By Ryan Flinn - 2012-09-28T20:12:41Z

Cytori Therapeutics Inc. (CYTX), a biotechnology company with $10 million in annual revenue, rose the most in about a year after the company won a $4.7 million U.S. government contract to develop a stem cell therapy to treat burns caused by thermal or radioactive bombs.

Cytori jumped 14 percent to $4.41 at the close in New York, the biggest single-day increase since October 2011. The shares of the San Diego-based company have doubled this year.

Were seeing a lot of momentum, Chief Executive Officer Christopher Calhoun said today in an interview with Bloomberg Television. This contract is one more major thing that we are delivering on, and there is more to come.

The two-year contract with the Department of Health and Human Services Biomedical Advanced Research and Development Authority may be worth $106 million over five years if certain milestones are met, Cytori said today in a statement. The company had a net loss last year of $32 million, according to data compiled by Bloomberg.

Cytoris experimental therapy takes adipose tissue, or body fat, from a patient and through its device separates the adult stem and regenerative cells before transferring them to a burn wound. Money from the contract will be used to develop the device and take it through the U.S. regulatory approval process with the Food and Drug Administration, Calhoun said.

These cells help to facilitate the healing of the injury, he said in a telephone interview earlier this week. They release growth factors that stimulate new blood flow.

Testing the technology in a clinical trial and getting approval may take five years, Calhoun said. The company is currently testing its therapy for other soft tissue damage, as well as cardiovascular disease.

Once approved, the device will be deployed in hospitals across the country, and can be used for routine burns as well as a treatment for patients in wake of a mass casualty event that could injure 10,000 people, Cytori said in the statement.

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

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Cytori’s Stem Cell Therapy for Burns Wins U.S. Contract