Scimitar Equity Blog

ReNeuron is a UK-based stem cell company. Their primary objective is the development of stem cell therapies targeting areas of significant unmet or poorly met medical need. RENE.L’s shares are traded on the London AIM market.

Focus: ReNeuron’s stem cell products are derived from non-embryonic human tissue sources. RENE.L’s stem cell therapy program have been built around stem cell expansion technology, c-mycER. This platform enables, from a single tissue sample, the growth of selected human stem cells into banks of quality-assured stem cell lines. These stem cell lines contain enough stem cells to treat many thousands of potential patients. This capability has enabled RENE.L to focus on developing non-patient-specific or allogeneic, stem cell treatments addressing diseases with large patient populations. The stem cell expansion process is fully regulated by way of a chemically induced safety switch so that cell growth can be arrested before implantation of the stem cells into the patient.

Market Opportunity: PAD is a chronic and debilitating disease that progressively restricts blood flow in the limbs, causing cramping, chronic pain and in extreme cases, loss of limb. The disease is commonly associated with other conditions such as diabetes, obesity and stroke.  At least 1 in 20 people over the age of 55 have some degree of PAD and it becomes more common with increasing age.

• Peripheral vascular disease (PVD) refers to diseases of blood vessels outside the heart and brain. It’s often a narrowing of vessels that carry blood to the legs, arms, stomach or kidneys. Peripheral artery disease (PAD) is a type of PVD. The most common symptoms of PAD are cramping, pain or tiredness in the leg or hip muscles while walking or climbing stairs. Typically, this pain goes away with rest and returns when you walk again. Many people mistake the symptoms of PAD for something else.  People with PAD are at higher risk for heart attack and stroke. Left untreated, PAD can lead to gangrene and amputation. If you smoke and/or have diabetes, you have an especially high risk for PAD. People with high blood pressure or high cholesterol are also at risk for PAD.

Regulatory Status: RENE.L has received regulatory/conditional approvals to commence a Phase I clinical trial in the UK with their lead ReN001 stem cell therapy for disabled stroke patients and is developing stem cell therapies for a number of conditions, including peripheral arterial disease and diseases of the retina.

• RENE.L submitted the pre-clinical data package requested by the UK Gene Therapy Advisory Committee (GTAC) in support of the proposed Phase I clinical trial with ReN001. This data package was submitted to GTAC in response to the principal condition attaching to GTAC; conditional favorable ethical opinion already given with regard to the proposed clinical trial,
• RENE.L is now in the process of submitting the final signed versions of the amended clinical trial protocol and associated documents for GTAC’s remaining review and approval. The amendments made to these documents arise from the other conditions imposed by GTAC in giving their favorable opinion do not involve the provision of further data and RENE.L and the principal investigator for the trial have accepted and incorporated into the clinical trial protocol in full,
• The UK Medical and Healthcare products Regulatory Agency (MHRA) has approved these clinical trial protocol amendments.

Patents: Applications are focused on the US, EU, Japan, Australia and Canada as well as some smaller biotechnology-focused territories. RENE.L has exclusively licensed over 80 issued patents, of which over 50 have issued in the key EU and US territories.  RENE.L has also claimed composition of matter and method of treatment or therapeutic use of new stem cell lines as they are selected for, and progress to, clinical development and/or show functional features for non-therapeutic applications.

Financial: In the 6 months to 9/30/09, revenues were £14,000 (2008: £6,000), representing royalty income from the Group’s non-therapeutic licensing activities. Net operating expenses were £2.0 M in the period (2008: £3.1 M). R&D expenditure decreased in the period to £1.1 million (2008: £1.9 M), due principally to the continuing effects of the cost reduction program instigated in mid-2008, together with a further reduction in outsourced cell banking and testing costs in the ReN001 stroke program. G&A costs also decreased in the period to £0.9 M (2008: £1.2 M), due principally to cost savings associated with the closure of RENE.L’s US facility as part of the cost reduction program. The Group has accrued an R&D tax credit of £154,000 during the period.  Net cash outflow from operating activities decreased in the period to £1.5 M (2008: £3.0 M), due largely to the decrease in operating expenses in the period.

• RENE.L completed a further equity funding of £3 M before expenses, by way of a placing of new ordinary shares. In connection with this placing, a total of £2.5 M of outstanding convertible loan notes, together with accrued interest thereon, was capitalized,
• As a result of the cash flow movements in the period, the Group had cash and cash equivalents totaling £2.1M as at 9/30/09,
• In 11/09, the Group secured a further £5 M equity funding facility from Matrix and is available for draw-down over a 2 year period.

Bottom Line: RENE.L Has developed a unique screening platform using c-mycER technology that enables the selection of optimal stem cell lines for further development as a treatment for the relevant disease.

• ReNeuron developed a range of stem cell lines for non-therapeutic applications – its ReNcell® products for use in academic and commercial research.  RENE.L’s ReNcell®CX and ReNcell®VM neural cell lines are marketed worldwide under license by US based Millipore Corporation,
• Selection criteria during cell screening include cell phenotype, ability to expand into large-scale culture, and capacity to engraft in the relevant disease model with minimal immune rejection by the host;  that can readily scale-up stem cell lines for clinical and commercial use without the need to re-derive those cell lines from an earlier, non-quality assured prototype giving a significant competitive advantage in terms of the time and expense in moving a potential stem cell therapy through a clinical development program,
• The micmac® cell encapsulation technology provides a method of protecting cells when transplanted, as well as reducing or eliminating the host immune response that might otherwise occur post-transplantation in certain clinical settings,
• This cell encapsulation platform has already been shown to be effective clinically, when encapsulated;  as such insulin-producing primary islet cells were implanted into patients suffering from Type 1 diabetes,
• On the basis of the above, the RENE.L is confident of receiving an opinion from GTAC in respect of the ReN001 Phase I clinical enabling the trial to commence,
• RENE.L is actively pursuing a number of non-dilutive funding sources; but, an going concern basis has been adopted in the preparation of these interim financial statements,
• RENE.L trades at £7.93 (52 week range of £3.50 to £11.35) with a market cap of £25.63 M (pounds),
• The Directors (together with their families and their family trusts and pension scheme arrangements) in aggregate hold 0.59% of the current issued share capital.  RENE.L is aware of the following significant (3% or greater) shareholdings in ordinary shares: Saad Investments owns 25.94%, Excalibur Fund Managers Ltd,  21.61%, Charles Anthony Good 8.24% and David John Royds, 4.75%,
• RENE.L should be watched for future news and platform development within the industry.