ReNeuron Group plc (OTCPK:RNUGF) Q4 2022 Results Conference Call July 4, 2022 10:00 AM ET
Company Participants
Iain Ross – Chairman
Catherine Isted – CFO
Randolph Corteling – Head of Research
Operator
Good afternoon, and welcome to the ReNeuron Group plc Preliminary Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it’s appropriate to do so. Before we begin, I’d like to open the following poll. I’d now like to hand over to Iain Ross, Chairman.
Good afternoon to you, sir.
Iain Ross
Good afternoon, everybody. My name is Iain Ross, I’m the Chairman of ReNeuron, I’m joined here today by Catherine Isted, who’s our CFO; and also by Randolph Corteling, who’s our Head of Research.
This is really quite an exciting time for us because I think we are in the process of evolving this company, and I have seen some of the pre-warrant questions, and we’re very happy to answer those. But what I want to do is to make it clear that this is a company which is going to be transparent, very clear and set out clear milestones of what we’re trying to achieve.
Firstly, I think it’s important to say that we need to manage everybody’s expectations. We’ve had a few setbacks. And as a result of that, we are evolving this business as we go forward. I am personally extremely excited. I think the science that we have here is incredible.
I think that, like many companies, we became focused on products, and we’ve had some setbacks there. But I think what underlies this business is a very exciting platform. And especially in the area of stem cells, which we’re going to focus more on as we move forward.
So we have great science, which I think has been built up over a number of years. We have great people. We have a number of very exciting young scientists who are making a lot of progress. And I think this business itself is based on a lot of know-how. We’ve also augmented that know-how by appointing our part-time CSO, Stefano, and also Randolph joining us or rejoining us, should I say, as Head of R&D.
We have an extensive patent estate and in fact, we have the third longest exosome patent estate globally. And we have some partnerships. And I know there will be questions about those partnerships, who are they with? When are we going to do announced deals with them?
I have to say we are at an early stage of some of those partnerships, but we are making a lot of progress because our goal is really to produce data, which is meaningful to form meaningful partnerships and collaborations and obviously get the financial support to take the business forward.
Over the year, there’s been a number of organizational changes. And I make no excuse that we, in fact, have refreshed our Board. We’ve been very well supported in the past by Tim Corn, Mark Evans, Sir Chris Evans, but they have stepped down, and now we have a new more independent Board. We have Barbara Staehelin and Martin Walton has joined us, along with Catherine earlier in the year.
Also Mike Owen, who’s been with the business for a long time, remains really our sort of scientific conscience on the Board. And as I said before, Stefano and Randolph have joined us, bringing 30 years of experience.
So I’d like you to listen to this with a view of this is a business which is going to really make moves over the next year, but it’s going to come from the basis of its science, its data and its partnerships.
So I hand over to Catherine to talk about the financial highlights.
Catherine Isted
So for the year ending March 2022, we have revenues in the period of £403,000, so that was up on the prior year. The loss for the period was lower at £9.7 million, reflecting lower costs. So the cost, talking about those, that was £11.6 million versus £13.2 million in the prior year. This was obviously driven by the reduction in clinical spend as we decided not to progress further with the retinitis pigmentosa trial.
There was actually an increase in net cash used in operations over the period, but that was more a reflection of the 2 R&D tax credits that were received in the prior year relating to ’19 and ’20. And in terms of cash at the 31st of March, we had £14.5 million, and that provides a cash runway into at least the middle of calendar year 2023.
So moving on to the operational highlights. We start with our hRPC program. As you’re aware, we had to make a very tough decision as a Board to help the development of this program. This was following on from our meeting of our Supervisory Committee, have decided that a further Phase II trial would be required to take this program forward. Due to the cost of those trials, we thought it was far better that this program is in the hands of a third party. So we are looking to outlicense that program.
Currently, what we’re doing is completing the data package because it’s very important that we have a solid data package to take to potential partners, and that is ongoing and will be completed during the course of Q3, after which we’ll be able to fully focus on out-licensing this program.
With Fosun, hopefully, you saw the announcement on Friday, that we signed the supplemental terms for our technology transfer of CTX into China. This involves £1 million payment over the next 24 months and £5 million over the medium-to-long term. I think that as much as the money is important, I think what this really shows is Fosun’s commitment to the CTX program. It’s not so much in terms of the amount that they’re paying to us, but additionally, it is the amount that they are paying in terms of building their new GMP facility, which they’re looking to get online in 2023. So we’re delighted to work with them.
And I think this really shows how we’re trying to maximize our legacy products, and we’ll continue to do so with both hRPC and Fosun in those geographies outside of China. On the exosomes and iPSCs side, following on from the strategic review, we are now fully focused on our exosomes platform. We have 7 discovery stage collaborations with the big pharmas, biotechs and academics, and we are absolutely focused on moving those forward, as well as adding new partnerships in the year. In October, we had very exciting data showing BDNF delivery into the brain. This is the first time that a protein has been able to be delivered from distance using an exosome. And we’re now working on various data packages on which therapeutic areas to take this program forward.
Additionally, on iPSCs, we signed 2 collaborations with in UCL, in CAR-T and CAR-NK, and also in the areas of Schwann cells, that are used in peripheral nerve damage repair. iPSCs, we think, is a very exciting platform, not only to help us with our exosome platform, but in its own right, and we’ll continue to work in that area to expand into other collaborations.
With that, I’d like to hand over to Randolph to talk more about the exosomes platform.
Randolph Corteling
Thank you, Catherine. So why are we focusing on exosomes, and more specifically, why we, at ReNeuron, are extremely excited about our stem cell-based exosomes? Well, exosomes are biological nanoparticles released by all cells for the purpose of intracellular communication. They do this through the encapsulation and delivery of cargo, such as proteins and nucleic acids from one cell to the other. However, it was when that we discover that it could be manipulated, they can be loaded with different cargoes of your choice, that really introduced the exosomes as the potential targeted delivery platform for complex drug modalities.
So through the genetic modification of producer cell lines, by loading different cargoes or changing the marker profile of the exosomes, you can target specific cells and deliver specific cargoes. You could have also target and deliver cargoes on the surface of the exosomes. And this has been shown by delivering the potential for delivering more than one bioactive cargo simultaneously.
I’m putting this all together and with the data that shows that exosomes have the ability to evade immune triggering makes exosomes a customizable targeted delivery platform for complex drug modalities.
But what’s specific to ReNeuron are our 7 proprietary conditionally immortalized stem cell lines, which show the function of different cell lines that they’ve been derived from, so that the exosomes retain that functional discrete nature. Our catalog proprietary cell lines from both neural and nonneural tissue differentiates us from other people in the field, and we believe this gives us a much greater chance of success.
We have years of experience and proven track record in the manufacturing of consistent stem cell banks, [ 2 GMP ], including 2 positive INDs. And then we’ve got the early preclinical animal data with our modified neural stem cell line, which we have decorated the exosomes with the protein BDNF. And where we’ve shown that when you deliver the BDNF through lumbar puncture with our exosomes, they have a far greater efficacy when the — compared with when the protein is delivered by itself.
So what differentiates us, I’ve just said, is our proprietary cell lines. Our proprietary cell lines truly give us that customizable stem cell exosome delivery platform, which we are optimizing for specific drug delivery needs. The standard approach taken up by many of our competitors is a single cell line. So it’s a one-size-fits-all hypothesis where you use a single cell line, which gives rise to a single outcome. Whereas at ReNeuron, we have our proprietary cell lines, 4 from the neural space, including cortical, striatal, hippocampal and ventral mesencephalon but in addition, we have retinal, liver and pancreatic.
All of these functions — all of these exosomes are showing functional properties based on the parental cell line which they were derived from. So the idea is that you choose the most appropriate exosome, and then you can load your payload depending not only on the tissue-targeting ability of that exosome, so for on and off targeting effects, but also on the engineering efficiency of the specific cargo and also of where that cargo needs to end up. For instance, if it needs to activate the cell surface or if it needs to be entered into the cytoplasm, for instance, for RNAi or into the nucleus for things like DNA.
Next slide, please. So — sorry, going back to the next slide, sorry. The previous slide. I also said that what I failed to say was that what we’ve also got on top of that is our CTX iPSCs line. So not only do we have this unique technology where we can reprogram our neural stem cells into iPSCs induced pluripotent stem cell lines.
This obviously gives us another platform to be able to supplement our exosome platform to generate stem cell lines from any different tissue that we require. So we are constantly adapting and developing our exosome platform to generate new exosomes from different sales sources. Thank you.
So this slide really shows us how different our exosomes really are. On this slide, you can see 4 different exosomes that we have in-house right now. And on the left-hand side of each of the quadrants, you see a red curve. The red curve shows the size distribution of the exosomes. And really, between the 4 different cell lines, there’s not much difference at all in that size distribution. Each one having a normal size of around 100 nanometers.
But it’s really when you look at the right-hand side of each quadrant that you really see the difference between the exosomes. And it’s the surface markers, which are able to focus and target the delivery of the exosomes, specifically to different tissues within the body. And what you can see there in the top right — left-hand corner, you can see our CTX cell line derived exosomes. The first 3 columns are CD9, CD63 and CD81. These are classic markers of exosomes.
And if you compare just those 3 classic markers of exosomes, you can see that just the 4 cell lines — exosome populations on the page are vastly different. So those markers have been implicated in the biogenesis of exosomes.
But if you take that one step further and you look at cell-specific markers, you can see the presence and the absence of specific markers, giving them really a phenotype or a fingerprint very specific to the original cell type that they were derived from.
So it’s — we have the ability to take those exosomes, and then, therefore, load those exosomes with different active molecules. And we can do this in 1 of 2 ways. The middle schematic on this diagram shows us the first way is to first purify the exosomes and then load with the different payloads through either passive or exogenous loading. And this can be done through modification of the API by chemical modification or electroporation.
And then at the bottom of this slide, we show we can modify them, the parental cell line per genetic modification. Through the genetic modification, we can then enrich in protein onto the exosomes and load those into the purified exosomes downstream processing.
So what we wanted to do is exemplify this using our manufacturer — sorry, next slide, please. We just wanted to exemplify this by really delivering a protein that we know has been shown to be very difficult to deliver direct to deep structures in the brain. So what we did is we genetically engineered our cortex line to express BDNF, that is brain-derived neurotrophic factor, on the surface of our exosomes. And what we do is we delivered those exosomes through lumbar puncture into naive animals. And we compared that to the response given to unengineered exosomes and the active protein by itself.
And what we showed and on the graph on the left-hand side, you can see quite clearly that on the left-hand side, only when this protein is delivered when attached to an exosome, do you get the target gene expression increase that you would expect with an efficacious response.
So this protein has been shown to be efficacious in animal models of Alzheimer’s, Parkinson’s and Huntington’s disease, when specifically targeted to regions such as the striatum and the hippocampus. And as I said, further in vivo functional studies are currently ongoing.
So this success has led to a number of different partnered programs being initiated. We currently have partnered programs through academics, small biotechs and large pharma. And we are currently looking at delivering a number of different payloads from protein to siRNA peptides and small molecules. But we also continue to work on our internal programs and expand those internal programs and to things to look at various different pharmaceutical delivery, looking at things like CRISPR-Cas9 gene editing expanding into different growth factors outside of BDNF and also in the micro RNA space.
And as Catherine mentioned, we also have our induced pluripotent stem cell line. The induced pluripotent stem cell line is not only being developed to look and support our exosome platform by generating new cell lines so that induced pluripotent cell line is based upon platform technology, which we have developed in-house to be able to reprogram our proprietary neural stem cells into pluripotency. The key is that those induced pluripotent stem cells [indiscernible] — which allows us to, in one genetic engineering approach result in highly stable cell lines.
So as I said, not only to support the exosome platform, but also to generate potentially off-the-shelf therapeutics through collaborations with University College London, which we are looking at CTX-induced iPSCs to generate CAR-T for the treatment of cancer. But we’re also separately looking at their ability to differentiate into Schwann cells for the potential use in peripheral nerve damage.
Catherine Isted
So I think now to move on to a summary. I think it’s really important to highlight our goals for the coming year. This is what we are looking to show to our shareholders, and this is what we’re working on as a company to build for ReNeuron.
So initially build a best-in-class end-to-end proprietary development technology platform, delivery technology platform and continue to strengthen our IP in this area. As mentioned earlier, we do have the third largest patent estate globally when it comes to access to exosomes. This gives us not only freedom to operate, but some great patents that mean that other people can’t come into the areas where we are focusing on.
In terms of our partner programs, we want to progress our partner programs, and also expand with new partners as well and continue to build a growing revenue stream. On the platform side, we’re looking to undertake and are undertaking further experiments and look to publish data to really prove the strength of that platform. So really proving that one size doesn’t fit all. And if you are a pharma company or a biotech company and you want delivery of a particular payload to a particular area, then you need to choose your exosomes wisely, and that comes from stem cell choice.
In terms of our proprietary programs, we want to continue to develop those, the BDNF data that we got in October was very exciting. So we’re continuing to work on our functional studies in that area. Again, this is all around producing more data to show progress there.
Very importantly, to continue to monetize our legacy assets, we’ve obviously out-licensed these programs in Greater China, and it was great to have the update last week on progress there with CTX with Fosun. We need to continue to move that forward, complete the data package for hRPC and also look to monetize these outside of China.
Also, we need to continue on working on our induced pluripotent stem cell platform. This is a very exciting area of science. We’ve already got partnerships with UCL in 2 areas, and we’d look to extend that as well.
So what are we looking to do? We’re looking to build a strong and validated platform and with strong partners, and we really look forward to being able to update you as the year progresses on news flow coming out of these areas.
With that, I think we’ll hand over to some of the Q&A.
Question-and-Answer Session
A – Iain Ross
But let me move to the more general ones. So one of the questions that’s come up prior to the meeting is, is there currently an active process underway in relation to recruiting a new permanent CEO?
The answer to that question is yes. And can I give some sort of time frame? No, I can’t give an immediate time frame. We are looking at both external and internal candidates. But I think as we said in the announcement, we intend to make an appointment as a Board as soon as it’s appropriate.
And then a question goes on to ask, am I going to continue for the foreseeable future? Well, I think at my age, I can’t really talk about the foreseeable future. But certainly, as and when we appoint somebody, there will be a period of handover. But please rest assured the Board are taking that quite seriously.
Another question that was asked and a group of questions were, are the directors going to put their hands in their pockets? And the answer to that is we will put our hands in the pocket as soon as we’re in a position to do so. As you’ll appreciate, we’ve been inside for quite some considerable time as we’ve negotiated the Fosun deal, which we announced last week, which meant it was impossible for us to actually step in as directors, but you have my assurance that the number of people on the Board and in the company that we’ll be investing as we move forward.
Do the directors believe that this further out-licensing CTX and hRPC outside of China is feasible? And the answer to that is yes. We are working very hard on the legacy assets because we want to prove that we have value in this business.
And just to move to one of the questions that was asked by somebody during the call is, yes, we believe there is value there, but they also said, well, why is it that now you’ve stopped hRPC that the costs haven’t gone down accordingly? But there’s one of these things in biotech, is once you put a product into patient in a clinical trial, you have an obligation to monitor those patients. So some of the costs that we are going to be retaining over the next year, in particular, are those related to monitoring and wrapping up the regulatory packages on the hRPC program. That’s obviously costly. But the good news is that we’re putting that package together and we’d be hoping to perhaps have a possibility about licensing.
We have had a number of discussions and there are, I would say, although there’s nothing outside the normal course of business at the moment, discussions are ongoing.
There was another question which related to Fosun, and saying, well, Fosun seem to have taken an awful long time. This is a Chinese company. They are based in China and China is in locked down. And all I can do is speak for the team that are currently in charge of the business. We have moved at extraordinary pace since the beginning of January to bring to fruition the deal we announced last week. Why hasn’t that happen before?
Well, I can’t really answer that. But what I can say is that we have signed the deal where it is giving us commercial terms because our view is if we don’t value it, nobody else will value it.
So somebody also said, will there be a chance to expand these things in the number of programs that we’ve got going? Yes, there will. But what we are doing is we’re making sure that we charge a commercial rate for the use of our people, so we will cover costs.
So can we take on more projects? Yes, we can because if the third parties pay a reasonable [FD] rate, we will actually carry on and grow this.
Now the big thing about these 7 collaborations that have been asked, the number of people are saying, can you tell us who they’re with? No, we can’t. We can only tell you that when they decide that they are prepared to have their name used, and the reasons they don’t want their name used is because it’s commercially sensitive. We’re working with 3 siRNA companies. And maybe whilst they can guess who they are, they don’t want to actually tell each other that they’re working with ReNeuron at the moment.
And obviously, somebody said to us, well, when will you convert those? Well we will convert 3 sRNA programs. We can’t do an exclusive license with each one of them because that’s not possible. But what I do believe is that there will be a number of collaborations signed, whether it’s the existing ones moving forward or is new ones coming in.
Other questions, somebody actually asked a question, which I know just came up during the meeting was, will we be considering to recompense the shareholders who didn’t actually do well on the announcement of our discontinuation of the hRPC program? And they are suggesting that there was a lot of selling just before that announcement which in itself suggests that there must have been some leakage. I have the figures in front of me. There was no more volume in January prior to that announcement than there was in the month before. The share price did fall in the month before, I think, from around about something, 90-something, around lower 80s.
But on the day before the announcement was made, the price was 81p. And in fact, on the announcement of us discontinuing the hRPC program, it went down to 30p. So I can assure you that there was no leakage whatsoever as far as that was concerned. Has there been a eureka moment in the last 6 months?
Yes, I think there has actually. I think when we’ve started to really focus on the exosome programs and started to generate some data in-house, we have seen some quite exciting data. But we are in the business of managing expectations here. And one of the things that we want to do is to make sure when ReNeuron makes an announcement, it’s an announcement that we are absolutely sure that the data is robust.
But going back to the points that Randolph was emphasizing, we believe the differentiation between us and some of the other exosome companies is such that we are going to head-to-head, and we believe that we will have data that show that our exosomes are more customizable. I can’t say the word customizable, it’s quite difficult. So yes, I think there is a eureka moment. But as and when the data comes out, we will certainly make announcements.
There was some question about I think what we got here, how you mentioned the possibility of licensing further capability? Could you say anything more about the areas? Well, it’s a bit difficult for us to say this, but I think we’ve made it fairly clear that we believe this is a broad technology platform. What we are not doing is keeping our eyes shut. So we are talking to other parties who could perhaps provide, support or even opportunities for us to have a license to data and technology, which could then enhance our programs.
And a lot of this depends on how we get on with our collaborators because these are not collaborations where they provide something, [indiscernible] when they solve the answer. You work together with them. So a lot of the collaborators, we have working groups, joint working groups, where we’re looking at solving problems together.
We had one in the last few months where we just could not get the exosomes to work. But actually, when we got down to defining the problems between the teams, what we discovered was it was not actually on our side of it, it was a particular molecule that we were trying to deliver within a particular configuration. And the 2 teams are now working on how to resolve that.
Your goals for the coming years seem to be vague and subjective. Let me make it clear. We are going to generate data. We’re going to do deals and we’re going to raise [indiscernible]. And I say that, in this particular market, raising money is not an easy task. So we’re looking at collaborations producing non-diluted funding.
Would you consider selling your legacy assets, for example, sell if the right? Yes, absolutely. We would consider that. I mean, we will consider anything that actually values our assets, whether they be legacy assets or the existing assets. For the pharmas, very clearly shown recently.
It’s not just great platform that is required to be shareholder, further shares are also relatively illiquid [indiscernible] institutions. Are there steps being taken to grow the shareholder base?
Yes, there are. But our first step in any market like this. One of my shareholders said to us recently, control what you can control, and look after your existing shareholders, and we are doing that. We are hopefully this week seeing all our existing shareholders to remind them why they invested in this company.
I think it’s very important that we do broaden the shareholder base. And certainly, when the opportunity arises, we will do that.
Is your research relevant to diseases such as muscular dystrophy and motoneuron disease? I’m looking at the scientists at the moment, and I’m basically saying that. It’s not where we’re focusing at this particular time. I think what you have to do is when you’re in a company such as this is you have to make some choices and you have to choose where you believe you’re going to get some cult wins, particularly in the current market and particularly with this company’s history. So I think it’s very important that we actually focus where we have experience and background and knowledge.
So CNS is certainly an area that we do have background and experience. So therefore, that’s what we’re going to concentrate upon.
So will you be leaving, Mr. Ross, in a year, future once the new CEO in brought in? No, I’m not. I’m not leaving. I’m going to invest my money I’m a person that’s been shown to committed to things. 3 weeks after I joined Redx as Chairman into administration, I didn’t walk away, I stayed there for 4 years, and I turned it right and put a really good management team in there. I think I have an advantage here is I think we’ve got a lot of the raw materials already. And so I will appoint a CEO, the Board will appoint a CEO, and I will step back as Non-Executive Chairman, but I will stay very much in touch with this business.
I love this question. And further to 2022 goals, what are your 2023 milestones? I’ll tell you let me just get through 2022 and see we’ve just spoken to the analysts earlier today, and I think everybody is focused on what the next 6 to 9 months are really important in the life of ReNeuron. And One thing I’ve learned over the years is things come in from left field. I always quote that Peptide Therapeutics is called Peptide Therapeutics and never did anything with the peptide.
So sometimes you just have to keep your eyes open. And I think this management team that we’re evolving, it’s evolving to keep their eyes open. There will be an opportunity, but it might be something completely different.
Please, could you take on for the pharma as well? I try like doing turnarounds and something we remarked earlier, I’m involved in the second turnaround at Silence Therapeutics, it’s going fairly well. I think you have to pick things that you believe in totally. I know nothing about 4G Pharma, but I do know something about ReNeuron because I’ve followed it for years, and I was a shareholder at one point.
Anything else? Are there any more questions? I don’t believe so.
Operator
Yes, I would just thank very for addressing those questions from investors and of course the company will review questions submitted today and we’ll publish those responses on the investor meet company platform. But just before we redirect to investors to provide you with their feedback, which is particularly important to the company, can I just ask you for a few closing comments?
Iain Ross
Few closing comments? Yes. I think from the nature of the questions, there is somewhat of a frustration among shareholders, and I fully accept that. But what I would say to you is that I think this company has fundamentally excellent science. It has some very good people who we are giving the opportunity to move it forward.
Some of these early collaborations are really with high-quality people. So whilst we’re not rushing out to say who they are at the moment, they are high quality. They are looking for answers for the delivery of a number of different molecules, types of molecules and we should be take it as a positive that people are working with us.
We also have a couple of very good academic relationships, which I think could release a very exciting broadening of what we do. And I think the results of BDNF is something that really basically validates what we’re trying to do here in delivery. We have achieved with BDNF something that nobody else has achieved, and that’s down to our exosome technology.
So ironically, in the background of this market, I actually think the future is pretty bright for us. And we just have to learn to execute and execute quickly. And that’s what certainly myself and the management team are focused on.
Operator
Iain, Catherine, Randolph, thank you very much for updating investors today. Could I please ask investors not to close your session as you now be automatically redirected to provide your feedback in order that the management team can better understand, your views and expectations. This will only take a few moments to complete, and I’m sure will be greatly valued by the company.
On behalf of the management team of ReNeuron Group plc, I’d like to thank you for attending today’s presentation, and good afternoon to you all.
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