Positive Phase II stroke data

ReNeuron Group 7 December 2016 Update

ReNeuron Group

Positive Phase II stroke data

H117 interim results

Pharma & biotech

7 December 2016

Price

2.88p

Market cap

£91m

Net cash (£m) at 30 September 2016

60.0

Shares in issue

3,164.6m

Free float

60.5%

Code

RENE

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

.

%

1m

3m

12m

Abs

15.0

0.0

4.6

Rel (local)

13.6

1.0

(2.5)

52-week high/low

3.70p

2.30p

Business description

ReNeuron is a UK biotech company developing allogeneic cell therapies. CTX neural stem cells are in development for ischaemic stroke disability (Phase II) and critical limb ischaemia (Phase I), and hRPCs (human retinal progenitor cells) are being studied for retinitis pigmentosa (Phase I/II).

Next events

CTX: start stroke Phase II/III study

H117

CTX: CLI Phase I data/Phase II study start

H117

hRPC: safety and efficacy data

2017

Exosome: Phase I clinical study start

2018

Analyst

Dr Linda Pomeroy

+44 (0)20 3077 5738

ReNeuron Group is a research client of Edison Investment Research Limited

ReNeuron has presented positive Phase II trial data for its CTX cells in chronic stroke patients. Reported data included 15 out of 21 patients having a clinically relevant and sustained response on at least one efficacy measure. This confirms the potential for long-term benefits from treatment with its CTX neural stem cells and has led to the decision to progress to a pivotal controlled clinical study in 2017. Beyond CTX, we expect safety and efficacy data from its retinitis pigmentosa (RP) trial in 2017. Our rNPV has increased to £278m (vs £249m) as we have increased the probability of the stroke programme’s success to 25% (from 20%) and updated cash.

Year
end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/15

0.0

(10.3)

(0.50)

0.0

N/A

N/A

03/16

0.0

(12.8)

(0.44)

0.0

N/A

N/A

03/17e

0.0

(23.1)

(0.64)

0.0

N/A

N/A

03/18e

0.0

(28.2)

(0.78)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Positive Phase II (PISCES II) stroke trial results

PISCES II was a single arm, open-label study in patients that had stable paresis (partial paralysis) of an arm four to 12 weeks following an ischaemic stroke. The focus was on a sub-group of stroke patients with no useful upper limb function at four to eight weeks post stroke. The primary outcome measure was a minimum 2-point improvement in the ARAT (Action Research Arm Test), a grasping and lifting test, at three months post treatment. While this was not met within the pre-set timeframe of three months, three of the 21 patients achieved it at various time points within 12 months. Equally, other endpoints of the study were met, which led to 15 out of 21 patients achieving a clinical relevant and sustained response on at least one efficacy measure. Importantly, CTX was shown to be well tolerated with side effects only relating to the surgical procedure. ReNeuron now intends to apply to the US and EU regulators for permission to commence a randomised, placebo-controlled, pivotal clinical trial in patients in 2017, with potential read-out in 2019.

2017 – a year of progress

While primary investor focus has been on the read-out of the stroke study, there are a number of other programmes with potential upcoming newsflow. This includes CLI study (Phase I data read-out and Phase II start in H117), RP study (Phase I/II safety and efficacy data read-out 2017) and further preclinical data from the exosome nanomedicine programme and potential move into the clinic in H118.

Valuation: Increased to £278m

Our rNPV-based valuation has increased to £278m (vs £249m) or 9p/share (vs 7.9p), after increasing the probability of success in the CTX stroke programme to 25% (vs 20%) and using H117 reported cash. Our CLI and RP study assumptions remain the same. We have reduced R&D spend in 2017 and 2018 slightly to reflect a lower than expected cash burn in H117. ReNeuron is well funded to execute on its expanding clinical trial programme, including the pivotal controlled clinical stroke study due to start 2017.

Exhibit 1: Financial summary

£'000s

2013

2014

2015

2016

2017e

2018e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

17

22

30

29

29

29

Cost of Sales

0

0

0

0

0

0

Gross Profit

17

22

30

29

29

29

R&D expenses

(4,786)

(5,829)

(7,250)

(10,272)

(19,517)

(24,006)

SG&A expenses

(2,319)

(2,824)

(3,693)

(4,015)

(4,617)

(5,079)

EBITDA

 

 

(6,966)

(7,857)

(10,269)

(13,632)

(23,499)

(28,394)

Operating Profit (before GW and except)

 

(7,088)

(7,969)

(10,394)

(13,724)

(23,571)

(28,522)

Intangible Amortisation

0

0

0

0

0

0

Exceptionals

0

0

0

0

0

0

Operating Profit

(7,088)

(7,969)

(10,394)

(13,724)

(23,571)

(28,522)

Other

0

0

0

0

0

0

Net Interest

29

149

91

878

493

344

Profit Before Tax (norm)

 

 

(7,059)

(7,820)

(10,303)

(12,846)

(23,078)

(28,178)

Profit Before Tax (FRS 3)

 

 

(7,059)

(7,820)

(10,303)

(12,846)

(23,078)

(28,178)

Tax

714

754

1,397

1,492

2,769

3,381

Profit After Tax (norm)

(6,345)

(7,066)

(8,906)

(11,354)

(20,309)

(24,797)

Profit After Tax (FRS 3)

(6,345)

(7,066)

(8,906)

(11,354)

(20,309)

(24,797)

Average Number of Shares Outstanding (m)

748.7

1,425.0

1,788.8

2,609.3

3,164.6

3,164.6

EPS - normalised (p)

 

 

(0.85)

(0.50)

(0.50)

(0.44)

(0.64)

(0.78)

EPS - FRS 3 (p)

 

 

(0.85)

(0.50)

(0.50)

(0.44)

(0.64)

(0.78)

Dividend per share (p)

0.0

0.0

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

1,620

1,772

2,033

6,963

7,242

7,536

Intangible Assets

1,272

1,272

1,591

1,591

1,591

1,591

Tangible Assets

213

225

161

361

640

934

Other

135

275

281

5,011

5,011

5,011

Current Assets

 

 

4,602

22,347

14,054

64,894

45,000

20,618

Stocks

0

0

0

0

0

0

Debtors

341

676

400

1,421

1,421

1,421

Cash

3,547

20,917

12,382

60,709

40,810

15,816

Other

714

754

1,272

2,764

2,769

3,381

Current Liabilities

 

 

(1,164)

(2,036)

(2,345)

(4,199)

(4,199)

(4,199)

Creditors

(539)

(1,234)

(1,150)

(3,700)

(3,700)

(3,700)

Short term borrowings

0

0

0

0

0

0

Short term leases

(1)

(1)

(1)

(1)

(1)

(1)

Other

(624)

(801)

(1,194)

(498)

(498)

(498)

Long Term Liabilities

 

 

(150)

(366)

(606)

0

0

0

Long term borrowings

0

0

0

0

0

0

Long term leases

0

(2)

(1)

0

0

0

Other long term liabilities

(150)

(364)

(605)

0

0

0

Net Assets

 

 

4,908

21,717

13,136

67,658

48,044

23,956

CASH FLOW

Operating Cash Flow

 

 

(6,637)

(6,718)

(9,124)

(11,920)

(22,804)

(27,685)

Net Interest

(1)

0

0

0

0

0

Tax

616

714

879

0

2,764

2,769

Capex

(37)

(121)

(380)

(293)

(352)

(422)

Acquisitions/disposals

0

0

0

0

0

0

Financing

5,601

23,435

0

65,195

0

0

Dividends

0

0

0

0

0

0

Other

30

61

91

(4,655)

493

344

Net Cash Flow

(428)

17,371

(8,534)

48,327

(19,899)

(24,994)

Opening net debt/(cash)

 

 

(3,974)

(3,546)

(20,914)

(12,380)

(60,708)

(40,809)

HP finance leases initiated

0

(3)

0

1

0

0

Other

0

0

0

0

(0)

0

Closing net debt/(cash)

 

 

(3,546)

(20,914)

(12,380)

(60,708)

(40,809)

(15,815)

Source: Company accounts and Edison Investment Research

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by ReNeuron Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by ReNeuron Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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