May 8, 2009 / 5:06 PM / 9 years ago

UPDATE 1-Cytori in stem cell deal with GE Healthcare; shares up

* Signs 18-month deal with GE Healthcare on StemSource

* Says deal similar to European partnership

* Shares up as much as 24 percent (Adds analysts’ comments; updates share movement)

By Vidya L Nathan

BANGALORE, May 8 (Reuters) - Shares of Cytori Therapeutics Inc (CYTX.O) jumped as much as 24 percent, after it entered into a deal with General Electric Corp’s (GE.N) healthcare unit for commercialization of its StemSource stem cell product in North America.

Analysts see Friday’s deal being a definite positive for Cytori as well as GE Healthcare.

“GE is telegraphing its market that it is changing its business model to go into the areas where it sees future scientific and commercial potential,” WBB Securities analyst Steve Brozak said. “And Cytori is the direct beneficiary of that focus.”

The company said the new deal was similar to its deal with GE Healthcare in Europe, but was limited to the sale of StemSource stem cell banking and research products in the United States, Canada and Mexico for 18 months, starting in the second quarter of 2009.

Analysts also see the deal opening up a new stem cell market in the United States for both companies.

“This deal would give them an entry into a brand new multi-million market. It should begin to see the rewards of this relationship almost immediately,” Zacks Investment analyst Jason Napodano said.

However, WBB Securities’ Brozak sees bigger potential from the deal.

“In terms of the potential, these are numbers that are so significant that you must assume that in GE’s modelling this is as a multi-billion market,” Brozak said.

The deal did not include U.S. commercialization of Cytori’s Celution technology, which is under review by U.S. health regulators.

Shares of the San Diego, California-based company touched a high of $2.50, before paring some of their gains to trade up 17 percent at $2.36. They closed at $2.02 Thursday on Nasdaq. (Editing by Mike Miller, Anil D’Silva)

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