It’s a done deal!
Aspiring biotech firm Cynata Therapeutics Ltd [ASX:CYP] reported a massive win late last night. Their Japanese benefactor, Fujifilm, is going to license their CYP-001 treatment.
This news has seen the share price roaring back to $1.74 in early trading, up more than 22%. Recouping the recent losses over the past week or so.
Better still, this may just be the start of a very lucrative partnership.
Trials and tribulations
Under the terms of this deal, Fujifilm will have the exclusive rights over CYP-001. Meaning they have the final say in how it is developed and eventually sold.
As for CYP-001 itself, well it is a stem cell treatment. Cynata has been using mesenchymal stem cells (MSCs) to try to treat a range of diseases. Fujifilm has been given the license to use this stem cell therapy in treating graft-versus-host-disease (GvHD).
After passing the phase I trial for GvDH, CYP-001 is showing plenty of promise. That is no doubt why Fujifilm has decided to pull the trigger and snap it up for themselves.
In doing so, Cynata will receive US$3 million upfront. Cash that will buy them time to keep developing their stem cell research.
However, should Cynata reach further milestones, they could receive up to US$43 million in total. That cash is contingent on further trials, regulatory approval and first sales.
So, the upside could keep coming as long as the drug lives up to its claims.
On top of this, Cynata will receive a 10% royalty on all future sales. So, while Fujifilm may be the license holder, shareholders will still reap some reward.
They’ve got a fair road ahead of them before that, though.
Onward and upward
The next major hurdle will be the Phase II trial of CYP-001. A task that will require significant resources to get underway.
With Fujifilm’s commitment though, Cynata are well on their way to making it happen. As CEO, Ross Macdonald commented:
‘Fujifilm’s decision to exercise its license option in GvHD is a clear validation of our Cymerus platform technology solution for manufacturing MSCs at scale. We now look forward to Fujifilm taking this product through further clinical development activities and subsequently to market.’
This could be the catalyst that sees Cynata crack the big time. A result that few biotech’s rarely manage to achieve.
For more information on the high stakes and big rewards of biotech investing, check out our report. You can get a copy for free, right here.
For Money Morning