Shares in Melbourne stem cell company Cynata Therapeutics have hit an eight-year high after it received a $202 million indicative and non-binding takeover offer from a Japanese pharmaceutical company.

Separately, Cynata told the ASX in response to a query that it didn’t think the takeover bid could explain a rise in its securities in the five days to Tuesday from $1.23 to $1.60, its highest level since a March 21 sell-off.

At 1124 AEST on Friday Cynata shares had emerged from a brief trading halt and were up 20 cents, or 12.5 per cent, to $1.80 – their highest level since November 2010.

Cynata said on Friday that it had received a $2-per-share indicative, non-binding and conditional offer from Sumitomo Dainippon Pharma, and had granted the Japanese company due diligence access.

“The Board does not believe the existence of the proposal, or the Company’s engagement with certain other parties in relation to making a proposal, is public information or would explain the recent trading in its securities,” Cynata told the ASX.


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It said that retail trading made up for recent trading volume, and the relatively low liquidity of Cynata securities can change its price in a relatively short period of time.

Cynata is attempting to commercialise stem cell treatment discoveries made at the University of Wisconsin-Madison in the US.

Its lead product is a potential treatment for graft-versus-host-disease, a complication that can occur when white blood cells from bone marrow and stem cell transplants see the patient’s own cells as foreign and attacks them.

Fujifilm has an option to licence the treatment for global development, which would see Cynata receiving over $60 million in one-time paymetns plus double-digit royalties.

But in March Fujifilm requested an extension until September 19 to make a decision on licensing, leading to Cynata’s shares crashing 32 per cent.

Cynata told the ASX on Friday that “substantial progress” has been made with Fujifilm following a series of meetings.

Cynata also expects to begin later this year on an early clinical trial on its stem cell treatment for patients with critical limb ischemia, a narrowing of the arteries to the extremities that can lead to amputation.