Roquefort Therapeutics PLC (LSE:ROQ, OTCQB:ROQAF) said it has signed a term sheet to out-license its Midkine antibody portfolio to Dubai-based contract research group PDC, which would include an upfront sum of $10 million.
The immuno-oncology group also expects to receive a non-dilutive equity stake in a special purpose vehicle (SPV) that PDC will use to develop the Midkine antibodies.
The exclusive worldwide licence will last for 20 years. Within three years, PDC aims to have completed a phase I clinical trial for at least one of the antibodies.
Following a successful trial, the SPV will be sold, with Roquefort earning around 24% of the sale proceeds. This share could be worth up to $50 million based on similar phase I trade sales, Roquefort said.
"PDC is a great partner with a strong track record of completing clinical trials and we are confident they will accelerate the development of the Midkine antibodies into the clinic," added CEO Ajan Reginal.
"Upon a successful phase I exit, this would create significant returns to the SPV shareholders. We believe this is a good deal for all parties and it validates our business model and highlights our deal-making capabilities. We expect to conclude this licensing agreement as soon as possible."
The term sheet runs until December 31, allowing PDC to complete its due diligence.
In a separate announcement, Roquefort said it is raising a gross £655,000 via the issue of unsecured convertible loan notes, which, along with current cash resources and cost-cutting measures, provides a funding runway for at least the next 12 months.
Investors were also told Professor Sir Martin Evans will move from the role of chief scientific officer to become a non-executive director. Having completed his tenure as a non-exec, Dr Michael Stein will step down from the Roquefort board and will be replaced in 'due course'.