Cytomedix, Inc. (OTC:CMXI) closed up 6.07% yesterday after it announced the Centers for Medicare & Medical Services (CMS) had initiated a reconsideration of its determination for the coverage of blood-derived products for chronic non-healing wounds.
Although CMXI closed at $0.891, the market response to the announcement wasn’t too convincing. At the open CMXI traded at $0.965, and almost all the trades occurred in the first half hour of the session.[BANNER]
The company has been trading higher lately after some other announcements, however, traders may have a good reason not to go too fast with CMXI. This latest development is definitely a positive piece of news for the company, but it’s not the end of the matter.
The press release issued by CMXI states that the “CMS proposes to publish an initial decision memo by May 9, 2012.” This is still approximately half a year off, and there is no guarantee the decision will be in favor of CMXI this time.
In the mean time, the company is still struggling with its performance, and in a recent prospectus CMXI admits that it will need substantial additional financing, and it expects to “incur substantial losses and negative operating cash flows in the future.”
The company has a purchase agreement with Lincoln Park Capital from October 5, 2010, which could provide some more financing. But that is not guaranteed, and would also mean some more dilution to shareholders. Still, if CMXI somehow manages to realize its plans, some day it could be in a much better position. Traders should decide what they think the company’s chances are, and what’s the best thing to do at this time.
