Few people have missed the fact that there is a harsh climate in the capital market for biotech companies right now. One company that has so far survived in this frosty environment is Cline Scientific, which this summer raised approximately 6.1 MSEK for the continued work of driving the main project StemCART towards clinical studies. BioStock spoke to CEO Patrik Sundh to get his thoughts on the state of the market, the financing and the value-adding milestones that the company is working towards.
Gothenburg-based Cline Scientific has developed a patented nanotechnology that enables controlled and precise manipulation and development of stem cells. In the main project, StemCART, the company aims to develop an allogeneic stem cell product for the regeneration of cartilage in human joints, for the treatment of diseases such as osteoarthritis.
The goal is to develop a product that can be produced in large batches, where the cells are compatible for the treatment of multiple patients, without the risk of immunological rejection. Currently, Cline is focusing on preparing StemCART for clinical trials, with the goal of initiating a phase I/II study in 2026.
Survived in a tough investment climate
Like many other smaller development companies, Cline has been pressured by the difficult situation in the capital market in recent years. While there are many who have succumbed to the unforgiving climate, the company has so far managed to move forward. This summer, a rights issue was carried out, which was subscribed to 66.8 per cent and which strengthened the company’s cash position by 6.1 MSEK. This means that they have now had the opportunity to focus on the preparations for the clinical stage.
Working with financing the development, the company is not only focused on rights issues. In addition to private capital, the company is also seeking various types of public funds. Among other things, we can mention the European Innovation Council Accelerator, where the company participates with an application that could mean that the project is strengthened with a grant of approximately 25 MSEK.
Process patent an important value-adding milestone
An important part of gaining continued confidence from the capital market is to be able to present successes in the development. This summer, the company announced that it had been granted a process patent by the European Patent Office for the StemCART project.
A process patent protects the process that Cline uses to grow and control stem cells to become cartilage cells. The process includes the technology of culturing the cells in a laboratory setting, modifying their properties, differentiating them into a specific cell type, and using them to heal damaged cartilage tissue.
In order for a process patent to be granted, it must meet several criteria. First of all, the method must be new, i.e. it has not previously been known or published. In addition, it must not be completely obvious, which means that it must not be a simple or obvious combination of existing technologies. Finally, the method must be industrially applicable, i.e. it must have the potential to be commercially or scientifically useful.
The patent protects the specific method for 20 years from the date of patent application and thus strengthens the value of the project for future sale or licensing. In addition to Europe, patent applications have also been filed in the United States, Japan, Israel, South Korea, China and Australia.
Comments from the CEO
BioStock reached out to Cline’s CEO Patrik Sundh to get his thoughts on how the company has fared in today’s harsh financing environment and how he sees the development going forward.
As everyone knows, the situation in the capital market is tough right now. How do you feel about the fact that you have made it this far, where many others have succumbed?
– I can not answer in any other way than that even though we feel very pressured by not having enough resources right now, we are proud of how far we have come. Whichever way you reason, Cline has, for a life science company, come a long way in its business with extremely little capital.
– The lack of willingness to invest reduces the interest of qualified people to want to work in smaller life science companies, due to the uncertainty that the difficulty of financing entails for job security.
– Right now, the main goal for many companies, if not the only goal, is to cut costs as much as possible, which mostly means cutting staff. This could soon jeopardise the entire Swedish life science innovation sector. Until recently the sector was portrayed as prosperous and future-positive. An interesting post on this topic was recently made by Helena Strigård on LinkedIn.
How will you focus in the development going forward?
– We will continue to concentrate our efforts and focus on our StemCART project and the interim goals we have previously set to take this to the start of a clinical phase I study. This is the company’s main project at present. We are proud that the Swedish Foundation for Strategic Research is sponsoring a PhD project that will start this spring together with our partner, Professor Anna Ström at Chalmers. The support covers the costs of the PhD student, which is dedicated to the continued optimisation of the matrix in the StemCART project.
– With the remaining funds we have at our disposal right now, we are continuing our CellRACE project. Given that CellRACE is currently in a phase where most of the work is about analysis of existing data, the project does not consume the same amount of resources as StemCART does today. This allows us to fit the CellRACE work into the StemCART ex vivo campaigns we are doing now without hindering any of the projects.
Are there any milestones on the road to clinical studies that you see as particularly important? If so, what are they?
– In bullet points, it can be summed up as follows:
- Robust, positive results from our ongoing ex vivo campaigns and also the opportunity to evaluate the safety of the product as well as function.
- Finalise the matrix we are developing, which will be an integral part of the StemCART product.
- Scale up production from lab scale to a smaller production line to produce batches for clinical trials.
Earlier this year, you announced that your process patent had been approved in Europe. Can you tell us a little bit about what your patent strategy looks like?
– Cline follows the patent strategy that the company originally set up. Based on a platform technology that was patented from the start, we have built up a patent portfolio that protects modifications to the platform for various applications. These then become different product patents, which so far has resulted in patents and patent applications for both the StemCART and CellRACE projects.
– Furthermore, we have chosen to protect innovations in the markets that are the largest globally or can be considered to be of strategic importance for a certain market segment. An example of this is Japan, where we have chosen to apply for a patent for StemCART because Japan is at the forefront of the development of stem cell therapies, especially in the use of iPS cells.
This summer, you raised 6.1 MSEK in your rights issue. What are your thoughts on securing financial stability in the longer term?
– A company like Cline is continuously thinking about the possibilities of further financing, which is a prerequisite for both survival, which is the case right now, and acceleration, which is the goal for reaching a clinical phase I study within a reasonable term. We are working in several different ways to try to strengthen our cash position, not only through new issues but also through applications for public funds, etc.
– Financial stability is, of course, a goal, but with today’s stock market climate, it is a difficult thing to achieve in the short term. Attracting a larger commercial development partner is the best solution, which is why we put a lot of effort into this, which takes time. And, of course, is dependent on our results over time.