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(Sharecast News) - Shares in AIM-listed biotech group Sareum jumped by a fifth on Tuesday after its co-development partner for cancer treatment SRA737 signed a commercialisation licence agreement with a US biopharma company.
Under the terms of the deal, Sareum will receive 27.5% of any income arising from the licensing of SRA737, a clinical-stage oral, selective Checkpoint Kinase 1 inhibitor that targets cancer cell replication and DNA damage repair mechanisms.
The drug was initially developed by the Institute of Cancer Research and partly funded by Sareum, while co-development partner CRT Pioneer Fund (CPF) holds the rights.
Tuesday's deal will see CPF receive $0.5m upfront, and then $1m and 500,000 shares in the unnamed licensee company 12 moths after licensing depending on commercial targets. Additional payments up to $289m may then be payable to CPF if certain development, regulatory and commercial milestones are achieved, along with tiered high single digit royalties on net sales of any product successfully commercialised.
"SRA737 has shown considerable promise in earlier clinical studies, demonstrating a robust safety profile and preliminary efficacy, in particular in combination with low dose chemotherapy," said Sareum's chief executive Tim Mitchell.
"With CPF, we are very pleased a partner has been identified to advance this exciting molecule into further development and believe this licensing agreement offers the best path forward for SRA737."
The stock was up 20.2% at 71.5p by the close in London.