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CYNATA THERAPEUTICS LTD (CYP) - Stem Cell Breakthroughs and Clinical Trials

• Andrew Musgrave

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Stem cell therapeutics represent one of medicine's most promising frontiers, and Australian biotech Cynata Therapeutics stands at the cutting edge with breakthrough treatments poised to transform patient care across multiple diseases.

Dr. Kilian Kelly, CEO and Managing Director of Cynata Therapeutics, reveals how their proprietary manufacturing process creates mesenchymal stromal cells (MSCs) with consistent quality and potency—solving a fundamental challenge that has limited stem cell therapy development. This technological advantage underpins their impressive clinical pipeline targeting conditions with significant unmet needs.

Their graft-versus-host disease treatment has already demonstrated remarkable efficacy, boosting two-year survival rates from a typical 20% to 60% in early trials. With Phase 2 enrollment nearing completion and results expected by year-end, this therapy could soon offer hope to patients facing this devastating transplant complication. Meanwhile, their kidney transplant program aims to eliminate the toxic immunosuppressants that paradoxically damage the very organs patients are trying to preserve.

Perhaps most revolutionary is Cynata's approach to osteoarthritis, which focuses not just on managing pain but actually halting the disease's progression—something no current treatment achieves. With 321 patients treated and final results expected within months, this therapy could fundamentally change how we approach a condition affecting millions worldwide, potentially eliminating countless knee replacements and transforming patient outcomes.

The next 9-12 months represent the most significant period in Cynata's history, with multiple trial readouts potentially triggering pharmaceutical partnerships and reshaping treatment landscapes. For investors and patients alike, Cynata Therapeutics represents a compelling opportunity at the intersection of innovation, medical need, and commercial potential.

Andrew Musgrave Host

Welcome back to ASX Briefs, your trusted source for insights from Australia's most compelling listed companies and today we're joined by Dr Kilian Kelly, the Chief Executive Officer and Managing Director of Cynata Therapeutics, a clinical stage biotechnology company pioneering breakthroughs in stem cell therapeutics. Kilian, thanks for joining me today and welcome to the ASX Briefs podcast. 

Dr Kilian Kelly Guest

Thanks very much, Andrew. Very pleased to be here. 

Andrew Musgrave Host

Now, Kilian, for listeners that may be unfamiliar with Cynata Therapeutics, can you just provide a brief overview of the company? 

Dr Kilian Kelly Guest

Sure, so we're an ASX listed biotech company based in Melbourne. We are focused on the development of stem cell therapies, specifically a type of stem cell therapies called MSCs or mesenchymal stromal cells, and the unique thing about Cynata is actually how we make these therapies, so we have a way of making these cells in a very consistent and scalable way while retaining their function and potency, and that really has been a huge challenge for the field. So that's really what sets us apart, and we now have four active clinical programs which are at various stages. 

So, we're really progressing on all fronts at the moment. 

Andrew Musgrave Host

Okay, and now recruitment for the acute graft-versus-host disease (aGvHD) Phase 2 trial is nearing completion, so can you share how this trial is progressing and what differentiates CYP-001 from the other treatments currently in development? 

Dr Kilian KellyGuest

Sure. So, graft-versus-host disease first of all, is a disease that many people might not be particularly familiar with, which is probably a good thing because it's a really nasty condition. It arises in people who have bone marrow transplants and similar procedures, which are used usually to treat various types of cancers like leukemia and lymphoma. And the problem is, is that in these transplants you get immune cells from a donor which can recognize the recipient, the patient, as foreign. So, it's almost like these people have somebody else's immune system inside them and that's predictably a fairly horrible thing to happen. It's usually treated with steroids initially, but if they don't work and they only work in about 50% of people the prognosis is really quite grim. Two-year survival rates have been reported as less than 20% in that group of patients. And in terms of other drugs, at the moment in adults there's only one other approved drug, which is a drug called ruxolitinib which shows decent response rates initially, but unfortunately they're not really sustained for the long term. There's not really an improvement in long-term survival and that drug also causes a lot of quite nasty side effects. So, there's still a huge unmet need in these patients and the product that we have,  we've already tested it in a phase one trial which got really encouraging results. So, we treated 15 patients, 13 showed an improvement of at least one grade and eight showed a complete response. So that was really encouraging. But what was perhaps even more encouraging was we saw a two-year survival rate of 60% and, as I said, often you'd be expecting about 20% after two years, so that's really quite notable. 

We're now in a Phase 2 trial, which is a global trial including US, Europe and Australia. At the end of the last quarter we announced we were about 60% complete in terms of enrolling the patients, and so that enrolment is going really well at the moment. We're expecting to complete that around about July this year, and if we do that, we should have results towards the end of the year, and so really, what we're aiming to show here is that the treatment that we have not only has good response rates initially, but that those response rates are sustained and that we improve survival in the longer term. And finally, our product, we believe, has a very good safety profile, and that's true of these types of cell therapies generally. So, we believe that we have the opportunity here to address a lot of the sort of limitations with existing treatments. 

Andrew Musgrave Host

Okay, and the kidney transplant trial is testing CYP-001's ability to potentially reduce reliance on calcineurin inhibitors. So, what are the implications of this for transplant medicine and how might it reshape long-term patient care? 

Dr Kilian Kelly Guest

Yeah, so that's right. So, this is in some ways related to the GVHD example because again we're looking at the ability of these cells to modulate or balance the immune system and to prevent this kind of inappropriate immune system reaction that you can get. In this case it's in patients who've got a kidney transplant. As many people would know, I'm sure, when you get a transplanted kidney, the big risk is that it would be rejected by your body because your body recognizes the kidney as foreign. And what happens at the moment is people take these drugs called calcineurin inhibitors. Usually, they end up taking those drugs for the rest of their lives to prevent rejection. 

They actually work quite well in preventing rejection, but the problem is again the toxicity they cause. So, these drugs are associated with very high risk of serious infections, also higher risks of various cancers developing, also higher risks of various cancers developing, and ironically they actually damage the kidneys as well. 

So, a lot of people who take these drugs for a long time end up having kidney damage as a result of the drugs they're taking to prevent their kidney being rejected, and of course, that's a terrible situation. So what we're trying to do here is find, if you like, a safer way of preventing kidney transplant rejection, and the trial that we've just started recently in partnership with a group in Europe, Leiden University Medical Centre, aims to evaluate that, and it leads on from some work they've done previously with donor-derived MSCs, so a similar sort of therapy which got some encouraging results, and really what we'd love to find at the end of this trial this is our objective really is that the to find at the end of this trial this is our objective really is that the MSCs allow the dose of those drugs to be reduced and maybe even for the drugs to be withdrawn completely, and if we could achieve that, it would really transform the way that kidney transplant patients are managed, and that's something that could bring huge benefit to these patients. 

 

 

Andrew Musgrave Host

And looking at the SCUlpTOR trial, you had 321 patients enrolled and treated. So, what makes CYP-004 uniquely positioned to address the massive global burden of osteoarthritis? 

Dr Kilian Kelly Guest

Yeah, so obviously osteoarthritis is a very different condition, and sometimes people are a bit surprised that we have this kind of broad range of conditions, but the reality is osteoarthritis is also a condition where there's, in part, it's mediated by the immune system and it's a result of chronic inflammation, and these cells also have an anti-inflammatory effect. But what's really different here is we're aiming to slow or stop the progression of the disease, and no existing approved treatments do that. So, at the moment, the drugs or other treatments that are on the market for osteoarthritis basically help to manage the symptoms, including pain and swelling and so on, basically make it more tolerable. But what they don't do is actually change the fact that the knee joint is continuously degenerating, and over time it just gets worse and worse, and therefore a lot of these patients end up needing a knee transplant right. So, what is desperately needed is a way to stop that degeneration, and that's what we believe these cells can do, and that's one of the primary objectives of this trial. 

So, we're aiming to show that not only do we reduce the pain and symptoms, but that we also slow down or stop the degeneration. If we can do that, it would genuinely be a game changer because, as I said, no other treatments have been shown to do that and it's reasonable to expect that if we could slow down or stop the degeneration, then you're also going to delay or avoid the need for knee replacements down the track. So that would have a huge economic benefit as well as a patient level benefit. So, it's a really exciting trial, and one of the reasons that it's taken so long is that we have to follow patients for quite a while in order to demonstrate whether we're changing that degenerative process. So, we're following all the patients for a total of two years. The last patient was actually enrolled back in November 23. So therefore, the final visit of that patient will be in November this year and we should have results then just a few months after that. So that is definitely one to keep an eye on. 

Andrew Musgrave Host

Okay, and looking at the commercial strategy, there's several trials are externally funded or managed by collaborators. So how does this collaborative model benefit Cynata's capital strategy and are you exploring commercial or licensing partnerships, particularly for the DFU or osteoarthritis programs? 

Dr Kilian Kelly Guest

Yeah, so you're absolutely right. So, two of those programs, which is the osteoarthritis and kidney transplantation trials, are actually partnered with academic groups and funded by grant funding. Importantly, however, Cynata retains the full commercial rights to the data from those trials, so that's hugely important for us. Obviously, we're a small company with pretty limited resources, so being able to have these trials funded externally is really a massive win for us. These trials would cost quite a significant amount of money if we were funding them ourselves and, of course, the fact that they're being managed by the partners also takes the strain off our internal resources. 

And as I said, the fact that we get to keep the rights to the commercial, the commercial rights to the data, means that we're not sort of giving anything away. 

So that's been a way that we've really been able to accelerate multiple programs simultaneously, which is something that, frankly, we just wouldn't have been able to do if we had to finance everything directly. So, I think it's been a very good model for us. And with regard to the commercial partners though, yes, absolutely, we are also aiming to partner with commercial entities in, I guess this is in a somewhat different way, in that what our business model is really is that we're taking these product candidates through early stage clinical development, right up to Phase 3 in the case of osteoarthritis, but our aim then really is to out-license or partner those assets with bigger companies who have the infrastructure and the know-how and the resources to actually successfully market these products, and especially in the example of osteoarthritis, I mean, that's obviously. 

It's a huge market worldwide. You're talking about tens of millions of patients and huge numbers of prescribers, because it is often managed by community level doctors, right. So that's very much big pharma territory, and so that's our aim. So, basically, when we get results from these two randomized controlled trials that we're expecting in the next sort of nine months or thereabouts, we believe that, if those results are positive, that would certainly set the basis for corporate partnership transactions and, in turn, then, that would allow us not only to see those products be taken forward by our partners, but it obviously allows us to turn our attention to other things as well then and we have numerous other potential product candidates that have successful pre-clinical data already and that could be taken into the clinic. Really, the limitation there is resources rather than anything else. 

Andrew Musgrave Host

Okay and finally, just to wrap things up with a solid cash runway into mid-2026 and several major milestones ahead, how are you prioritising capital allocation and what are the key outcomes that investors should keep an eye out for over the next 12 months? 

Dr Kilian Kelly Guest

Yeah, as we just discussed, our main capital expenditure really at the moment is our graft-versus-host disease trial, because that's the one that's being managed and funded by Cynata and that's really what takes a lot of our internal resources as well, and we really are focused on that, absolutely focused on that. It's still recruiting patients, but we're getting towards the late stages of that. So, our aim in the first instance is to complete patient enrolment. That we're hoping to do within the next couple of months, really hopefully around July, and if we do that, as I said, we should have results towards the end of the year, which is really going to be the next big inflection point. 

So, I think for investors out there on GVHD, the two big announcements coming are the completion of enrolment and then the results, and then very soon after that, we're expecting the results of the osteoarthritis trial. So, it really, it's not an exaggeration to say that this is going to be the biggest sort of nine to 12 months in the company's history and these trials really have the potential to completely transform the company's position, both from a share price perspective in direct terms, but then of course, following on with those commercial partnership opportunities. You know we could be a very, very different company this time next year and clearly that means I think there's a great opportunity for investors to get in now or for those who are in to stay in. I think, as I said, there's really a huge potential upside over the next year or so. 

 

Andrew Musgrave Host

Okay, Kilian. Well, it's been great to speak with you today, so thanks for your time and we look forward to further updates from Cynata Therapeutics in the upcoming months. 

Dr Kilian Kelly Guest

Great. Thank you very much. 

Andrew Musgrave Host

That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.