Cytori Shares Surge On Up To $531 Mln Licensing Deal With Lorem Vascular

(RTTNews) - Cytori Therapeutics, Inc. (CYTX) will license its Asia-Pacific Cardiovascular, Renal & Diabetes Markets to Lorem Vascular for up to $531 million, the two companies said Monday. Under the deal, Cytori will receive $31 million upfront in equity and initial purchase commitments. Shares of the cell therapy company gained almost 46 percent in extended trades following the news.

San Diego, California-based Cytori Therapeutics is developing cell therapies based on autologous adipose-derived regenerative cells or ADRCs to treat cardiovascular disease and other medical conditions. Beijing, China-based Lorem Vascular is provider of regenerative medicine therapy.

Under the deal, Cytori and Lorem will commercialize Cytori Cell Therapy for the cardiovascular, renal and diabetes markets in China, Hong Kong, Malaysia, Singapore and Australia. Cytori Cell Therapy is derived from the company's Celution System, which enables access to a patient's own ADRCs at the point-of-care.

Lorem will pay up to $531 million in license fees, opening product purchase commitments and Cytori equity purchases. Of this, Lorem will pay up to $500 million in fees for a 30-year exclusive license to Cytori Cell Therapy for all indications, except alopecia and aesthetics, in the licensed territories in the form of revenue milestones. In addition, Lorem agreed to buy the Cytori Celution System and consumables under a product supply agreement.

Cytori will receive $24 million in exchange for 8 million shares of Cytori common stock at $3.00 per share. The equity purchased will be closed in two installments - comprising a payment of $12 million that will be paid within 7 days and another $12 million payment that will be made within 60 days.

In addition, Lorem Vascular will order $7 million in Celution devices and consumables with a $2 million order placed immediately, while a $5 million order will be placed following regulatory approval in China.

Lorem and Cytori have implemented a regulatory plan in China and anticipate approval in 2014. the companies said that one board seat will be granted to K.T. Lim, Chairman of Lorem Vascular.

K.T. Lim said, "This therapy represents a front-line treatment modality that will serve as the centerpiece of our cardiovascular, renal and diabetes commercial activities across the region. Lorem Vascular will initiate an immediate launch in Hong Kong, Singapore and Australia. A subsequent launch in China and Malaysia is planned in 2014, pending regulatory approvals."

Christopher Calhoun, Chief Executive Officer of Cytori said, "Through this agreement with Lorem Vascular, we have secured a committed partner to bring Cytori Cell Therapy to patients in countries where we have recently received, or are in the process of achieving, regulatory approval. With the Celution System now approved and available in more than 40 countries, we are uniquely positioned to expand our cell therapy brand by being first-to-market with cell therapy products in new geographies around the world."

More than 230 million Chinese have a form of cardiovascular disease which is the country's leading cause of death. This accounts for more than 4 percent of all deaths, or three million people per year. The growing worldwide prevalence of diabetes is one of the contributing factors to increasing rates of vascular diseases, as they are common co-morbidities of diabetes.

CYTX closed Monday's regular trading session at $2.09, up $0.03 or 1.46 percent, on a volume of 750 thousand shares on the Nasdaq. In after hours, the stock further gained $0.96 or 45.93 percent to $3.05.