Cytori Reboots Azaya Facility After Buyout, Looks for European Deal

Xconomy Texas — 

San Antonio — Cytori Therapeutics is in the process of restarting a San Antonio manufacturing facility it gained in February when it acquired Azaya Therapeutics, the maker of nanoparticle-encapsulated generic drugs. The San Diego-based company now plans to find a European distributor for a drug that facility makes.

Cytori (NASDAQ: CYTX) is working to bring the manufacturing staff in San Antonio to about 20 as it validates the capabilities of the site, which will produce Azaya’s drug called ATI-0918, a formulation of generic chemotherapy drug liposomal doxorubicin (marketed as Doxil in the U.S. and Caelyx in Europe). Cytori says the Azaya drug showed in a European clinical trial it was bioequivalent to the chemotherapy, which was one of the reasons Cytori acquired Azaya, according to John Harris, a vice president and general manager at Cytori who oversees the company’s commercial and partnership operations.

“We’d be looking for a drug company that has an existing pipeline, and is looking for late-term and existing assets to put into their funnel,” Harris said about making a deal in Europe.

A deal may net some cash for Azaya shareholders, who agreed to sell the company for $2 million in Cytori stock in January. The sale also included potential milestone and royalty payments, including one worth up to $50 million if Cytori is able to license or sell the Azaya assets (though a deal in Europe alone almost certainly wouldn’t come close to that $50 million figure).

Cytori also wants to gain regulatory approval for ATI-0918 as a generic in the U.S., but it still needs to perform clinical testing to show it is bioequivalent to doxorubicin. Other generic versions of doxorubicin are already available, including Lipodox sold in the U.S. by Sun Pharma.

Milestone payments are also be tied to a second Azaya drug, ATI-1123, which is meant to help deliver another widely used chemotherapy, docetaxel. Azaya completed a Phase 1 trial in 2012, and now Cytori will look to start a Phase 2 study, which it may be able to fund using money from a deal for ATI-0918, or it may instead look for outside help, Harris says.

The nanoparticle encapsulation is meant to help deliver old chemotherapies and other drugs more safely and effectively. Cytori may try to license ATI-0918 on a regional basis and ATI-1123 globally, Harris says.

Cytori, meanwhile, has a separate product line it is also developing in cellular therapy. The company is seeking to gain U.S. approval for its product, called Cytori Cell Therapy, as a medical device to treat scleroderma, a rare, progressive autoimmune disorder that affects blood vessels and organs. It often causes the hands to calcify and contract, causing severe sensitivity to temperature and pain, Harris says. Cytori is waiting for results from a 48-week, 80-patient Phase 3 trial, which it expects later this year.

The device uses a patient’s own fat tissue, typically taken through liposuction, Harris says. The tissue is put in the closed system, which separates the fat from a “cocktail of cells including stem cells,” and the cells are then reinserted into the patient, Harris says.

Cytori is also studying the cellular therapy in knee osteoarthritis and a type of urinary incontinence. It makes a small amount of direct sales in Japan already for knee osteoarthritis and breast reconstruction, due to that country’s laws regarding cell therapy, Harris says.

Azaya constructed the San Antonio manufacturing facility but then suspended its business in 2015 after a deal to sell to Lake Forest, IL-based Hospira (NYSE: HSP) fell through, Azaya’s chairman and co-founder John Kerr told Xconomy earlier this year. Cytori came into play after a second deal also didn’t materialize.

Harris says Cytori may consider adding new capabilities to the San Antonio site, including a clinical chemistry lab and, possibly at some point, some of Cytori’s own product manufacturing.