Living Cell Technologies Limited (ASX: LCT; OTCQX: LVCLY), a global company pioneering the development of a cell implant therapy to treat diabetes, today announced that it has entered into an agreement to raise A$3 million through a placement of shares to Otsuka Pharmaceutical Factory, Inc, according to a company press release.
Otsuka is the research and manufacturing arm of the Otsuka group of companies. Otsuka will be issued 25 million shares in two tranches at A$0.12 per share, for a total investment of AUD $3 million.
LCT which is based in Auckland says it will use the proceeds from the investment to fund its ongoing development and clinical trials of its breakthrough lead product DIABECELL, for the treatment of diabetes.
In addition to the share investment, the parties have commenced negotiations for a Collaborative Research and License agreement for the research, development and commercialisation of DIABECELL in Japan and certain other Asian countries, excluding China where LCT has an existing relationship with Jiangsu Aosaikang Pharmaceutical Co.
Under the terms of the pending agreement with Otsuka, LCT and Otsuka agree to collaborate on the research, development and commercialisation for DIABECELL for the treatment of diabetes and its related complications in Japan and other Asian countries.
The two companies are also in the process of negotiating to grant Otsuka the exclusive license to become the sole agency for DIABECELL Designated Centres of Excellence (DDCE) to treat patients with DIABECELL once the product is registered in Japan and other Asian countries covered by the agreement. The parties expect to conclude negotiations in respect of the agreement within the next six months.
LCT chairman and medical director Professor Robert Elliott said: “We are very pleased to welcome Otsuka as a significant shareholder of the company and as our partner to expand our presence in Asia. 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.
“This is consistent with our global development and commercialisation strategy for DIABECELL. We will begin planning for a clinical trial in Japan, which will be a natural and exciting extension to our Phase II trial in New Zealand, which is coming to conclusion. To add this new jurisdiction to our clinical trial program will add important new data and significantly enhance our ability to advance DIABECELL to market.”
LCT managing director and CEO Dr Ross Macdonald added: “The Otsuka name is widely recognised and respected in Japan and around the world for the quality healthcare products it develops and we are very pleased to be partnering with such a strong healthcare group.”
Otsuka managing director Hiromi Yoshikawa said: “The work that LCT has been conducting into new treatments for diabetes is very significant and we are excited by the opportunities DIABECELL offers for the Asian market. We share a common vision for the treatment of diabetes and related complications. We see DIABECELL as a very significant opportunity to improve treatment options available in Japan and elsewhere in the world.”
The Investment will be structured in two placement tranches as follows: Tranche 1: $2,280,000 payable for 19,000,000 Shares to be issued as soon as practicable after receipt of the funds, which funds must be received by LCT not later than 22 April 2011; and
Tranche 2: $720,000, which funds must be also be received by LCT not later than 22 April 2011, for an unsecured Mandatorily Converting Note, the conversion of which is conditional upon shareholder approval to be obtained at an LCT General Meeting to be called as soon as practicable and no later than 30 June 2011. Assuming shareholder approval of the conversion of the Note is obtained, the Note will automatically convert into 6,000,000 ordinary shares in LCT on the next business day after the date on which shareholder approval is obtained. If shareholder approval for the conversion of Note into Ordinary Shares is not obtained, the Note is repayable together with interest at the rate of 7.5% per annum on 31 December 2011. -- Source: Company press release