Why Cynata Therapeutics’ Share Price Crashed 31.07% Today

Australian stem cell research company Cynata Therapeutics Ltd [ASX:CYP] has seen its share price tumble 31.64% this morning, shedding 55 cents to trade at $1.22.

This morning’s nosedive comes on the back of strong gains made since the beginning of December, climbing 84.5% to reach $1.79 — its highest price since October 2010.

Fuji delay causes concerns for Cynata Therapeutics’ share price

Back in 2016, Fujifilm invested US$3 million into Cynata in exchange for just over 10% of the company’s total stock.

Cynata’s relationship with Fuji has proven fruitful over the years, with the Japanese photography company working to commercialise some of Cynata’s technology in the Japanese market and beyond.

Today’s dramatic price drop seems to have been caused by Fuji’s inaction to exercise its latest license option.

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Back in December last year, Cynata completed the clinical study report for phase 1 of its CYP-001 for the treatment of steroid-resistant acute graft versus host disease (GvHD).

At the conclusion of the study, Fuji was given 90 days in which to exercise the license option.

Today’s announcement stated the licensing option has now been extended to 19 September.

CYP’s CEO, Ross Macdonald, said the purpose of the extension was to accommodate certain requests made by Fujifilm in relation to structural aspects of the GvHD license agreement.

Cynata said that it is not negotiating any changes to licensing terms and no changes have been agreed upon.

The amount of scepticism surrounding the potential licensing blunder appears to have been too much for a lot of investors, choosing to sell off rather than wait to see what Fuji comes back with.

What’s next for the Fuji Cynata partnership

According to the partnership agreement signed by the two parties back in 2017, the deal totals over $60 million in potential one-time payments, along with double-digit royalties on net sales of CYP-001 product.

Fuji would also bear the development costs of CYP-001.

Fujifilm has been expanding into a range of new industries, such as life sciences and medical technologies since it has endured tough times with the collapse of the camera film industry.

While only pure speculation for now, Fuji could be beginning to realise CYP’s option is too rich for its liking.

Fujifilm still believes a new drug would be worth $US300 million in annual sales, which would deliver at least US$30 million in annual royalties to Cynata. Development costs of CYP-001 might be too much for Fuji to swallow.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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