ReNeuron’s frozen CTX cell product potentially a “major competitive advantage”

from proactiveinvestors Australia by John Harrington

Cash-rich stem cell therapy development company ReNeuron (LON:RENE) is starting to press harder on the accelerator with some of its programmes.

The firm’s interim results, covering the six months to end-September, were largely about recapping the progress made during the period, not least the transformational £33mln fund-raising announced in July, but there were also signs that the company is beginning to decide where best to invest its funds.

ReNeuron’s chairman, Bryan Morton, said the £33mln would give ReNeuron the wherewithal to “establish a world-class cell manufacturing facility and to realise value through the generation of solid clinical data and associated commercial deals over the next three years”.

The plan to establish a cell manufacturing facility in South Wales is already in the public domain, but what was new was a bit of extra detail on a frozen (cryopreserved) variant of the company’s CTX cell product, where test results have encouraged the company to accelerate the development of this extended shelf-life version of the CTX drug product, enabling it to be deployed in all future CTX-based clinical trials and for eventual in-market use.

The frozen version of the CTX drug product will reduce costs and timelines of Phase II and Phase III clinical trials and avoid future bridging formulation studies, the company said.

Broker Cenkos Securities hailed the formulation switch as “a major industry breakthrough compared to many other stem cell companies that are using fresh product formulations”.

Cenkos analyst Dr Navid Malik said: “ReNeuron has made strong progress towards transitioning its CTX cell line into a well characterised cryopreserved product moving away from the limitations of using a fresh product and allowing potentially undesirable excipients to be removed, and sterility and potency assays to be conducted on the site at the time of administration into a patient. Changes in the formulation will also remove the need for a bridging study at a later date and also improve gross margins and wider cell viability.”

ReNeuron’s chief executive, Michael Hunt, also helpfully drew Proactive’s attention to another bit of development that is being accelerated, namely an additional therapeutic platform relating to exosomes.

“We have identified that our CTX cells release nanoparticles, known as exosomes, containing key proteins and micro-RNA that appear to influence neighbouring cells to stimulate certain therapeutic mechanisms associated with tissue repair,” the company said.

Pre-clinical data shows the therapeutic potential of exosomes in a range of assays, including wound healing, immune modulation, neuro-protection and cancer proliferation.

“We have filed multiple patent applications covering our technologies and their therapeutic use in this fast-emerging field. We are targeting our CTX-based exosomes as new drug candidates for indications in tissue repair, fibrosis and cancer. The company is very well-placed to exploit the future therapeutic potential of this field because our CTX cells have the capacity to become an efficient and potentially very valuable ‘producer’ cell line for exosome-based therapies,” the interim statement said.

The firm ended the reporting period with £23.52mln, up from £6.67mln at the end of September 2012.

Cash burn over the six months was £3.42mln, a tad down from the cash outflow of £3.52mln in the corresponding period of 2012.

As might be expected of a pharmaceutical company still in the development stage, the company made a loss before tax, but at £3.49mln this was little changed from the loss of £3.32mln the year before, despite research and development (R&D) costs increasing to £2.76mln from £2.37mln.

Hunt said that R&D costs are set to increase but “they won’t go up dramatically, because there is only so much we are doing as a business”.

The company has three core therapeutic programmes and a new R&D platform with the exosome development, and Hunt told Proactive Investors that there is still quite a lot of grant funding being brought to bear against all of those programmes.

“So, although the underlying costs will go up, quite a lot of that is being offset by grant funding, and that is not being reflected in the numbers yet, because, of course, we haven’t drawn down the grant,” Hunt said.

Cenkos Securities reiterated its ‘buy’ recommendation. “ReNeuron has become a major player in the field and is significantly undervalued in our view when compared to other players,” Cenkos said.

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