Investor presentation gives an indication of next milestones with Clinical trial results from diabetic foot ulcer in early 25 and aGvHD trial in 2H25. The DFU trial interim results looked positive enough for CYP to buy the IP for the dressing technology rather than license.

Cynata entered into a worldwide exclusive license agreement with TekCyte to use this technology, which is based on proprietary surface modification techniques, to produce polymer-coated dressings for the delivery of MSCs to wounds.

Cynata will issue shares to the value of $230,000 to TekCyte.

Patient enrolment in the DFU trial has been completed (announced 8 April 2024), and initial results are promising. An analysis of the first 16 patients enrolled after 10 weeks’ follow-up showed a median percentage reduction in wound surface area of 87.6% in the active CYP-006TK group, compared to 51.1% in the control group (announced 26 February 2024).

Dr Kilian Kelly, Cynata’s CEO and Managing Director, said: “Ownership of this technology strengthens our intellectual property position and simplifies our commercial proposition for potential partners. We are very excited by the initial results in our trial of CYP-006TK in DFU, and optimistic about the potential for this product to meaningfully change outcomes for patients.”

Small holding in RL

Listening to New Scientist weekly podcast an interesting segment on placental cells being used for heart repair following a study from Mount Sinai showing stem cells derived from the placenta known as Cdx2 cells can regenerate healthy heart cells after heart attacks in animal models.

Back in September 22 CYP announced: Cynata Therapeutics is set to investigate its Cymerus mesenchymal stem cells (MSCs) as a treatment for ischaemic heart disease (IHD) thanks to a $1 million grant from the Australian government.

The perception of stem cells took a hit when MSB was knocked back by the FDA for a second time with a request for further clinical trials.

CYP announced approval for a clinical trial in kidney transplant recently and has opened recruitment for its phase 2 clinical trial in aGvHD a treatment for the rejection of bone marrow transplants for blood diseases.

Stem cells continue to show potential. CYP's MSC have scalability and uniformity of production. The placental stem cells seem to have the advantage of not causing rejection.

Commercial use still a long way off but a small hold in RL following this interesting technology.

CYP 4C FDA approval for GvHD phase 2, delays to phase 3 trials, plenty of cash at hand.

FDA approves Cynata’s IND application for Phase 2 trial in aGvHD

This is a major value catalyst for the Company as it provides a development and commercialisation gateway into the USA, not only for aGvHD but potentially for further clinical targets.

The results of the primary evaluation are expected in early 2024. The trial aims to recruit 60 patients with high risk aGvHD across a number of countries including the USA and Australia with patient Overall Response Rate (ORR) evaluated at Day 28. Participants will be randomised and will receive either CYP-001 or a placebo, in addition to corticosteroids, the current standard-of-care.

Progress continues to be made in the Phase 3 trial in osteoarthritis with patient enrolment steadily advancing. The Phase 3 trial is the largest randomised controlled trial of MSCs conducted in patients with osteoarthritis worldwide, with results having the potential to disrupt clinical management of OA patients, globally. The sponsor of the study, the University of Sydney, had expected the trial to conclude in late 2024, but that forecast is presently under review based on the current recruitment ratee.

The MEND respiratory distress clinical trial is ongoing with completion expected later this year. The addition of St George Hospital as a new site for MEND clinical trials will help to streamline and accelerate the recruitment process.

Cynata’s clinical trial in DFU comprising 30 adult patients is expected to report in the first half of calendar 2023. Cynata is actively seeking to address the slow rate of recruitment, caused largely by the well-publicised crisis in the hospital system in Australia, through multiple mitigation strategies.

Cynata’s core focus is to complete recruitment in its active clinical trials, navigate the beginning of its Phase 2 clinical trial in aGvHD with study centres and other stakeholders, and to continue engagement in commercial discussions with multiple potential partners.

Cynata closed the quarter with A$23.8m in cash, as at 30 June. Net operating cash outflows for the quarter totalled A$2.27m, primarily relating to a small reduction in research and development expense

Reduced cash outflow, trials progressing slowly due to COVID restrictions / delays.

Net operating cash outflows for the quarter totalled A$1.23m, primarily relating to the receipt an A$833k R&D Tax Incentive Rebate and a reduction in research and development expenses (as a consequence of the cyclic nature of R&D expenditure) of $1.83m

Strong financial position with A$25.28m in cash as at 31 March 2021

The Phase 3 osteoarthritis trial is the largest randomised controlled trail of MSCs conducted in patients with osteoarthritis worldwide, and so the results have the potential to have a major impact on clinical management of OA patients, globally. The sponsor of the study, the University of Sydney, expects the trial to conclude in 2024, as planned. 

Cynata expects to complete recruitment of 24 patients in the MEND respiratory distress trial and 30 patients in the DFU trial by the end of the calendar year.

Disc:  Hold CYP here and in SMSF, speculative but I remain bullish on the opportunity.

Summary of Alan Kohler interview with CEO and COO published 17 August:

Ross Macdonald is the CEO of Cynata Therapeutics and they’re a stem cell company. It hasn’t been a great experience for shareholders, particularly over the last couple of years as the stock’s gone from about $1.70 to 50 cents. Two years ago they got a takeover offer from a Japanese company, Sumitomo, for $2 – or at least, it was an approach and it never happened. 

They backdoor-listed in 2013 and since that time they’ve raised $59 million, they’ve still got $27 or so million in the bank of that money and they’re going through about $800,000 dollars a quarter, they’re burning, trying to get their clinical trials done. They’re still a fair way off, I think, but they’re getting somewhere. The problem is that the stem cell business has got a bad name I guess from Mesoblast not getting anywhere. Cynata’s point, CEO Ross Macdonald’s point, is that their technology is different, they don’t require donors, they can manufacture stem cells from other cells and just keep producing them, they don’t need people to keep donating bone marrow which is an entirely advantageous thing of course.

But it’s still pretty speculative because their trials aren’t finished. Like all biotechs, if you buy them before the trials aren’t finished, you just don’t know what’s going to happen, so here’s Ross Macdonald, CEO of Cynata Therapeutics, and Kilian Kelly who’s the Chief Operating Office of Cynata, who can tell us some more of the detail.

The technology you’ve got was invented at the University of Wisconsin. How come it’s inside an Australian listed ASX company? I think you and Stewart Washer, your chairman, picked it up back then, but how did that happen, come about? 

RM: Well, Stewart and I didn’t pick it up, we weren’t responsible for the original acquisition of the technology, but that occurred several years prior and it really came about through a convergence of a number of things. First of all, it was the realisation that stem cell-based medicines and MSCs in particular were going to be a major force in medicine and pharmaceutical treatments going forward, so that was point number one. Point number two was a realisation at the time that the manufacturing process relying on lots and lots of donors was completely impractical.

The third was the publication of that time of a landmark paper by the scientists at the University of Wisconsin that opened the door to a much more practical means of manufacturing MSCs and the recognition by a local entrepreneur who was also involved in cell therapies at that time.

What’s the difference between what the University of Wisconsin came up with and Mesoblast technology? 

RM: We’re chalk and cheese, to be frank. The conventional approach to manufacture cell therapy products is to rely on human donors who are prepared to donate their bodily tissues from which the product is derived, it’s a slightly more complex situation to donating blood. That’s the conventional process. The process that was developed at the University of Wisconsin was to use a particular type of cell called an induced pluripotent stem cell, or an IPSC for short, which ultimately was the subject of a Nobel Prize in 2012, as the starting material.

What that meant, in short, was there was no longer a requirement to keep going back to human donors. It’s a bit again like if you have to milk the cows every day, well suddenly you’ve got a machine that allows you to not require cows anymore. You still get milk and you get very good quality milk, but you don’t have to keep going back to the cow herd.

How come your company’s worth $70 million and Mesoblast is capitalised at more than a billion dollars? 

RM: That’s a very good question, but it’s a complex answer. Of course, we can point to the obvious and that is that Mesoblast is further advanced, they’ve been around a lot longer, they spend and have spent certainly a heck of a lot more money than we have to get to where they are today. But then one could also ask the question, there haven’t been a lot of successes in the past six months so why are they still capitalised at more than a billion dollars? And that, I don’t understand.

Obviously, if you point to the sentiment in the market, there’s been a weakness in our share price of course, certainly since 2019 which is very disappointing because fundamentally the company is on a high, we’re the leading company worldwide in developing cell therapies derived from these IPS cells, induced pluripotent stem cells, and besides Mesoblast there are many, many other companies that have spectacular market capitalisations that are developing IPSC-based cell therapies, albeit with different goals in mind than we have.

I’d like to get your COO, Kilian Kelly, who’s on the call to take us through the clinical trials that you’ve got running, but before we do that just tell us what the status of your licence with the University of Wisconsin is at the moment. Because I think Ian Dickson would’ve signed a licence agreement up to 2028, but a lot of that’s now gone, I mean we’ve only got seven years to go, so what’s the position? 

RM: The rights to the technology don’t conclude when the licence ends. The licence is simply determined around the life of the original University of Wisconsin patents and as shareholders will know from our announcements, Cynata’s built a further body of patents, intellectual property around this technology that goes well beyond the original patent life. Even though that licence may conclude in 2028 or 2029, actually it’s more like 2031 with the licence expiry of the relevant patents, that doesn’t mean that suddenly you’re going to face generic competition from every other stem cell company in the world, in fact quite the contrary.

That’s one of the advantages of cell therapy, is that you can build a wall of protection around your intellectual property in all its forms because you’re not reliant upon a patent, necessarily as being the sole asset in the company. It’s all of the further patents that we’ve filed as well as the fact that the cell line is not available to anybody else, it’s held securely by Cynata so no one else can copy the product. They can’t make a generic equivalent, so it’s a very different situation in the biologicals universe compared to the small molecule universe where ultimately when a patent expires then the generic companies can come in and manufacture an exact copy – and it has to be an exact copy, of course, it can’t be nearly the same, it has to be the same and it can’t be in the case of a cell therapy product.

can you just give us an overview of the current clinical trials that you’ve got running and how far advanced they are? 

KK: Yeah, I’ll take that one on, Alan. In terms of our clinical trial program, we now have active clinical programs in several different clinical indications. Our initial program was in a condition called graft versus host disease, which we completed a clinical trial, a phase one trial, a year or two ago with exceptionally positive results, both on a safety and an efficacy point of view. That trial was then published in Nature Medicine which is one of the leading medical journals worldwide which was really a reflection of the fact that it was the first clinical trial worldwide with IPSC derived cells. That program is the one that we’ve licenced to Fujifilm in Japan, so we’re currently in the planning stage for further trials in GVHD.

Aside from that, the other trials are all still, the rights are still held by Cynata. We have an ongoing trial in osteoarthritis which is in partnership with the University of Sydney and it’s actually funded by the NHMRC so most of the costs are covered by the grant from the Australian Government. Cynata’s costs really are just to provide the actual cells, the product for that trial.

Has that trial started?

KK: It has, yeah, it got underway late last year in November, so it is actively recruiting at the moment. It will be one of the largest clinical trials ever conducted with MSCs, it’s a 440-patient phase three randomised control trial.

Is that generalised osteoarthritis or is it for the knee?

KK: It’s in the knee, yes, so it’s specifically in the knee, it’s patients with moderate to severe osteoarthritis of the knee.

Is there evidence at this point that having three injections of stem cells into your knee actually does resolve osteoarthritis of the knee?

KK: Well, there have been quite a few smaller trials with MSCs which have shown indications that there will be a benefit of that nature, but of course until somebody actually does a trial like what we’re doing now, that can’t be considered to have been proven, so that’s really what this trial is all about. Until now, nobody has done a trial of this size that’s properly controlled and powered to show efficacy. The early data certainly indicates that MSCs have a benefit, but this is why we have to do phase three trials to really show that.

When will that trial be published, the results of it?

KK: We’re expecting to complete enrolment late next year and then it’s a two-year follow-up, so it would be 2024 when we have the results.

Are you the only company that’s got technology that means you can manufacture mesenchymal stem cells without donors?

RM: Yes, and we’re the leading company worldwide in that space, as I said before. It’s a great place to be. The fact that we were featured on the front cover of Nature Medicine magazine is publicity you can’t buy. But yet, we still, as you point out, we’re still at 50 cents a share, so what do we have to do to communicate that point of difference and investability?

The answer is, be listed on Nasdaq. It was probably, with the benefit of hindsight, not a great idea to be on the ASX. 

RM: I think everybody thinks that’s the path to the promised land, but not necessarily so. We look at some of the other exemplars from Australia, and not just Australia, but Canada and Israel as well that have gone to Nasdaq thinking exactly that and it hasn’t really been a very good journey for them. I won’t name names, but shareholders can certainly look at a few of the companies that have spent a lot of money getting on Nasdaq and ultimately it hasn’t been a happy journey for them or their shareholders. That’s not to say that should they get good data in their later clinical trials that it will completely turnaround, which is more than likely, but it’s a pretty painful process watching your share price go down by two-thirds just because you’ve listed on Nasdaq.