells, ALDHbr cells, have the potential to promote the repair and regeneration of multiple types of cells and tissues, including the growth of new blood vessels, the company explains.

Preclinical research suggests that ALDHbr cells specifically migrate to sites of ischemic damage and induce the formation of new blood vessels at those sites. In human clinical trials utilizing ALDHbr cells, evidence of improved perfusion in ischemic tissue has been observed. Other stem cell therapies require expansion of cells that increase manufacturing and regulatory risk, increase processing costs and may delay treatment of the patient up to several weeks. Aldagen says that it produces well-characterized cell populations with a high level of purity without the need for these additional steps, thereby enabling a rapid turnaround time, typically 36 hours once the bone marrow is received.

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