ReNeuron PLC - A Stroke of Potential

http://www.reneuron.com/
ReNeuron (LSE:RENE) is biotechnology/pharmaceutical company that undertakes stem cell research for a variety of practises primarily in the clinical stages. Their main drug is known as ReN001 ‘which is a therapy for the treatment of patients who are left disabled by the effects of stroke’ (which is the 3rd most prevalent cause of death in the developed world). Stroke is becoming ever prevalent in developed and emerging economies – few treatments exist and they are preventative rather than curative. Through stroke you have a 33% chance of death and if you survive you have a 50% chance of being disabled so clearly the market for these products is great considering stroke affects millions of people worldwide each year. ReNeuron is listed on the AIM currently trading around 3.15p (near 3 year lows that were made following the financial crisis in 2009). ReNeuron has 774m shares in issue with a market capitalisation of £26.5m.


As the chart shows, ReNeuron listed in 2005 with an IPO around 23p. It has since peaked around 52.5p and had an all-time low around 2.7p so based on the current share price is easily towards the lower end of the range. During its listing it has experienced several spikes up on good news before drifting back down. This is a typical movement of such pharmaceutical firms because drugs take so long to realise and clinical trials are often of multi-month lengths. From a charting point of view, ReNeuron does look cheap with the possibility of a further spike up either in late 2012 or 2013. The rise beginning at the low in 2006 to the high in 2007 amounts to circa 900% and the rise in 2009 amounting to 405%. Other large rises also occurred as can be seen. One to watch as its a very long-term option and not necessarily the right time yet. A downtrend still seems prevalent.

ReNeuron has two therapeutic cell lines; a neural stem cell line and a retinal stem cell line along with non-therapeutic research cell lines. ReN001 is the stroke treatment program, ReN009 is for ‘Critical Limb Ischemia’ and ReN003 is for retinal treatment. The order above is that of being most progressed to least progressed in the trial stages. The real gem here really is ReN001 which has already seen positive progress in the initial stages of the treatment with six patients already being cured within two dosage cohorts with no significant side effects. This trial is known as PISCES (Pilot Investigation of Stem Cells in Stroke).
ReNeuron is the first and only company to have received regulatory approval for any stem cell based clinical trial and even more importantly RENE works closely with the NHS providing them a quick source to market as well as NHSBT providing the manufacturing facilities that ReNeuron require. Upon this development in 2011, CEO Michael Hunt commented, 'Although further optimisation work remains to be done, the transfer of the production process for the CTXcryo cells to NHSBT represents an important milestone in our product development and cell manufacturing strategy and is a further step towards realising our vision to develop safe, effective and readily scalable stem cell-based therapeutics for wide-scale patient use in significant disease conditions.'

Just last September, Merchant Securities assigned a huge price target to RENE amounting to well over 700% at the time, with a target of 33p/share. Following the downtrend in the share price this now represents an almost 1000% upside.

Further good news was released in January further confirming the impressive effects of ReN001 as it was announced that animals suffering from stroke recovered 83% of their ‘sensorimotor function’. Although these results are only apparent in animals they are greatly encouraging for ReNeuron. To settle funding issues, ReNeuron also planned to raise £9.4m in April (2012) which will fund the company for at least 12 months and allow them to conduct Phase II of ReN001 in 2013 as well as filing for approval and efficacy tests on ReN009 later in 2012. So far, £6.1m of this has been raised. The fundraising took place via a placing at 6pence and open offer at 4pence.

Another important landmark was accomplished in May with Osiris Therapeutics being granted marketing approval for its stem cell products, which should ease the path for following firms such as ReNeuron. Yet more positivity became known in June with all five treated patients showing reductions in ‘neurological impairment and spasticity’ where no significant negative side effects were experienced. The company said, ”The data indicate that the ReN001 treatment has a good safety profile at the doses administered thus far’ and “The clinical team looks forward to dosing patients in the remaining higher dose cohorts in the PISCES study over the coming months." This is particularly positive although a clear risk is that problems arise as a result of increased dosages, albeit lower dosages have not pointed towards this occurring.

The only partially bad news arrived near the end of July; however it was on the company’s financial performance so upside for the drugs was uninterrupted. Pre-tax losses widened by £160,000 to £6.2m with R&D costs rising to £4.87m. Revenues rose, but by an insignificant amount also. The company said, ‘"We are actively pursuing a range of future funding sources, including potentially non-dilutive sources such as grants. We are also exploring the potential to reduce longer term funding requirements by the partnering of certain of our stem cell technologies and therapeutic programmes to commercial development partners in due course. Early discussions with interested parties have commenced in this regard." Despite, this the fundraising should ensure sufficient working capital for the foreseeable future and any money raised would be precautionary.

Chairman Bryan Morton commented, “During the period under review, our therapeutic programmes have continued to progress well. We are encouraged by the recently presented interim data from the PISCES clinical trial of our ReN001 therapeutic candidate for stroke and we remain on track to file an application, later this year, to commence clinical development of our ReN009 therapeutic candidate for critical limb ischaemia. The pre-clinical development of our ReN003 therapeutic candidate for retinitis pigmentosa also progresses to plan. We and our academic collaborators have continued to generate and present a breadth of preclinical data demonstrating the potency, versatility and clinical and commercial potential of our lead CTX neural and hRPC retinal stem cell product candidates used in our therapeutic programmes. These are stem cell product candidates which demonstrate the characteristics that we believe are critical for the development of scalable and affordable off-the-shelf cell-based therapies addressing large unmet patient needs. We look forward to reporting further progress towards the realisation of that clinical and commercial potential in the year ahead.”

Lastly, earlier this week RENE announced that the Data Safety Monitoring Board had given the go ahead for the higher dosage cohorts giving a vote of confidence for the already successful research phase. The safe nature of already carried out research is the most impressive feat achieved by the company so far which has quickly allowed for the completion of the majority of Phase I hence reducing expenses arising from possible delays.

For a company of less than 30 staff, ReNeuron has achieved a great start to its campaigns most notably ReN001 and should it see further advances, could easily be a takeover target for bigger firms. However, at this current stage (like most companies in this sector) RENE represents a very high risk, high reward option that could easily see its share price multiply from its current levels dependent on the results in its three researches.

1 comment:

  1. I am in here at 6p. After seeing a bbc program. in china on stoke patients where servilely injured and with out the western system of trial the chines just had a go anyway there susses rate was very hi in different levels from some movement to lots ( I am not medical lol) so as I have seen it does work we just need to do our way .

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