Staff Writer

Cytori Therapeutics Inc. will raise $12 million under an equity agreement with its stem cell bank marketing partner, Green Hospital Supply Inc., a distributor of health care equipment and services in Japan.

Green Hospital Supply, of Osaka, Japan, will purchase 2 million shares of unregistered Cytori common stock at $6 per share and be granted a nonvoting observer seat on Cytori's board of directors. The transaction will close on or before Feb. 28.

Following the transaction, Green Hospital Supply's ownership in Cytori will increase to 3 million shares, representing 11.5 percent of Cytori's total shares outstanding.

Green Hospital Supply is responsible for marketing Cytori's Celution system, used to extract a mix of stem and regenerative cells from a patient's fat tissue during surgery.

"Simultaneously, this deal provides us with capital to invest in the development and commercialization of our Celution System," Christopher J. Calhoun, CEO of Cytori, said in a company new release.

Analyst Jan Wald with the Stanford Group Co. said the partnership with Green Hospital is one of the Cytori's earliest revenue streams.

"I think it was a good move," Wald said, adding that Cytori may not have to worry about going to capital markets before reaching profitability. He estimated it could be two or three years before Cytori may have to tap capital markets.

Through the partnership with Green Hospital Supply, this is the first time Cytori's StemSource Cellbank has been made available, said Tom Baker, director of investor relations at Cytori.

Green Hospital was interested in establishing stem cell banks throughout Japan, he said, and had approached Cytori about its stem cell preservation system.

"Our increased equity position in Cytori is strategically important for our business," Kunihisa Furukawa, president of Green Hospital Supply, said in the news release. "We have identified Cytori's StemSource Cellbank product as one of the primary foundations of our future growth. In addition, we believe their vision, products and business model will create the global leader in regenerative medicine."

Unlike U.S. stem cell banks that store umbilical cord blood, Green Hospital Supply seeks to preserve stem cells at local hospitals real-time when a patient undergoes surgery, Baker explained.

The hospital supplier is traded on the Tokyo stock exchange and has total annual revenues of $500 million, according to Baker's figures.

Cytori remains focused on clinical trials investigating the use of fat tissue-derived stem cells in repairing heart muscle and in breast reconstruction after a partial mastectomy, Baker said.

He noted that the majority of the company's resources are focused on the application of these stems cells in cardiovascular disease patients, to prevent future disease or to repair damage from a heart attack.

Currently, Cytori has two clinical trials under way in Europe in cardiovascular disease. It also has two more trials planned for Europe in patients in need of breast reconstruction due to defects from a partial mastectomy or due to more severe damage, Baker said.

In other financing news:

• Archemix Corp., of Cambridge, Mass., has withdrawn its request for an initial public offering citing unfavorable market conditions. It filed for an IPO in July 2007, hoping to raise $69 million and by selling 4.5 million shares at $12 to $14 each. Last month the company received a $1 million milestone payment from Nuevelo Inc., of San Carlos, Calif., when Nuevelo began a Phase 1 study of an aptamer, NU172, developed by Archemix.

• Bioniche Life Sciences Inc., of Belleville, Ontario, secured a $5 million commercial loan from the Business Development Bank of Canada to support scale-up of vaccine production at its facility. When combined with the previously announced $10 million in Ontario government financing and $5 million in federal government financing, the company said it has $20 million for production scale-up over the next two years to provide a capacity of 40 million doses of the E. coli O157:H7 vaccine. It is part of a long-term, $100 million project to create an Animal Health and Food Safety Vaccine Manufacturing Centre.

• Chemokine Therapeutics Corp., of of Vancouver, British Columbia, closed, via a nonbrokered private placement, an offering of 5.25 million units at a price of $0.20 per unit for gross proceeds to the company of $1,050,000. The company's management team and board of directors subscribed for an aggregate of 1,362,500 units in the offering. Each unit issued consisted of one share of common stock and one common share purchase warrant entitling the holder to purchase one share of common stock at an exercise price of $0.30 per share for five years from the date of issue.

• GTC Biotherapeutics Inc., of Framingham, Mass., has entered into a securities purchase agreement with institutional investors to purchase 6,896,550 million shares of GTC's common stock at a price of $0.87 per share for gross proceeds of approximately $6 million. GTC will also issue seven-year warrants to purchase an additional share of GTC's common stock for each share sold in the offering, at an exercise price of $0.87 per share. The closing of the offering is expected to take place on Feb. 12. The net proceeds of the financing will be used for general corporate purposes.