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Research: Healthcare
ReNeuron Group
Written by
ReNeuron Group |
Positive Phase II stroke data |
H117 interim results |
Pharma & biotech |
7 December 2016 |
Share price performance
Business description
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Analyst
ReNeuron Group is a research client of Edison Investment Research Limited |
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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 |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
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
|
|
Foreign & Colonial Investment Trust