Cytomedix Acquires Aldagen

Cytomedix, Inc. recently announced the completion of the acquisition of Aldagen, Inc., a privately held biopharmaceutical company developing regenerative cell therapies based on its proprietary ALDH bright cell (ALDHbr) technology. Under the terms of the transaction, Cytomedix issued preferred shares valued at $16 million based on a 10-day volume-weighted average price calculated through February 2, 2012. Cytomedix will issue additional consideration to be paid in 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.

“Since joining Cytomedix as CEO in 2008, our strategy has evolved, but the vision to transform the company from a wound-care-based technology platform into a broader regenerative medicine company has remained constant. In pursuit of this vision, we started with the successful 2010 acquisition and integration of the Angel System, a unique, best-in-class PRP platform technology that has allowed us to grow from nominal sales to $6 million per year in just over 18 months,” said Martin P. Rosendale, CEO of Cytomedix.

“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,” he continued. “In combination, we now touch the three pillars of regenerative medicine with autologous stem cells, platelet-derived signal molecules, and plasma scaffolds. We view the acquisition of Aldagen as an opportunistic transaction at an attractive valuation that will allow us to build and expand our new product development efforts with Aldagen’s technology, intellectual property, people, and clinical expertise. In terms of maximizing opportunity for our shareholders while managing and mitigating risk, we believe this transaction is very advantageous.”

At the closing, Cytomedix issued 135,398 newly designated Cytomedix Series E preferred shares to Aldagen shareholders. Pro forma for the conversion of these shares to common stock, as set forth in the designations documents for the Series E preferred stock, 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.

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 Aldagen 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 aforementioned trial. The costs of the clinical trial will be funded, in part, by the $5 million investment made by Aldagen shareholders, $3 million in proceeds from completed or committed warrant exercises by existing Cytomedix shareholders, as well as a portion of Cytomedix’ cash on hand. All up-front and contingent consideration shares are subject to lock-up restrictions ranging from 6 to 18 months.