The terms submitted by
According to the ASX announcement dated 17 September 2017
the terms are as follows:
• FujiFilm Holdings Corporation (FujiFilm)
is granted an exclusive, worldwide license to develop and commercialise Cynata Therapeutics (Cynata)
lead mesenchymal stem cell (MSC) product, CYP-001, for the prevention and treatment of GvHD in human so Cynata will receive US$3m cash from Fujifilm as an upfront fee. [note pfeifer1982HC: prompting a payment of US$10,000 to Wisconsin Alumni Research Foundation (WARF) as part of the license agreement with Cynata
, see below]
o Fujifilm will bear responsibility for all costs of any further product development activities in relation to GvHD, along with responsibility for regulatory submissions and commercialisation.
o The non-dilutive upfront payment of US$3m will lengthen Cynata’s cash runway and support further investment in the upcoming Phase 2 trials in critical limb ischemia (“CLI”) and in osteoarthritis, along with other potential future clinical programs.
o Cynata will potentially receive additional future milestone payments from Fujifilm totalling up to US$43m based on successful attainment of certain industry standard product development and commercial milestones, the first of which is US$2m on completion of the first Phase 2 clinical trial in USA, UK or Japan. Subsequent milestones are completion of Phase 3 clinical trials (US$3m), submission of applications for regulatory approvals (US$12m), acceptance of geographic marketing authorisations and first sales (US$16m) and extending the indication (US$10m). [note pfeifer1982HC: of which 30% will likely be payable to Wisconsin Alumni Research Foundation (WARF) as part of the license agreement with Cynata, see below]
o Cynata will receive a 10% royalty on all future product sales if the licensed product is successfully commercialised in any country in which any licensed patents are granted or pending. o Having sub-licensed certain patent rights licensed-in from the Wisconsin Alumni Research Foundation (“WARF”) in respect of Cynata’s Cymerus™ technology to Fujifilm, Cynata will be required to make a one-off cash payment to WARF of US$10,000. Cynata is also required to pay WARF a mid-single digit percentage royalty on Fujifilm product sales and 30% of other amounts received from Fujifilm, including in respect of milestone payments.
o Both Fujifilm and Cynata have rights to terminate the license under certain conditions such as material breach and bankruptcy and failure to use reasonable efforts to achieve certain specified milestones. The agreement also includes limited mechanisms for potential royalty adjustment on termination of the WARF Head License, entry of a generic competitor or in-licensing third party enabling technology.
• Fujifilm and Cynata will enter into a separate agreement for the supply of product by Cynata for certain future product development activities at cost plus a moderate doubt digit manufacturing margin
• The endorsement by Fujifilm of Cynata’s Cymerus platform supports the continued commercialisation of Cynata’s cell therapeutic products in other indications, including CYP002 for critical limb ischemia (CLI) and CYP-004 for osteoarthritis
To facilitate Cynata’s ongoing partnering efforts certain amendments have been made to the license agreement between Cynata and WARF, particularly in relation to sub-sublicensable sub-licenses under the WARF patents and extending certain interim development milestones, whilst not changing the current milestone for obtaining approval from the U.S. Food and Drug Agency (or an equivalent foreign agency) in 2026.
[The last paragraph provided an explanation on the delay back in March, when the Licence Option was meant to be executed
A deal that required a lot of patience from investors
In September 2016, FujiFilm and Cynata signed a Non-binding Development and Commercialisation Term Sheet
. It anticipated that, under a definitive agreement, Cynata will grant FUJIFILM an option to an exclusive, worldwide licence to market and sell Cynata’s lead MSC product for prevention and treatment of graft-versus-host disease (GvHD), as well as (a) an option to negotiate a licence for manufacturing those products, and (b) certain rights to Cynata’s proprietary Cymerus™ technology for the prevention and treatment of other diseases.
FujiFilm even provided an earnings projection CYP-001 in GvHD back in their December 2016 presentation. Unfortunately, I can't get my hands on the that presentation anymore, as the FujiFilm website has been re-done since and my original link is now dead.
The much anticipated FujiFilm announcement in January 2017 caused a bit of disappointment amongst investors, as FujiFilm didn't sign a licence agreement, instead FujiFilm and Cynata signed a Development and Commercialisation Partnership Agreement
aka a Licence Option
Agreement to an exclusive, worldwide licence to market and sell Cynata’s lead MSC product, CYP-001, in the field of prevention and treatment of graft-versus-host disease (GvHD).
As part of that, FujiFilm also took a A$3.97 million strategic equity stake in Cynata.
Over the next two years, FujiFilm wasn't shy of having its representatives talk to various newspapers. It was a bit surreal, as it sounded like they have already taken up the license, when in fact it was "only" an option to take it up.
January 2017, Junji Okada, Director, Corporate VP & GM of Corporate Planning Headquarters and Pharmaceuticals Products Divs., FujiFilm Holdings Corporation, in an interview published in "Weekly Diamond"'s January Edition with the title "FujiFilm pushing into regenerative medical business" (sorry, my links are dead but against a few that article is still available via their website):
"[...] Get a challenge right to become a main player
We have elemental technologies cultivated with film. In the field of regenerative medicine, there are no companies in the world who have established a firm position yet. As a pharmaceutical manufacturer, we are "chase after". Even if imitating after the major and keeping up, profitability is not good and efficiency is bad. If you go out early in areas where no one is doing, you will gain the challenge of becoming a main player.
We are steadily striking the foundation necessary for regenerative medicine . Mostly it is acquisition. We are holding down all three major elements (cell, medium, scaffold) in regenerative medicine. I think that business can be deployed comprehensively just by regenerative medicine. Then you get inquiries from various places and information comes in, so you can further lead the industry.
- I am aiming for the first domestic company trial in transplant medical treatment using iPS cells in 19 years.
It is the impression that we are finally getting into the stage of business. Since I do it, I want to honor the first domestic. There is also a pride that it is a top runner in the field of regenerative medicine.
[...] Earn "one-third" in healthcare centering on regenerative medicine
- The policy of M & A in the future.
Whether there is synergy or not is not important, but it is important. We will continue to focus on focusing areas such as image diagnosis and regenerative medicine.
- Healthcare is currently about 20% to Fujifilm HD sales. If regenerative medicine is going to grow steadily in the future, Fujifilm may be called a "medical company" day.
Other business will grow as well (laugh). I will not say how many years, but I will aim at healthcare to account for about one-third of HD sales." To avoid altering any facts, I did not make any changes to the spelling, wording etc. What you see is exactly how it got translated using Google Translate.
In September and October 2018 FujiFilm talked to Nikkei Asia
, leading to two separate articles to then be published:
Two great articles with lots of information regarding the technology, anticipated timeline/s, market opportunity, Cynata's Phase 1 trial, FujiFilm's plans in the US etc., way too much to quote on here.
Still in October 2018, an article with the title iPS-derived mesenchymal stem cells, next year at the prospect Japan-US clinical trial Fujifilm, etc.
was published on nikkan.co.jp
stating the following:
"The MSC used in Phase 2 trials is supplied from the United States, but in the future, it is also considering production at Japan Tissue Engineering (J-TEC) of the Fujifilm Group."
Also, in October during an FCDI presentation at The Cell & Gene Meeting on the Mesa, Nick Manuso, Senior Vice President FujiFilm Cellular Dynamics, Strategy and Business Development, had the following remarks on his presentation slides:
"Leading the field of breakthrough cellular therapies using induced pluripotent stem cells (iPSCs)
- Phase II - Graft Versus Host Disease with Cynata Therapeutics [...]"
together with a comment of Cynata's CEO Ross Macdonald at the top right corner (1:10 mins). To watch the presentation on YouTube, click here
Ken-ichiro Hata, Deputy Director BioScience & Technology Development Center, Fujifilm Corporation Japan Tissue Engineering Co., Ltd. (J - TEC), Representative Director and President, for example in December 2018 said the following: "There are many walls that must be overcome in order to make organs from iPS cells, but research and development of cell therapy using iPS cells is progressing steadily. CDI also supplies iPS cells to the Australian regenerative medical venture in the Fujifilm Group and contributes to the world's first iPS cell clinical trial in the UK. This is to inject a mesenchymal stem cell (* 3) made from iPS cells and treat it for patients with complications that occur after leukemia bone marrow transplantation. And Fujifilm will do the same clinical trial in Japan, as a company in 2019 for the first time. If approval from the country is obtained, I would like to sell it to medical institutions as a formulation."
Also in December 2018, FujiFilm was quoted saying: Fujifilm announced on Wednesday that it will establish a facility for production of artificial pluripotent stem cells (iPS cells) for treatment in Wisconsin State, USA. Investment amount is about 2.5 billion yen. It is intended to accelerate the development of regenerative medicine products using iPS cells and to operate it in FY 2019. Fujifilm plans to apply for a clinical trial (clinical trial) for obtaining approval of transplantation medicine by iPS cells from the country in Japan during FY 2018. We plan to conduct clinical trials in the United States. A US subsidiary is set up as a production facility, and introduction of cultivation equipment and so on corresponding to the quality control standards of US authorities. Rapidly develop regenerative medical products in the fields of Parkinson's disease, heart disease, cancer by iPS cells produced. We also assume production contracts from other companies.
In January 2019 FujiFilm mentioned Cynata and its Phase 1 clinical trial in GvHD a total on a total of five pages across their presentation with the title Pharmaceuticals, Bio CDMO and Regenerative Medicine Business
: Source: FujiFilm Holdings Investor Presentation 15 January 2019 Source: FujiFilm Holdings Investor Presentation 15 January 2019 Source: FujiFilm Holdings Investor Presentation 15 January 2019 Source: FujiFilm Holdings Investor Presentation 15 January 2019 Source: FujiFilm Holdings Investor Presentation 15 January 2019
Cynata's unofficial anthem among investors at the time was Beyonce's "If you like it then you should have put a ring on it"...
Whilst the licence option agreement is with the parent company FujiFilm Holdings, we still had the existing partnership with FCDI, who also mentioned us when announcing an investment of US$21 million to open a new cGMP-compliant*1 production facility with the goal of industrializing iPS cell manufacturing for regenerative medicine therapies.
FujiFilm decided to also advertise the world's first clinical trial using iPS cells a few times in Science Magazine
a few times, here is a sample of the full page advertising from March 2019: Source: Science Magazine Digital
After the initial "deadline" for the Licence Option Agreement to run out in March 2019 and Doomsday Preppers start hording food and toilet paper preparing for the End of the World as we know it, Cynata extended the Option Agreement (see ASX announcement here
) to then finally execute it on 17 September 2019
with the terms outlined above (praise the Lord...).
A few months before, 4 July 2019 to be exact, FujiFilm released its latest "NEVER STOP" campaign commercial
. At 1:56 min you can see the Cynata world-first reference (English translation at the very bottom).
In October 2020 FCDI updated its website. Although FCDI is not the licensee of our technology and therefore CYP-001 does not (currently) form part of FCDI's own pipeline, Cynata now gets a mention there under partnerships
: Source: FujiFilm Cellular Dynamics
Background on CDI FujiFilm has entered this space with a BANG the year before (30 March 2015), by announcing to acquire Cellular Dynamics International, Inc.'s (CDI) - a leading developer and manufacturer of fully functioning human cells in industrial quantities to precise specifications - issued and outstanding shares of common stock for US$16.5 per share or approximately US$307 million (on a fully diluted basis). The offer represented a premium of 108% to CDI's closing price on 27 March 2015. The Story Behind Cellular Dynamics’ Sale to Fujifilm is one of a leader in a newly establised space (more info here), founded in 2004 by University of Wisconsin-Madison professor and stem cell pioneer James Thomson. that has built a steady business manufacturing living human cells in massive quantities. The technology is based on induced pluripotent stem cells: taking tissue from donors, CDI’s scientists coax the cells back to an embryonic-like state, then direct them to turn into desired cell types such as neurons and heart, liver, and retinal cells. The technology has applications in drug toxicity testing, cell banking, and the development of experimental cell-based therapies that could in theory heal or regrow body parts.
Despite showing increasing revenue, CDI was still in the red. With the pressure of having to repay a credit facility mounting and having all other options already explored, it was FujiFilm's opportunity to step in and up with what was deemed a more or less satisfactory offer given the current circumstances.
The acquisition was finalised in May 2015.
The perfect partner Fujifilm
, founded in 1934, has transformed itself into a company covering prevention, diagnosis, and treatment. As a comprehensive healthcare company, Fujifilm therefore saw the revolutionary treatments that regenerative medicine could offer as a key part of its mission. An important factor in Fujifilm’s decision to enter this field was the company’s extensive portfolio of technologies, many of which seemed applicable to regenerative medicine. One example is photographic film, which was Fujifilm’s core product at the time of its foundation and for many years thereafter. Film is a precision chemical product that integrates color-producing reagents and nearly 100 different chemical compounds in total in an ultra-thin layer just 20 micrometers thick. To produce photographic film requires technologies that control many different chemical reactions on a microscopic scale. By coincidence, 20 micrometers is about the diameter of a single liver cell. Fujifilm’s technologies for controlling microenvironments appeared to have extraordinary potential in the world of regenerative medicine. Fujifilm also possessed a wealth of knowledge about collagen, a protein that is one of the main components of photographic film. In regenerative medicine, collagen plays a critical role in growing cells and restoring tissues. To fulfill demand for the highest quality photographic film possible, Fujifilm had refined a wide range of collagen-based technologies, including methods for processing and controlling the protein, which is extremely sensitive to such environmental parameters such as moisture and temperature. Fujifilm saw a clear opportunity to leverage its collagen technologies in this exciting new field.
After its acquisition of Cynata's sister company
CDI back in 2015, FujiFilm is leveraging world-leading iPSC development and production technologies to create an iPSC bank that comprises iPSCs for use in researching various diseases and conditions
, which put them in a unique position to evaluate Cynata's Cymerus™ manufacturing platform as it utilises the very same iPSCs manufactured by their (now) subsidiary CDI through a licensing agreement with Cynata back in September 2014
Having access to information that is not in the public domain, hence also not available to other companies in this space. Aiming to be recognized worldwide as a leader in regenerative medicine, Fujifilm will continue to move forward with this extremely important challenge
and given that they are considering iPSCs to be the key to regenerative medicine
, it came as no surprise that FujiFilm was the first one to make a move to become our licensee (CYP-001 in GvHD) in addition to also being the supplier of the iPSC starting material for Cynata's Cymerus™ MSC manufacturing platform. MSCs are among the most frequently used cell type for regenerative medicine with currently over 1,000 clinical trials initiated around the world for a wide range of diseases.
Just like Cynata's approach of developing a therapeutic platform in reverse (see here
), FujiFilm positioned itself over the years as a "self-contained" leader in the regenerative medicine sector in general and a pioneer in the iPSC sector in particular by building on their existing photo technology, expanding and continuously transforming it by acquiring factories and know-how needed for any expected future needs, incorporate them in your existing business structure to then leverage on their expertise. FUJIFILM Holdings Corporation has 317 consolidated subsidiaries as of March 31, 2020.
I'm not going to list all 317 consolidated subsidiaries now, don't worry. But lets just have a look at a few of them: Japan: The Americas: Europe: Asia & Others:
Feel free to check them out yourself to see that they are all amongst the leaders (if not THE leader) in their space. That
is vertical integration par excellence if you ask me!
Many investors, especially the ones NOT invested in Cynata might say the terms are not that exciting, being able to call a well-connected conglomerate such as FujiFilm with a Market Capital of US$20 billion your partner, has many perks including but not limited to having access to this vertically integrated, in-house regenerative medicine behemoth which also includes a advertising/marketing and distribution machinery "on steroids", that are worth multiples of the actual figures of the Licence Agreement currently in place. Remember, FujiFilm had a vital advantage over other companies in this space due to its unique position as mentioned above.
Although it might take a while for such a heavyweight to move, according to Newton's First Law of Motion, once it moves, it is also more difficult for it to stop.
I'm looking forward to what the future holds!