Shares in drug developer Avacta, which is working on cures for lung, breast and bowel cancer, have leapt 23 per cent on the news it has signed its first significant pharmaceutical licensing deal.
Wetherby-based Avacta said the deal with LG Chem Life Sciences, part of the South Korean LG Group, could be worth £244m in upfront payments and near-term and long-term milestones. Royalties will also be payable on product sales.
Avacta's chief executive Dr Alastair Smith said his firm and LG Chem will work together on the discovery and development of Affimer (the firm's high-tech alternative to antibodies) therapeutics in cancer and inflammatory disorders.
This latest development agreement provides for upfront and near-term milestone payments, plus longer-term clinical development milestones totalling £142m.
Avacta will also receive royalties on any future product sales and LG Chem will cover Avacta's costs of research and development associated with the collaboration.
Avacta may receive an additional £102m in option fees and milestone payments should LG elect to exercise its options for additional targets.
Avacta will generate and carry out early-stage optimisation of Affimer drug candidates against multiple undisclosed targets.
LG Chem and Avacta will collaborate to progress these candidates through to drug candidate selection, and LG Chem will be responsible for pre-clinical and regulatory studies, clinical development and world-wide marketing of any resulting products.
Dr Smith said: "I am delighted to be entering into this therapeutic development partnership with LG Chem which is a strong validation of the potential of the Affimer platform.
"This alliance is an exciting opportunity, not only to work with a partner who has first class biologics manufacturing and clinical development capabilities, but who also has a pioneering vision to develop innovative therapies.
"This landmark agreement with LG Chem reflects the substantial progress that we have made in developing the Affimer technology as a therapeutic platform and I look forward to updating the market on future progress and other partnerships."
Dr Jeewoong Son, president of LG Chem Life Sciences, added: "We are very pleased to announce collaboration with Avacta Group.
"Utilising Avacta's Affimer technology - a novel non-antibody protein format overcoming limitations of classical antibody-based therapy - and LG Chem's biologics capability in development and manufacturing, it will take us to the next level of treatment paradigm and to open up a new horizon in biologics therapeutic strategies. I believe, this innovative collaboration will deliver value to patients and will transform patients' lives."
Avacta said it is on target to come up with a possible cure for lung, breast and bowel cancer within the next 10 years.
Avacta will start human trials in 2020 to help cure people with cancer using its ground breaking technology.
Analyst Mark Brewer at FinnCap said: "Avacta announced a significant therapeutic development partnership and licence agreement with LG Chem Life Sciences.
"Not only is this a significant endorsement of the therapeutic potential of Affimers, but it provides additional near-term cash to help progress its lead oncology programme, which is targeted to enter the clinic in 2020.
"With a rich pipeline of interest in the reagent portfolio and ongoing discussions with other pharma companies, we expect further licensing activity."