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Cellmid Signs Agreement With Zoetis, World's Largest Animal Health Company

Cellmid Limited's (ASX:CDY) shares are expected to rise after it signed an agreement with the world's biggest animal health company Zoetis (NYSE:ZTS), which has a market cap. of US$21.6 billion.

The agreement will provide for upfront and exclusivity payments for Cellmid. These will continue until such time as the option to license is exercised by Cellmid's partner.

The agreement with Zoetis is for the evaluation and option to license one of Cellmid's anti-midkine antibodies (MK antibody) for therapeutic use in companion animals.

The agreement is a validation of Cellmid's proprietary MK antibodies, which have previously been shown to be effective in animal models of a number of diseases.

Zoetis has extensive experience in the development and commercialisation of animal health products and will evaluate the performance of Cellmid's MK antibody in their proprietary models with the view to license.

Zoetis is based in Florham Park, NJ., and is the world's biggest maker of medicines for pets and farm animals.

It has annual sales of about $4.6 billion, from products including LymeVax, the first Lyme disease vaccine for dogs in the U.S.; Revolution, for protecting dogs and cats from fleas, heartworms and other parasites and Convenia, a one-shot treatment for dogs with common bacterial skin infections.

Midkine (MK)

Midkine is a growth factor that is highly expressed during embryonic development. Midkine modulates many important biological interactions such as cell growth, cell migration and cellular adherence.

These functions are relevant to cancer, inflammation, autoimmunity, ischemia, nerve growth/repair and wound healing.

Zoetis

Zoetis was a subsidiary of Pfizer, the world's largest drug maker, but with Pfizer's spinoff of its interest in the firm it is now a completely independent company.

The company operates in over 120 countries worldwide with recent expansions into Southeast Asia and China.

Analysis

The agreement with the world's biggest animal health company Zoetis to license one of Cellmid's anti-midkine antibodies (MK antibody) for therapeutic use in companion animals is a major coup.

Significantly, the deal provides for upfront and exclusivity payments for Cellmid. This will be until the option to license is exercised by Cellmid's partner.

As such, this is a major leap forward for Cellmid and is value accretive for its share price.

Zoetis was spun out of Pfizer and given its market cap of US$21.6 billion is a coup for Cellmid.

Zoetis could potentially increase its exposure to the companion sector, which currently accounts for around 36% of revenue compared to 64% from animal farm products.

Cellmid is therefore positioned to benefit both financially in the short to medium term from the license agreement as well as longer term if the option is exercised by Zoetis.

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