Shares in Avacta Group Plc (LON:AVCT) were on the up in late-morning trading Wednesday after it signed a licensing deal with New England Biolabs (NEB), an enzyme discovery and production company, to commercialise its Affimer technology for use in life science research and diagnostic assays.
The biotechnology firm said it had been collaborating with NEB to develop Affimers to combine with NEB’s reagents (a substance used for chemical analysis).
Avacta has also identified Affimers that inhibit several of NEB’s proprietary enzymes to provide modulation of their activity in response to temperature.
Unlike alternative enzyme inhibitors, Affimers can be fine-tuned to switch at the right temperature without having a negative effect on the overall assay performance.
NEB was in the final stages of product testing and had agreed with Avacta the terms under which the combined product would be commercialised.
While the financial details of the agreement were not disclosed, Avacata said it would receive a royalty on product sales, which could begin as soon as 2019.
The company added that it expected to continue the collaboration with NEB to generate Affimer tools and inhibitors for other enzymes, enabling further product developments.
Alastair Smith, chief executive of Avacta, said the agreement further validated the Affimer technology and the company’s licensing business model, adding that the royalty licenses would “underpin the future high margin revenue from Affimer reagents”.
In a note to clients, analysts at City broker finnCap estimated that royalties would stand at around 10%, while also reiterating their 120p price target for the group.
Shares were up 2% at 25p.
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