Cellmid signs agreement for sale of biotech subsidiary Lyramid Limited

Cellmid Limited (ASK:CDY) has signed a binding agreement with Provelmare Holding SA, a Panama-based company, for the sale of Lyramid Limited, Cellmid's wholly-owned research and development subsidiary focused on commercialising its midkine intellectual property portfolio. Midkine, an important novel therapeutic target, is a growth factor abundant during embryonic development but is almost undetectable in healthy adults and it reappears in certain pathologies, including inflammatory diseases and cancer, becoming readily detectible in blood and other tissues. The sale is on a going concern basis and Lyramid’s business, including employees, contractors and collaborators remain intact following the sale. “Delighted to hand over” Although the sale was not required to be approved by shareholders, approval was sought at Cellmid’s AGM in November 2020 where the resolution to sell Lyramid was passed.  Cellmid chief executive officer Maria Halasz said: “We are delighted to hand over this exciting drug development program to its new owner, Provelmare Holdings.  “Their commitment to funding the development of the midkine intellectual property, their sole focus and the continuity of operations will increase the likelihood of success of this promising technology.” Notably, Lyramid chief scientific officer Associate Professor Graham Robertson, will continue in his role following the sale.  Royalties provide potential upside In addition to the immediate cash payment of AS$500,000, the divestment of Lyramid will deliver a number of tangible benefits to Cellmid shareholders.  The company will be able to solely focus on its consumer health business to execute on its growth and profitability objectives.  It will retain the right to participate in the potential upside from the assets through royalties without the need to dedicate further shareholder funds to the commercialisation programs. Overall, it will save close to A$1 million annually by reducing research personnel and relinquishing the financial responsibility for patent filing and maintenance, amongst other costs related to Lyramid.  Key terms Key terms of the agreement are:  Cellmid receives a cash consideration of A$500,000, payable at the time of completion;  Cellmid will be reimbursed for costs incurred in relation to midkine research and development between January 1, 2021, and April 28, 2021;  Provelmare will provide funding to Lyramid to execute on an agreed product development program;  The intellectual property licence between Cellmid and Lyramid, signed on August 1, 2020, remains on foot and will provide for a royalty of 4% payable to Cellmid on net sale of products developed and sold and a royalty of 8% payable to Cellmid on net sub-licensing revenue; and Physical midkine assets essential for the commercialisation of the intellectual property will be transferred to Provelmare. Looking forward A service agreement between Lyramid and Cellmid will be signed to provide continuity and ongoing support.  Provelmare Founder Sebastien de Massy said: “We are very excited to have the opportunity to develop the midkine drug development program and continue with the significant groundwork by Cellmid and its collaborators to take the project through its next value inflection point.” Provelmare initially intends to fund the IND enabling studies of Lyramid’s midkine therapeutics, which will include selection of the therapeutic agent, carrying out in vitro and pre-clinical validation, pre-clinical safety and efficacy studies and GMP manufacture of the drug product.  Cellmid shares are more than 7% higher to A$0.07.