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Cytori (CYTX) $106M Contract By BARDA To Develop Cell Therapies For Thermal Burns Combined With Radiation Injury – Strong BUY – Stock UP $0.54 Or 13.99% To $4.40

Government contract to support national preparedness

CYTX has been awarded a contract that may be valued up to $106M by the US Department of Health and Human Service's Biomedical Advanced Research and Development Authority (BARDA), if all Contract Options are executed.

The contract is for pre-clinical and clinical development of cell therapy for the treatment of thermal burns combined with radiation injury. The aim is to evaluate and create a new countermeasure for thermal burns which would be useful following a mass-casualty event. CYTX's cell therapy is based on a patient's own adipose-derived stem and regenerative cells (ADRCs) processed by the Celution® System technology.

The base contract covers a 2 year period and is extendable up to 5 years with Options. The total award will support all clinical, pre-clinical, regulatory, and technology development activities needed to complete the FDA approval process for use in thermal burn injury. The guaranteed base period is valued at approximately $4.7M and includes pre-clinical research and the acceleration of the Celution® System to further improve cell processing.

The Bottom Line: Definitely an actionable and Strong BUY ranking - under the terms of the contract, successful achievement of specified milestones will allow BARDA to review and, at its discretion, consider the execution of Options and qualify Cytori to receive up to approximately $101M in additional funding, if completely executed, to bring the technology through the FDA approval process for thermal burns under a device-based PMA regulatory pathway. The GAO reports that in a mass casualty event, 10,000 patients could require thermal burn care. The limited number of specialist surgeons and burn centers in the US creates a public health need for a burn wound therapy that can be quickly and broadly applied by non-specialist medical personnel following such an event. According to the American Burn Association, there are approximately 50,000 to 70,000 burn cases each year in the US. This relationship with the US government will facilitate development of cell therapy for thermal burns, which could then serve as an important new path to market for soft tissue indications in the US Additionally, the findings under this contract will complement CYTX's existing efforts to develop cell therapies for a range of wound healing applications outside the scope of this contract. Expectation of success is based on extensive clinical experience treating a variety of conditions, including radiation-related wounds, thermal burns, fistulae and diabetic ulcers in Europe and Asia. The stock is up in the pre-market +$0.54 or 13.99% to $4.40 having closed at $3.86 down -0.39 or 9.18%, yesterday.

Cytori's management will host a conference call and webcast at 8:30 AM Eastern Time today to further discuss and answer investor questions related to the contract. The dial-in number for the webcast is +1.877.402.3914, Conference ID #36330078 and the webcast may be accessed under "Webcasts" in the Investor Relations section of Cytori's website (ir.cytori.com). If you are unable to participate in the live conference call, you may access the archived webcast approximately 90 minutes after the end of the call.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.