Cellmid (ASX: CDY) has inked a key option agreement with listed Japanese company Fujikura Kasei Co (TYO: 4620), a major supplier of latex particles used in medical diagnostics with a market cap. of ¥12.4 billion (A$130 million), for Cellmid’s proprietary anti-midkine diagnostic antibodies.
Significantly, the partnership is a logical fit as Fujikura considers midkine an important part of the commercial expansion of its medical diagnostic business.
Under the terms of the option to licence agreement, Cellmid will supply its anti-midkine diagnostic antibodies for validation on Fujikura’s latex platform.
Midkine has been extensively validated as an early marker for a range of cancers and has also been shown to be useful in prognosis and disease management.
A latex based assay will be highly beneficial for the commercial launch of any midkine diagnostic product, as it is widely used and accepted in pathology laboratories. It is also preferred as it can easily be automated, reducing processing costs.
Dr Hideyuki Kuroda, head of Medical Project Division at Fujikura Kasei Co, commented: “We are very excited about this opportunity as the midkine diagnostic platform lends itself to multiple, high value product development opportunities.
Cellmid will receive an initial fee and a further payment should Fujikura elect to exercise its licence option.
The company will also receive royalties on any future midkine diagnostic products sold by Fujikura.
Maria Halasz, chief executive officer of Cellmid, said she was confident the partner company’s expertise in latex based diagnostics would ensure success in achieving the required limit of detection (LOD) for a midkine test.
The licence agreement will proceed if Fujikura reaches a LOD of 500 picogram/mL midkine in serum on its proprietary latex diagnostic platform.
Cellmid’s highly sensitive MK-ELISA detects midkine to a limit of 8 picogram/mL, and Fujikura is planning to achieve a LOD close to that level on its latex platform using the same antibody pair.
Healthy individuals usually have serum midkine levels below 500 picogram/mL.
A latex based test with a 500 picogram/mL LOD means that the test will be able to identify individuals with elevated midkine levels, which may lead to the development of a number of cancer diagnostic products.
Fujikura has regulatory and product development programs in place to accelerate this path to market.
Halasz said: “Fujikura is the ideal partner for us as they have a strong focus on building their medical diagnostic business and consider midkine an important part of this commercial expansion.”
Fujikura Kasei Co
Tokyo-headquartered Fujikura Kasei Co is a fine chemical company traditionally with core strengths in coating materials, electro-conductive materials, polymers and resins, serving electronics, automobiles, buildings industries.
With its platform technologies in particle size and shape control, hybridisation, functionality and processing, Fujikura is one of the largest suppliers of latex particles used in medical diagnostic based on latex coagulation technology.
Analysis
This agreement further validates Cellmid’s midkine diagnostic technology as well as provides Cellmid with an initial fee and upside with further payments at Fujikura’s elect.
Cellmid’s midkine diagnostic technology has been extensively validated as an early marker for a range of cancers and has also been shown to be useful in prognosis and disease management.
The upside of this latest partnership is the potential for the development of a number of cancer diagnostic products.
Just as significantly, Fujikura has regulatory and product development programs in place to accelerate this path to market.
A latex based assay will be highly beneficial for the commercial launch of any midkine diagnostic product, as it is widely used and accepted in pathology laboratories. It is also preferred as it can easily be automated, reducing processing costs.
In 2013 Cellmid is working to increase revenue from multiple channels, convert its patent portfolio into products and increase market recognition.
This is a company with near term cash flow and a diversified pipeline of products.
The retracement in share price from $0.028-$0.03 to $0.02 provides an opportunity for investors. We assess Cellmid to be worth closer to $0.035 on our calculations, offering substantive upside.
CDY Price at posting:
2.1¢ Sentiment: LT Buy Disclosure: Held
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