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Cytori Therapeutics shares up on gov't contract

NEW YORK (AP) -- Shares of Cytori Therapeutics Inc. rose Friday after the company said it will study a cell-based treatment for thermal burns and radiation injury for the U.S. government.

Cytori said it will get $4.7 million from its contract with the U.S. Department of Health and Human Services' Biomedical Advanced Research and Development Authority. If the agency exercises additional contract options, the San Diego company could get as much as $106 million, and Cytori said it expects the government will start ordering its therapy if development is successful.

Cytori shares rose 72 cents, or 18.7 percent, to $4.58 in afternoon trading. They are approaching their 52-week high of $4.85 on Monday.

The initial contract covers preclinical development of the therapy, which is intended to create a treatment for thermal burns after an event or attack in which large numbers of people are injured. Cytori said the Government Accountability Office believes that more than 10,000 people could be injured in a large attack or accident. Because there are a limited number of burn specialists and centers in the U.S., a therapy that can be easily applied by non-specialists would meet a possible public need.

Cytori's Celution system is designed to take regenerative cells out of a patient's fat tissue. Cytori is using those cells to develop treatments for cardiovascular disease and soft tissue ailments.

The base period of the contract lasts two years. The deal includes options lasting another three years and additional funding to cover clinical development of the therapy, technology development, and the regulatory process.