LCT stock up 20% after Japan deal

Xenotransplantation specialists Living Cell Technologies (ASX:LCT) has seen its stock soar by more than 20% after entering into an agreement with Japanese biopharma company, Otsuka Pharmaceutical Factory.

The agreement will see Otsuka purchase a total of 25 million shares in LCT at a rate of 12c per share, a premium of 20% on the share price as of yesterday, for a total outlay of $3 million.

Read more about Living Cell Technologies and its xenotransplantation technology.

The deal will take place over two tranches, the first worth $2,280,000 for 19 million shares, and the second for $720,000 in the form of a converting note for 6 million shares, but which requires shareholder approval.

The two companies also commenced negotiations on a collaborative research and license deal that will see Otsuka work on the research, development and commercialisation of LCT’s flagship diabetes treatment Diabecell in Japan and other Asian countries, excluding China.

The agreement also proposes that Otsuka become the exclusive licensee of the Diabecell Designated Centres of Excellence to treat patients once Diabecell achieves regulatory approval in Japan and other Asian countries.

These negotiations are ongoing and the companies expect to reach agreement within the next six months.

“We are very pleased to welcome Otsuka as a significant shareholder of the Company and as our partner to expand our presence in Asia,” said LCT Chairman and Medical Director Professor Robert Elliott.

“We are very excited about the opportunities to work together with Otsuka to develop our product for the treatment of diabetes in Japan and Asia, potentially one of the most significant markets for us globally. Such an arrangement augments the ongoing development progress of LCT’s activities around the world.”

LCT shares jumped from an opening price of 9.9c to 11.5c today’s, up 21.05% at the close of trading.