CYP Trading - post Fuji validation, page-217

https://www.nabtrade.com.au/investor/insights/latest-news/news/2019/09/four_biotech_stocks

4. Cynata Therapeutics (CYP:ASX)

Market capitalisation: $163 million
One-year total return: 31.8%
Analysts’ consensus price target: $2.50

Cynata Therapeutics was also one of our promising stem-cell stocks in October 2016, when it was trading at 71 cents: CYN has also hit the headlines this month, announcing a deal with Japanese company Fujifilm by which the latter will exercise its option to license one of Cynata’s stem cell-based treatments coming out of its Cymerus mesenchymal stem-cell technology platform.

Mesenchymal stem cells, or MSCs, are found in the body’s bone marrow and connective tissue. They have immune-suppressive and immune-regulatory activity, and migrate to sites of affected tissue to control local inflammation. In 2015, Cynata achieved a world-first breakthrough of manufacturing MSCs to therapeutic standards using induced pluripotent stem cells: prior to this breakthrough, manufacturing MSCs required a continuous supply of new tissue donations, but CYP’s technology using induced pluripotent stem cells gives it an effectively limitless starting material.

The Fujifilm deal was ready for the green light earlier this year, but in March, the two parties announced a six-month delay: that caused a 40% slump in CYP’s share price, but all is forgiven now on the part of skittish investors.

Fujifilm will license CYP-001, Cynata’s treatment for graft-versus-host disease (GvHD), a rare but potentially lethal complication from bone-marrow transplants, including for leukaemia. GvHD happens when immune cells from a transplant (the graft) see the recipient’s cells (the host) as foreign, and attack them, causing inflammation throughout the body. Usually, severe cases of GvHD are treated with high-dose steroids and immune-suppressants, but in about half of cases the patient fails to respond to treatment – and the consequences are usually fatal.

However, CYP-001 treatment, involving an infusion of millions of stem cells, appears to work to control and mediate the immune response. A Phase I clinical trial in 2018 showed that 14 out of 15 GvHD patients treated with CYP-001 showed improvement, with 8 of 15 having their GvHD signs and symptoms “completely resolved.”

Cynata will receive $US3 million from Fujifilm as an up-front fee, and stands to get up to $US43 million more in future milestone payments, as well as 10% royalties if the drug is successfully commercialised.

Cynata is also working to develop stem treatments for osteoarthritis and critical limb ischemia, a reduction of blood flow to the extremities that can lead to amputation and death. The company is preparing Phase II trials for its stem cells in relation to both conditions.

In July, Cynata received a $200 million takeover proposal by Japan’s Sumitomo Dainippon Pharma, at $2 a share. The company says it will update the market about the approach shortly: obviously, its response will have a significant impact on whether CYP will stay independent long enough to attain where analysts see its price as potentially heading.

There goes that $2.50 again!