ReNeuron Group — Continuing to gain clinical data in eye disease

The main project uses hRPC (see Exhibit 1) to treat the degenerative eye condition RP. The exosome set of projects are for the delivery of high-value pharmaceuticals, probably genetic therapies like siRNA, to the brain, but also have potential as vaccine vectors. These applications all require partnering and there are three evaluation projects underway. There are some very early-stage projects in progenitor cells. These could mature into valuable projects from 2021–22 onwards. The CTX project in stroke disability requires one or more partners to progress further; in China, the partner is Fosun.

ReNeuron is incorporated in the UK with offices in the UK and the US and the main laboratory in Bridgend, South Wales. The company has around 35 employees.

The hRPC project is the critical lead project for ReNeuron. It is one of two cell therapy companies tackling RP. RP is a very diverse group of degenerative genetic eye diseases where photoreceptor cells progressively die. RP manifests through progressive night blindness (low light vision) with loss of peripheral vision. Eventually, high-resolution acuity and colour vision is lost. Gene therapies only treat specific mutations, meaning that the patient pool for each is very small. Cell therapies can potentially treat many patient types.

ReNeuron’s approach is very different to gene therapy as it uses genetically healthy hRPC. The cells are allogeneic based on an immortalised cell line. This means they can be produced in standardised batches, and stored and shipped frozen. This avoids the complex, very expensive, customised manufacturing needed for autologous cell therapies. The only other RP cell therapy in development, jCyte, uses fresh cells which will be a serious problem in commercial use if approved.

Our August outlook note discussed the science background in more detail. Theoretically, it is likely that hRP cells secrete trophic factors: hormone-like proteins that encourage retinal cell survival. It is also possible that some hRPC grow and differentiate into functional light-sensitive cells. Practically, clinicians, payors and patients need to know how much visual acuity can be preserved and recovered, and the duration of action of a single dose per eye.

ReNeuron’s hRPC need to be injected close to the site required, usually the centre of the eye, where most photoreceptors are situated. This involves depositing a small drop (a bleb) with one million hRPC as a subretinal injection. The subretinal injection is a precise operation and temporarily distorts the retinal structure. In the continuation Phase ll, two blebs will be given near to functional retinal areas but not under them.1 This could support, by trophic factors, the nearby functional retina and potentially help to restore some function to the overlying degraded retina. The three- and six-month data, due in H221, will indicate how successful this revised strategy might be and pave the way for the Phase III trial design.

Here we summarise the updated data, published on 6 January 2021, from the US Phase I/IIa trial (NCT02464436) based on data from up to nine patients. VA is critically important to patients as it provides the ability to resolve details and perform day-to-day tasks – but it is a variable parameter. VA is measured using the ETDRS2 chart. If a patient correctly reads three extra lines, their VA has doubled. This has been the historic FDA benchmark. Patient variability means that a one-line ETDRS chart difference (five letters) is not regarded as clinically significant whereas a two-line difference is significant. The term often used is best corrected visual acuity (BCVA), which means that the patients wear spectacles or contact lenses for the readings.

Exhibit 2 shows the individual VA gains seen by the Phase II patients at one year (seven cases). ReNeuron notes that gains of 10 letters or more would be a benefit and if a proportion of patients gained three lines (15 letters) or more, that should suffice for regulatory approval.

Of these seven, four showed VA gains of less than 10 letters, three of whom had clinically significant gains of over five letters. Of the other three patients, one in effect gained two lines (10+ letters) and two patients gained the equivalent of three lines (15+ letters), so a potential doubling of their VA. This is also after 12 months, so the effect of the single hRPC injection has been maintained.

In our August note, we commented that the therapy appears to give a clear benefit quickly and then appears stable on average. The further data strengthen this impression. However, the data now include one patient who had a surgical complication on bleb implantation but subsequently recovered to baseline. This has reduced the reported averages. Another patient who experienced a surgical complication is not included as they have not recovered any sight in the treated eye.

Of interest is that at the nine- and 12-month points, there are now additional patients reported. The untreated eye now shows, with seven patients, a decline of -2.4 letters at a year giving an average gain in the treated eye of 12.3 letters. Exhibit 3 shows the patients at each time point, Exhibit 4 shows the data per time point. Using a simple linear regression plot, it can be seen that the treated eye data on average is stable, whereas there is a gradual decline in the untreated eye.

The FDA-approved amended protocol plus the UK regulatory go-ahead has enabled the dose to be raised to two million cells for a further nine patients in an extension of the current trial. These new patients will add to the 10 Phase IIa patients already treated (of whom nine reported as above).

In the extension study, two blebs of one million hRPC (two million cells in total) will be used on either side of the functional retinal area being treated. A wider range of pre-treatment baseline VA in patients will be eligible and the trial endpoints will be expanded to include VA (as before), microperimetry, visual field, retinal sensitivity and retinal structure. The primary endpoint remains safety.

The other company, jCyte, developing an RP cell therapy, jCell, uses an intravitreal injection – into the vitreous jelly filling the inner eye. This is technically simpler to administer but the cells are then dispersed across a large volume. Hence, at least six million cells per eye are required.

The continuation study recruited its first patient in the US in late 2020 and on 15 January 2021 reported that the first three-patient cohort had been treated. These patients will undergo a safety review before the next cohort, as is standard practice. There are now two US centres enrolling patients. The Oxford Eye Hospital (UK) site is not yet recruiting, probably due to COIVID-19 restrictions.3 A further European site might be added.

According to management, a regulatory discussion is now anticipated around late H2CY21 in preparation for the planned pivotal study application, enabling a possible Phase III to start in mid-2022. Management states that a small Phase III could enable a regulatory filing in 2024; the size of any Phase III depends on the visual acuity gain seen in the continuation study. If there is a large relative gain in VA, a small number of patients in Phase III could yield data that have strong statistical significance. The Chinese timeline with Fosun still assumes a 2024 approval in China.

There is one direct cell therapy competitor and four indirect gene therapy competitors. The cell competitor, jCyte, has been referred to above. jCyte is a private academic company. In summer 2020, it reported data from a Phase IIb RP trial (NCT0307373). In 74 patients, a net mean 7.4 letter gain at the higher cell dose of six million (n=23) was seen but with little effect at the three million cell dose (+3.0 letters, n=25). Untreated patients (n=23) gained 2.80 letters. Hence the three million dose had no effect and the net six million gain was +4.6 letters. jCyte plans to start a pivotal study in 2021 based on a subgroup. We are cautious about data comparisons with hRPC.

Japanese eye specialist company Santen licensed the rights to jCell for $50m in cash, $12m in a convertible note offering and up to an additional $190m in milestones based on approval and initial sales plus a sales royalty. This provides a basic benchmark for any ReNeuron partnering deal, but we anticipate that ReNeuron could get better terms on good continuation data.

Spark Therapeutics (Roche) has the one approved (2018) product, Luxturna. It sells for £613,410 per treatment (ex-tax) in the UK and treats both eyes in patients with recessive RPE65-associated Leber congenital amaurosis mutations. The mutation is rare, about 2% of RP cases. Spark sold $21.2m of Luxturna (net of rebates) in H119 before its acquisition by Roche for $4.3bn. The high deal value was due to the potential of Spark’s technology in conditions such as haemophilia.

Biogen is developing BIIB112 to treat X-linked RP (X chromosome linked disease is only in males of course). Data from 2020 reported sight improvements in six of 18 patients with good tolerability.

MeiraGTx has programmes against X-linked gene defects and an RPE65 project. It reported early X-linked RP data in July 2020, finding statistically significant improvements in mean retinal sensitivity and central visual field progression rate.

Exosomes are tiny lipid (oil) vesicles about 100nm in diameter that are secreted by cells, particularly mesenchymal stem cells (MSCs), the basis of ReNeuron’s CTX platform. ReNeuron also has early-stage induced pluripotent stem cell (iPSC) projects, not further discussed.

Exosomes can be isolated and loaded with short RNA sequences and/or small therapeutic proteins or drugs. Exosomes also appear to pass though the blood/brain barrier, as shown by literature reports of down-regulation of brain proteins by exosomes injected into mice.

ReNeuron has several promising projects and three collaborations running. Its exosomes could be the delivery component of a gene therapeutic and generate royalties and milestones. We anticipate that at least one project might generate a formal deal during 2021.

There are some specialist companies such as Evox Therapeutics, based in Oxford, UK. Evox announced a deal with Takeda in 2020 worth up to €803m.

The US company Codiak has two clinical projects designed to stimulate anti-tumour responses. One of these, exoIL-12, produced positive safety data from an ascending dose Phase I/II study in December 2020 of an IL-12-displaying exosome therapy designed to stimulate anti-tumour responses. Codiak completed an IPO in October 2020, raising $82m, and has a market cap of about $590m. This shows the magnitude of the potential upside form ReNeuron’s exosome portfolio.

The updated newsflow projected by ReNeuron management up until a possible hRPC filing in 2024 is shown in Exhibit 5. Apart from anticipated exosome deals, the major event in 2021 will be the first three months of continuation hRPC trial data, probably at a conference in Q321. Six-month data could be available in Q421. This may allow a potential high-value partnering deal to be concluded from 2022 onwards. The data should also enable ReNeuron to finalise the Phase III design with regulatory agencies. This then leads to Phase III potentially starting in H222, with possible regulatory filings from 2024.

For valuation purposes, we assume an RP prevalence of one in 4,500. On our estimate, there are about 75,000 diagnosed cases in total across the US and Europe. There are then about 1,100–2,500 new diagnoses per year (incidence) in the US and about 3,200 in Europe. Consequently, once all known (prevalence) patients with disease who can be treated, are treated, sales are based on new cases (incidence). There are no data on retreatment, so we have not assumed that this happens, but it seems a plausible additional scenario.

As hRPC target a bigger market than Luxturna, we have assumed a lower price of $275,000 – this is to be more acceptable to payors and to achieve good levels of uptake. Our forecast has 2030 US sales of $428m, European sales of $367m and Japanese sales (through a partner) of $120m. This results in total forecast world sales of $915m. The background assumptions and rationale are unchanged from our August 2020 note.

The potential hPRC approval (unchanged probability of 30%) is expected around H2 CY25. The immunotherapy and diabetes cell therapy projects have good deal potential but are in their preclinical stages. Exosome evaluation projects to deliver RNA drugs are promising and require early licensing. Our indicative value on 1 January 2021 remains £190m. With 56.85m shares outstanding, this equates to 334p per share. We note current high deal values in the gene and cell retinal therapy area, with one totalling $250m plus royalties in June 2020. Codiak, a pure exosome company with two Phase I clinical projects, is valued at about $590m.

In H121 to 30 September 2020, the loss (after a £0.9m tax credit) was £7.1m. Operating cash outflow was £5.5m, offset by receipt of the £2.9m FY19 tax credit. This gave a cash outflow of £2.6m. For FY21, we expect operating cash use to be c £13.8m. with FY21 year-end cash (30 March) of about £16m. FY22 costs are expected to be lower after the June CY20 restructuring. With £17.5m gross raised in December 2020, management has stated that ReNeuron has cash for at least 18 months, that is until the start of a potential Phase III study. This excludes any exosome deal values. Financial estimates are shown in Exhibit 6.