CYTORI THERAPEUTICS, INC. (NASDAQ:CYTX) Files An 8-K Entry into a Material Definitive Agreement

Item1.01

On January16, 2017, Cytori Therapeutics, Inc. (the Company),
entered into an Asset Purchase Agreement (the Purchase Agreement)
with Azaya Therapeutics, Inc., a privately-held corporation
incorporated under the laws of the State of Delaware (Seller), to
which the Company will acquire substantially all of the assets of
Seller and assume certain liabilities of Seller (the
Acquisition). In connection with the Acquisition, the Company
will acquire the rights to develop and commercialize (i)Sellers
ATI-0918 drug candidate, a generic bioequivalent formulation of
DOXIL/CAELYX, a chemotherapy drug that is a liposomal
encapsulation of doxorubicin (ATI-0918); and (ii)Sellers ATI-1123
drug candidate, a liposomal formulation of docetaxel (ATI-1123).

Under the terms of the Purchase Agreement, at the closing of the
Acquisition (the Closing) the Company will (i)issue $2.0 million
of shares of its common stock, par value, $0.001 per share
(Common Stock), in Sellers name, (A)$1.5 million of which will be
delivered to Seller at the Closing (the Closing Shares), and
(B)$0.5 million of which will be deposited into a 15-month escrow
to a standard escrow agreement (the Escrow Shares and together
with the Closing Shares, the Shares); and (ii)assume the
obligation to pay approximately $2.0 million of Sellers existing
trade payables, which payments the Company intends to make at or
promptly after the Closing. The price per Share will be equal to
the volume weighted average closing price of the Shares on the
Nasdaq Capital Market over the 10 consecutive trading days ending
on the trading date immediately prior to the date of the Closing.
to the Purchase Agreement, the Company has agreed to use best
efforts to file a registration statement covering the resale of
the Shares issued to the Sellers within 30 days of the Closing,
and to use commercially reasonable efforts to cause such
registration statement to be declared effective as promptly as
practicable following the filing. The Seller has agreed to abide
by certain weekly and monthly sale/transfer volume limitations
with respect to selling the Shares following their registration.

In addition, at the Closing, the Company will assume the
obligations to (i)pay Seller fixed commercialization milestone
payments of up to $16.3 million in the aggregate, based upon
achievement of certain net sales milestones for ATI-0918;
(ii)make certain earn-out payments to Seller equal to a mid
single-digit percentage of net sales of ATI-0918; and (iii)make
certain earn-out payments to Seller equal to a low single-digit
percentage of net sales of any product (each a Patented Product),
including ATI-1123, that practices a claim in the related patent
assigned by Seller to the Company (the ATI-1123 Patent). The
Companys aggregate earn-out payment obligations to Seller from
global net sales of both ATI-0918 and any Patented Product will
not exceed $100.0 million (the Earn-Out Cap).

Further, the Purchase Agreement provides that if the Company
enters into certain assignments, licenses or other transfers of
rights to a Patented Product or the ATI-1123 Patent, the Company
will pay Seller a percentage in the low to mid teens of the
consideration received by the Company, provided, that the
Companys aggregate payment obligation to Seller for any such
assignment, license or other transfer of rights will not exceed
$50.0 million.

If the Company or its successors, sublicensees or transferees
sells a competing product to ATI-0918 at any time prior to
satisfaction of the Earn-Out Cap, other than because ATI-0918
fails to receive marketing authorization from the European
Medicines Agency within a certain period of time or fails to
generate a minimum threshold of net sales within a pre-determined
amount of time, then 50% of the net sales of such competing
product would be deemed to be net sales of ATI-0918 under the
Purchase Agreement for purposes of calculating commercialization
milestone payments and earn-out payments.

The Company has agreed to, and has agreed to require that any
successors, sublicensees or transferees, use commercially
reasonable efforts to develop and commercialize ATI-0918 and any
Patented Product.

Both the Company and Seller agreed to customary representations,
warranties and covenants in the Purchase Agreement. Each party
also agreed to assume customary indemnification obligations,
provided, that Sellers maximum liability to the Company for
breaches of Sellers representations and warranties in the
Purchase Agreement and any ancillary agreements entered into in
connection therewith, is limited to $3.9 million, subject to
limited exceptions.

The Company has entered into a five-year lease for Sellers
facility located in San Antonio, Texas that is contingent upon
the Closing occurring. The lease will represent an initial annual
base rent obligation of approximately $93,000.

The Closing is subject to the satisfaction of customary
conditions, including, without limitation (i)Sellers receipt of
stockholder approval and (ii)the Companys receipt of consent from
its secured lender, Oxford Finance, LLC.

Prior to the Acquisition, the Company had no material
relationships with Seller or its affiliates.

The foregoing description of the terms of the Purchase Agreement
is qualified in its entirety by reference to the provisions of
such agreement. The Company expects to file the Purchase
Agreement with the Companys Annual Report on Form10-K for the
fiscal year ended December31, 2016.

Item1.01 of this Current Report on Form 8-K is hereby
incorporated by reference into this Item3.02.

The Shares have not been registered under the Securities Act of
1933, as amended (the Securities Act) or any state securities
laws. The Company is relying on the exemption from the
registration requirements of the Securities Act by virtue of
Section4(a)(2) thereof. The Shares may not be offered or sold in
the United States absent registration or exemption from
registration under the Securities Act and any applicable state
securities laws.

Neither this Current Report on Form 8-K nor any of the exhibits
attached hereto is an offer to sell or the solicitation of an
offer to buy shares of Common Stock or other securities of the
Company.

****

The Company cautions you that this Current Report on Form 8-K
includes forward-looking statements regarding events, trends and
business prospects, which may affect its future operating results
and financial position. Such statements, including without
limitation, statements regarding: anticipated closing of the
Acquisition; potential benefits to Cytori, Azaya and their
respective stockholders resulting from consummation of the
proposed Acquisition (including benefits arising out of possible
synergies between Cytoris and Azayas technology platforms and
intellectual property, and potential benefits Azayas stockholders
may realize by reason of their ownership of Cytori stock);
Cytoris intended development of next-generation, druggable
regenerative medicine products; anticipated cost-effective
expansion of Cytoris clinical pipeline with ATI-0918 and
ATI-1223; access to licensing and revenue opportunities after
closing of the Acquisition; anticipated markets for ATI-0918 and
ATI-1123; timing for submission of regulatory filings for
ATI-0918; expected commercial launch timeframes (which launches
are subject to regulatory approvals and other conditions
precedent) and the global scope of such commercial launches;
conduct of possible follow-on studies in the U.S. for ATI-0918;
anticipated development efforts for ATI-1123; Cytoris anticipated
clinical pipeline (including ATI-0918 and ATI-1123); Cytoris
potential access to future capital to develop the acquired
assets, including ATI-0918 and ATI-1123; and

expected impact of the Acquisition on Cytoris operation,
financial condition and assets. Some of these risks and
uncertainties include, but are not limited to: the possibility
that the Acquisition will not close and Cytori will not acquire
Azayas assets; unanticipated clinical, regulatory, commercial or
other hurdles or uncertainties in developing, manufacturing and
commercializing Azayas assets, including ATI-0918 and ATI-1123;
any inability to identify and realize potential synergies between
Cytoris and Azayas technologies; inability to access capital to
develop the acquired assets on terms acceptable to Cytori;
potential negative market reaction to the Acquisition; unforeseen
costs and expenses relating to the acquired assets that may exert
significant pressure on Cytoris human, technical and financial
resources, including its ability to fund development and
commercialization of its clinical pipeline, including ATI-0918
and ATI-1123; failure to find suitable financing to operate
Cytoris business as currently contemplated after consummation of
the Acquisition; risk regarding identification of suitable
partnering candidates for ATI-0918 or ATI-1123; technical
capabilities risks, including the ability to successfully obtain
and maintain sufficient drug development and manufacturing
expertise; risks relating to review by the European Medicines
Agency (EMA) of the ATI-0918 marketing authorisation dossier and
related EMA application requirements; inherent risk and
uncertainty in the conduct of clinical trials and clinical trial
results (including Azayas previously conducted bioequivalency
trial for ATI-0918); risks in the collection of clinical data,
final clinical outcomes risks; risks regarding protection of
intellectual property rights, including protection of know-how
and other trade secrets relating to manufacture of ATI-0918 and
ATI-1123; competitive risks, including risk associated with
commercializing a generic drug (ATI-0918) competitive with drugs
offered by potentially much larger companies with greater
technical, financial and human resources; risks regarding
dependence on third-party performance, and performance and
acceptance of Cytoris products in the marketplace; as well as
other risks and uncertainties described under the heading Risk
Factors in Cytoris Securities and Exchange Commission Filings on
Form 10-K and Form 10-Q. Cytori assumes no responsibility to
update or revise any forward-looking statements to reflect
events, trends or circumstances after the date they are made.

About CYTORI THERAPEUTICS, INC. (NASDAQ:CYTX)

Cytori Therapeutics, Inc. (Cytori) is a biotechnology company engaged in the development of treatments and devices for a range of disorders using cells as a key part of the therapy. The Company develops cellular therapeutics formulated and optimized for specific diseases and medical conditions and related products. It is focused on developing primary product, Cytori Cell Therapy, for patients with scleroderma hand dysfunction, orthopedic disorders, cardiovascular disease, urinary incontinence and thermal burns, including those complicated by radiation. Its cellular therapeutics are collectively known by the name, Cytori Cell Therapy, which consists of a heterogeneous population of specialized cells, including stem cells that are involved in response to injury, repair and healing. These cells are extracted from an adult patient’s own adipose tissue using its automated, enzymatic, sterile Celution System devices and consumable sets at the place where the patient is receiving their care.

CYTORI THERAPEUTICS, INC. (NASDAQ:CYTX) Recent Trading Information

CYTORI THERAPEUTICS, INC. (NASDAQ:CYTX) closed its last trading session up +0.12 at 1.65 with 175,755 shares trading hands.