Stem Cell Sciences signs licensing deal with Deltagen

Stem Cell Sciences (AIM:STEM, SCS) has signed a licensing agreement with US-based drug discovery tools and services provider Deltagen for use of its patented internal ribosome entry sites (IRES) technology.

SCS' IRES technology is a gene expression system used in cell-based drug screening and animal models of human diseases and SCS holds patents over its use in stem cells and animal models.

"It's a technology which enables higher efficiency, and a great deal more versatility in the way that you build genetically engineered mice," said SCS' Edinburgh-based CEO Peter Mountford. The company, an investee of BioTech Capital (ASX:BTC), also has offices in Melbourne and Japan.

The licensing deal consists of an up-front licence fee of US$1.2 million, plus royalties from Deltagen for the use of SCS's IRES technology.

"Deltagen sells both mice and the information generated from those mice. We get a royalty on both. They have consistent sales, although the company has been in receivership for a number of years. They're now tidying up their affairs," said Mountford.

SCS will also receive selected genetically engineered mice and access to Deltagen's database, said Mountford.

"The use of those mice will be in collaboration with our academics. So it's speeding their research and it's speeding our development," said Mountford.

Deltagen is the first company licensed to use SCS's IRES technology for the manufacture, sale and sub-licensing of 'knock-out' mice (mice genetically engineered to be deficient in a specific gene to enable the study of that gene's function).

"One of the fundamentals for testing genes is obviously knock-out mice, and it really has been the benchmark for testing and analysing gene function in a whole animal," said Mountford. "Quite a few companies have licensed [the IRES technology] in the past for internal research and development. Deltagen is the first company to take a licence to either use it in third party collaborations or to sell the mice that they've produced."

SCS was also recently granted additional claims by the US Patent Office over key 'stem cell selection' technologies, providing the company with new licensing opportunities in the US market in which it is looking to expand and possibly base an office.