TIDMRENE
RNS Number : 8952V
ReNeuron Group plc
06 December 2019
6 December 2019 AIM: RENE
ReNeuron Group plc
("ReNeuron" or "the Company")
Interim Results for the six months ended 30 September 2019
ReNeuron Group plc (AIM: RENE), a UK-based global leader in the
development of cell-based therapeutics, is pleased to announce its
interim results for the six months ended 30 September 2019.
Operational highlights
hRPC stem cell therapy candidate for retinal disease:
-- Positive top-line efficacy data presented from Phase 2a
patients in ongoing US Phase 1/2a clinical trial in retinitis
pigmentosa
-- Ongoing Phase 2a study to be expanded to allow for subsequent
potential single pre-approval clinical study and shorter route to
market
-- Further top-line efficacy data from expanded Phase 2a study
expected to be presented during 2020
CTX stem cell therapy candidate for stroke disability:
-- Clinical trial protocol amendments and other initiatives in
place to accelerate patient recruitment in ongoing US Phase 2b
clinical trial
-- Significant increase planned in overall number of patients to
receive CTX therapy as opposed to placebo procedure in Phase 2b
study
-- Overall size of Phase 2b study increased from 110 to 130
patients, with top line data expected in mid-2021
Exosome and iPS cell technologies:
-- Grant-funded collaboration initiated with European Cancer
Stem Cell Research Institute to enable delivery of therapeutic
nucleic acids using CTX-derived exosomes
-- New data presented, supporting use of CTX-derived iPSCs
(induced pluripotent stem cells) to develop new immortalised cell
lines as potential therapeutic agents for subsequent licensing to
third parties
Increased business development activity:
-- Exclusive out-licence agreement signed with Fosun Pharma to
develop and commercialise hRPC and CTX programmes in China
o ReNeuron to receive upfront, near term and estimated
success-based milestone payments of GBP80.0 million plus
double-digit royalties on sales
-- Discussions ongoing with other commercial third parties
regarding potential out-licence deals across all of ReNeuron's
programmes
Financial highlights
-- Reduced loss for the period of GBP3.90 million (2018: loss of GBP5.36 million)
-- Reduced cash consumed by operations of GBP5.15 million (2018: GBP7.54 million)
-- Upfront payment of GBP5.40 million, net of withholding tax,
received pertaining to licence agreement with Fosun Pharma
-- Cash, cash equivalents and bank deposits at 30 September 2019
of GBP21.27 million (31 March 2019: GBP26.39 million)
Commenting on the results, Olav Hellebø, Chief Executive
Officer, said:
"The period under review has been marked by significant progress
across our various clinical and research programmes. During the
period, and subsequent to it, we presented very encouraging
positive efficacy data from the Phase 2a patients in the ongoing US
Phase 1/2a clinical trial of our hRPC cell therapy candidate in
retinitis pigmentosa. We have taken advantage of these early
results to amend our clinical development strategy with the aim of
shortening the overall time to market approval application for this
therapeutic candidate.
"During the period, we have instigated a number of protocol
amendments and other initiatives to accelerate patient recruitment
into the ongoing US Phase 2b clinical trial of our CTX cell therapy
candidate in chronic stroke disability. These amendments will
result in a greatly increased number of CTX-treated patients in the
study. Additionally, we have been very encouraged to see the
potential of our exosome and iPS cell technologies emerge further
during the period.
"We are pleased to be working with Fosun Pharma as our partner
for China, following the signing of the exclusive licence agreement
for both our CTX and hRPC programmes in that territory during the
period. We hope to be able to announce further deals with
commercial third parties across our various programmes in the
months ahead."
Analyst meeting and webcast:
A meeting for analysts will be held at 9.30am today at the
offices of Buchanan, 107 Cheapside, London, EC2V 6DN.
For a webcast of the analyst presentation, please log on to the
following web address approximately 10 minutes before 9.30am:
https://webcasting.buchanan.uk.com/broadcast/5dcc32879535b1405a05b0bd
For further details please contact Buchanan on 020 7466 5000 or
email reneuron@buchanan.uk.com. A recording of the webcast will be
made available on ReNeuron's website, www.reneuron.com.
Enquiries:
+44 (0) 20 3819
ReNeuron 8400
Olav Hellebø, Chief Executive Officer
Michael Hunt, Chief Financial Officer
+44 (0) 20 7466
Buchanan 5000
Mark Court, Tilly Abraham
Argot Partners (US) +1 212 600 1902
Stephanie Marks, Claudia Styslinger
Stifel Nicolaus Europe Limited
Jonathan Senior, Stewart Wallace, Ben +44 (0) 20 7710
Maddison (NOMAD and Joint Broker) 7600
N+1 Singer
Aubrey Powell, James Moat, Mia Gardner +44 (0) 20 7496
(Joint Broker) 3000
This announcement contains inside information. The person
responsible for arranging for the release of this announcement on
behalf of the Company is Olav Hellebø, Chief Executive Officer.
About ReNeuron
ReNeuron is a global leader in cell-based therapeutics,
harnessing its unique stem cell technologies to develop 'off the
shelf' stem cell treatments, without the need for immunosuppressive
drugs. The Company's lead clinical-stage candidates are in
development for the blindness-causing disease, retinitis
pigmentosa, and for disability as a result of stroke. ReNeuron is
also advancing its proprietary exosome technology platform as a
potential delivery system for drugs that would otherwise be unable
to reach their site of action. ReNeuron's shares are traded on the
London AIM market under the symbol RENE.L. For further information
visit www.reneuron.com.
This announcement contains forward-looking statements with
respect to the financial condition, results of operations and
business achievements/performance of ReNeuron and certain of the
plans and objectives of management of ReNeuron with respect
thereto. These statements may generally, but not always, be
identified by the use of words such as "should", "expects",
"estimates", "believes" or similar expressions. This announcement
also contains forward-looking statements attributed to certain
third parties relating to their estimates regarding the growth of
markets and demand for products. By their nature, forward-looking
also statements involve risk and uncertainty because they reflect
ReNeuron's current expectations and assumptions as to future events
and circumstances that may not prove accurate. A number of factors
could cause ReNeuron's actual financial condition, results of
operations and business achievements/performance to differ
materially from the estimates made or implied in such
forward-looking statements and, accordingly, reliance should not be
placed on such statements.
Review of clinical programmes
hRPC (human retinal progenitor cells) for retinal disease
During the period under review, and thereafter, we have made
significant progress with our ongoing Phase 1/2a clinical trial in
retinitis pigmentosa (RP). RP is a group of hereditary diseases of
the eye that lead to progressive loss of sight due to cells in the
retina becoming damaged and eventually dying.
The Phase 1/2a clinical trial is an open-label study to evaluate
the safety, tolerability and preliminary efficacy of our hRPC stem
cell therapy candidate in patients with advanced RP. The Phase 2a
segment of the study, which uses a cryopreserved hRPC formulation,
enrols subjects with some remaining retinal function and is being
conducted at two clinical sites in the US -- Massachusetts Eye and
Ear in Boston and Retinal Research Institute in Phoenix,
Arizona.
In April 2019, initial data from the first cohort of three
patients in the Phase 2a segment of the study were presented at the
sixth annual Retinal Cell and Gene Therapy Innovation Summit in
Vancouver, Canada. The data demonstrated a sustained improvement in
visual acuity compared with baseline in these patients, as measured
by the number of letters read on the ETDRS chart (the standardised
eye chart used to measure visual acuity in clinical trials).
In October 2019, further positive efficacy data from the study
were presented at the American Academy of Ophthalmology Annual
Meeting (AAO) in San Francisco. At this point, 22 patients had been
treated in the study, consisting of 12 patients in the Phase 1
segment of the study and 10 patients in the Phase 2a segment of the
study. Eight out of the ten Phase 2a patients treated had reached
at least the one month follow up time point.
The visual acuity data presented at the AAO conference from the
patients treated in the Phase 2a segment of the study continued to
show the hRPC therapy's ability to deliver clinically meaningful
signals of efficacy in a patient population where inexorable
disease progression is the norm. The clinical trial data also
continued to show a good overall safety profile for the hRPC
therapy, with no immune or cell-related serious adverse events
reported and isolated episodes of surgically related adverse events
consistent with those expected for a sub-retinal injection
procedure.
Taking advantage of the positive clinical data generated thus
far, we intend to expand the ongoing Phase 2a segment of the study
to generate further and longer-term follow up efficacy data in a
larger group of RP patients during 2020. Our aim is to use this
expanded data set, assuming it continues to be positive, to design
and agree with the regulatory authorities a protocol for a
subsequent single pre-approval clinical study for the hRPC therapy
in RP. We believe that this strategy should lead to a shorter
overall time to market approval application for the therapy than
the clinical development strategy we were previously pursuing in
this indication.
Our hRPC cell therapy candidate offers a number of potential
advantages over alternative approaches to the treatment of RP.
Firstly, our cell therapy candidate is independent of the many
specific genetic defects that collectively define RP as a disease,
thereby allowing a much broader potential patient population to be
eligible for the treatment. Secondly, the cells are cryopreserved,
enabling on-demand shipment and use at local surgeries and
hospitals. Finally, the cells are injected directly to the site of
retinal degeneration, allowing a greater chance of anatomic
restoration of photoreceptor function.
Our RP clinical programme has been granted Orphan Drug
Designation in both Europe and the US, as well as Fast Track
designation from the FDA in the US. Orphan Drug Designation
provides the potential for a significant period of market
exclusivity once the therapy is approved in those territories. Fast
Track designation provides eligibility for an accelerated approval
and priority review process by the FDA.
CTX for stroke disability
During the period, we have continued to progress the clinical
development of our CTX cell therapy candidate for stroke
disability. This candidate is currently being evaluated in our
PISCES III clinical study, a randomised, placebo-controlled, Phase
2b clinical trial being undertaken in the US.
Patients in the study are treated between 6 and 12 months after
their stroke and are randomised to receive either CTX therapy or
placebo treatment. The primary end-point of the PISCES III study is
the proportion of patients showing a clinically important
improvement (at least one point) on the modified Rankin Scale (mRS)
at six months post-treatment compared with baseline. The mRS is a
global measure of disability or dependence upon others in carrying
out activities of daily living and is accepted by regulatory
authorities as an appropriate end-point for marketing approval in
stroke disability.
During the period and thereafter, we have pursued a number of
initiatives to increase the rate of patient recruitment into the
PISCES III clinical trial. These include various initiatives to
better target eligible patients for the study as well as potential
amendments to the clinical trial protocol itself. In particular,
the clinical trial protocol has been amended to change the
treatment randomisation ratio from 1:1, to 2:1 (that is, two out of
three patients recruited into the study will now receive the CTX
cell therapy as opposed to a placebo procedure). This amendment
will increase the number of patients in the study who will be
randomised to receive the CTX therapy from 55 to approximately 85
patients. We expect this to accelerate patient recruitment into the
study as well as providing a broader data set of CTX-treated
patients overall.
Further, the treatment window in the PISCES III clinical trial
protocol has been increased from six to twelve months post-stroke,
to six to 24 months post-stroke, thereby allowing for recruitment
into the study from a larger pool of potentially eligible stroke
survivors.
In order to maintain the statistical integrity of the study as a
result of these protocol changes, the total number of patients to
be treated in the PISCES III study will increase from 110 to 130
patients. As a result, we anticipate that top-line data from the
PISCES III clinical trial will be available in mid-2021.
Exosome and iPS cell technologies
Our exosome technology is being exploited as a novel vector for
delivering third party biological drugs. In July 2019, we announced
the grant of a number of key patents in Europe, Japan, China and
South Korea covering our neural stem cell-derived exosomes and
their methods of production. In August 2019, we announced a new
grant-funded collaboration with the European Cancer Stem Cell
Research Institute at Cardiff University to develop novel systems
to enable the delivery of therapeutic nucleic acids across the
blood brain barrier using our CTX stem cell-derived exosomes.
In October 2019, we presented new data demonstrating the
stability and scalability of new stem cell lines derived from the
Company's CTX human neural stem cells following re-programming to
an embryonic stem cell-like state. We have designated these
reprogrammed CTX stem cells as CTX-iPSCs (or CTX-derived, induced
pluripotent stem cells). In essence, this means that we are able to
take our CTX neural stem cells back to being stem cells that are
able to differentiate into any other type of stem cell, including
bone, nerve, muscle and skin. Further, we showed that the new stem
cell lines generated could be grown at scale by virtue of the
Company's conditional immortalisation technology, enabling the
efficient production of clinical-grade, allogeneic ("off the
shelf") cell therapy candidates.
As a result of the above findings, we are currently exploring
the potential of our CTX-iPSC technology to be utilised to develop
further new, immortalised allogeneic cell lines of varying types as
potential therapeutic agents in diseases of unmet medical need for
subsequent licensing to third parties. For example, the production
of allogeneic haematopoietic stem cells from our CTX-iPSCs could
potentially provide an alternative approach to those cancer
immunotherapies currently in development that rely on the use of
the patient's own T-cells.
Business development activities
In April 2019, we announced the signing of an exclusive licence
agreement with Shanghai Fosun Pharmaceutical Industrial Development
Co., Ltd. ("Fosun Pharma") for the development, manufacture and
commercialisation of both our CTX and hRPC cell therapy programmes
in the People's Republic of China ("China").
Under the terms of the licence agreement, Fosun Pharma will
fully fund the development of our CTX and hRPC cell therapy
programmes in China, including clinical development and subsequent
commercialisation activities. Fosun Pharma has also been granted
rights to manufacture the licensed products in China. In return,
ReNeuron received GBP6.0 million (before withholding tax) on
entering into the agreement and will receive up to GBP6.0 million
in near-term operational milestones and up to GBP8.0 million in
future regulatory milestone payments. In addition, ReNeuron will
receive post-launch profit threshold milestone payments derived
from the licensed products, leading to total estimated milestone
payments of GBP80.0 million provided all milestones and profit
thresholds are successfully met, as well as tiered royalties at
rates between 12% and 14% on sales of the licensed products in the
Chinese market.
We are working closely with Fosun Pharma as it pursues the
development, manufacture and commercialisation of our cell therapy
programmes in the People's Republic of China, with the CTX
programme being the initial focus of activities.
We remain in active discussions with other commercial third
parties regarding potential collaboration and/or out-licensing
deals across all of our programmes.
Other activities
In August 2019, we were delighted to announce the appointment of
Professor Robert MacLaren, Dr Sally Temple and Dr José-Alain Sahel
to ReNeuron's Scientific Advisory Board. ReNeuron's Scientific
Advisory Board is composed of leading academics and industry
executives with a world-class breadth of expertise across the
Company's areas of operation.
Professor Robert MacLaren is Professor of Ophthalmology at the
University of Oxford, where he directs research into developing new
clinical treatments for blindness, using stem cells, gene therapy
and electronic retinal implants. In 2014, he co-founded Nightstar
Therapeutics, a biotechnology company developing gene therapy
treatments for patients with retinal diseases, which was acquired
for $800 million by Nasdaq-listed Biogen, Inc. in June 2019.
Dr Sally Temple is the Scientific Director of the Neural Stem
Cell Institute in New York. She leads a team of 30 researchers
focused on using neural stem cells to develop therapies for eye,
brain, and spinal cord disorders.
Dr José-Alain Sahel is the chair of the Department of
Ophthalmology at the University of Pittsburgh School of Medicine,
of the UPMC Eye Center, and the Eye and Ear Foundation Endowed
Chair of Ophthalmology. Dr Sahel founded Fovea Pharmaceuticals,
which later became the Ophthalmology Division of Sanofi Aventis. He
is also a scientific co-founder of GenSight Biologics, Pixium
Vision and Sparing Vision.
Financial review
In the six months to 30 September 2019, revenues were
GBP6,030,000 (2018: GBP27,000), including an initial gross licence
fee of GBP6.00 million received from Fosun Pharma in May 2019.
Grant income of GBP64,000 was received and is shown as other
operating income (2018: GBP508,000). In 2018, other operating
income also included GBP1,893,000 in respect of an exclusivity fee
received during licensing negotiations.
IFRS 16 was adopted during the period and the comparative
figures for prior periods have been restated accordingly. Details
are set out in note 16 to these Interim Financial Statements.
Total operating costs increased in the period to GBP11.80
million (2018: GBP10.12 million). Research and development
expenditure increased to GBP9.23 million (2018: GBP7.54 million),
reflecting costs incurred in progressing the PISCES III clinical
trial. General and administrative expenses remained constant at
GBP2.58 million (2018: GBP2.58 million).
Finance income represents income received from the Group's cash
and investments and gains from foreign exchange. Finance income was
GBP0.59 million in the period (2018: GBP0.89 million) and included
foreign exchange gains of GBP0.42 million (2018: GBP0.75 million).
The Group holds cash and investments in foreign currencies in order
to hedge against operational spend and the strengthening of the US
Dollar against sterling during the period has resulted in a
relative appreciation of the Group's foreign currency deposits.
Finance expense comprises finance lease interest of GBP22,000
(2018: GBP19,000). The total tax credit for the period was GBP1.85
million (2018: GBP1.46 million). This was offset by overseas taxes
paid of GBP0.60 million (2018: GBPNil).
As a result of the above, the total comprehensive loss for the
period reduced to GBP3.90 million (2018: GBP5.36 million).
Cash consumed by operations in the period reduced to GBP5.15
million (2018: GBP7.54 million), broadly reflecting the operating
expenses incurred during the period, net of the initial licence fee
of GBP5.40 million (after withholding tax) received from Fosun
Pharma. The Group had cash, cash equivalents and bank deposits
totalling GBP21.27 million as at 30 September 2019 (31 March 2019:
GBP26.39 million).
Summary and outlook
The period under review has been marked by significant progress
across our various clinical and research programmes. During the
period, and subsequent to it, we presented very encouraging
positive efficacy data from the Phase 2a patients in the ongoing US
Phase 1/2a clinical trial of our hRPC cell therapy candidate in
retinitis pigmentosa. We have taken advantage of these early
results to amend our clinical development strategy with the aim of
shortening the overall time to market approval application for this
therapeutic candidate.
During the period, we have instigated a number of protocol
amendments and other initiatives to accelerate patient recruitment
into the ongoing US Phase 2b clinical trial of our CTX cell therapy
candidate in chronic stroke disability. These amendments will
result in a greatly increased number of CTX-treated patients in the
study. Additionally, we have been very encouraged to see the
potential of our exosome and iPS cell technologies emerge further
during the period.
We are pleased to be working with Fosun Pharma as our partner
for China, following the signing of the exclusive licence agreement
for both our CTX and hRPC programmes in that territory during the
period. We hope to be able to announce further deals with
commercial third parties across our various programmes in the
months ahead.
Olav Hellebø
Chief Executive Officer
6 December 2019
Interim Financial Statements
Unaudited Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2019
Restated(1) Restated(1)
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ---- ------------ ------------ -----------
Revenue 4 6,030 27 49
Other operating income 6 64 2,401 2,671
Research and development costs (9,227) (7,543) (16,240)
General and administrative costs (2,575) (2,576) (4,779)
Operating loss (5,708) (7,691) (18,299)
Finance income 7 588 893 1,103
Finance expense 8 (22) (19) (39)
-------------------------------------- ---- ------------ ------------ -----------
Loss before income taxes (5,142) (6,817) (17,235)
Taxation 9 1,245 1,457 2,887
-------------------------------------- ---- ------------ ------------ -----------
Total comprehensive loss for
the period (3,897) (5,360) (14,348)
-------------------------------------- ---- ------------ ------------ -----------
Total comprehensive loss attributable
to equity owners
of the Company (3,897) (5,360) (14,348)
-------------------------------------- ---- ------------ ------------ -----------
Basic and diluted loss per share 10 (12.3p) (16.9p) (45.3p)
-------------------------------------- ---- ------------ ------------ -----------
(1) For further details on the restatement of the reported
results for IFRS 16 in the 6 months ended 30 September 2018 and the
year ended 31 March 2019, see notes 2 and 16.
Unaudited Consolidated Statement of Financial Position
as at 30 September 2019
Restated(1) Restated(1)
30 September 30 September 31 March
Note 2019 2018 2019
GBP'000 GBP'000 GBP'000
--------------------------------- ----- ------------ ------------- -----------
Assets
Non-current assets
Property, plant and equipment 557 727 632
Right-of-use-assets 11 654 707 704
Intangible assets 186 186 186
1,397 1,620 1,522
--------------------------------- ----- ------------ ------------- -----------
Current assets
Trade and other receivables 924 1,054 834
Corporation tax receivable 4,618 4,467 2,768
Investments - bank deposits 2,500 5,951 5,954
Cash and cash equivalents 18,771 24,722 20,432
--------------------------------- ----- ------------ ------------- -----------
26,813 36,194 29,988
--------------------------------- ----- ------------ ------------- -----------
Total assets 28,210 37,814 31,510
--------------------------------- ----- ------------ ------------- -----------
Equity
Equity attributable to owners of
the Company
Share capital 12 318 316 316
Share premium 12 97,888 97,704 97,704
Capital redemption reserve 40,294 40,294 40,294
Merger reserve 2,223 2,223 2,223
Accumulated losses (120,499) (108,781) (117,293)
--------------------------------- ----- ------------ ------------- -----------
Total equity 20,224 31,756 23,244
--------------------------------- ----- ------------ ------------- -----------
Liabilities
Current liabilities
Trade and other payables 7,038 5,046 7,261
Finance lease liability 154 108 141
--------------------------------- ----- ------------ ------------- -----------
7,192 5,154 7,402
--------------------------------- ----- ------------ ------------- -----------
Non-current liabilities
Finance lease liability 794 904 864
--------------------------------- ----- ------------ ------------- -----------
794 904 864
Total liabilities 7,986 6,058 8,266
--------------------------------- ----- ------------ ------------- -----------
Total equity and liabilities 28,210 37,814 31,510
--------------------------------- ----- ------------ ------------- -----------
(1) For further details on the restatement of the reported
results for IFRS 16 in the 6 months ended 30 September 2018 and the
year ended 31 March 2019, see notes 2 and 16.
Unaudited Consolidated Statement of Changes in Equity
for the six months ended 30 September 2019
Share Capital
Share premium redemption Merger Accumulated Total
capital account reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------- ------- ---------- -------- ----------- -------
As at 1 April 2018
(previously reported) 316 97,704 40,294 2,223 (103,868) 36,669
Change in accounting
policy(1) - - - - (117) (117)
----------------------- ------- ------- ---------- -------- ----------- -------
As at 1 April 2018
(restated) 316 97,704 40,294 2,223 (103,985) 36,552
Share-based credit - - - - 564 564
Loss for the period - - - - (5,360) (5,360)
----------------------- ------- ------- ---------- -------- ----------- -------
As at 30 September
2018 (restated) 316 97,704 40,294 2,223 (108,781) 31,756
Share-based credit - - - - 476 476
Loss for the period - - - - (8,988) (8,988)
----------------------- ------- ------- ---------- -------- ----------- -------
As at 31 March 2019
(restated) 316 97,704 40,294 2,223 (117,293) 23,244
Exercise of share
options 2 184 - - - 186
Share-based credit - - - - 691 691
Loss for the period - - - - (3,897) (3,897)
----------------------- ------- ------- ---------- -------- ----------- -------
As at 30 September
2019 318 97,888 40,294 2,223 (120,499) 20,224
----------------------- ------- ------- ---------- -------- ----------- -------
(1) For further details on the restatement of the reported
results for IFRS 16 in the 6 months ended 30 September 2018 and the
year ended 31 March 2019, see notes 2 and 16.
Unaudited Consolidated Statement of Cash Flows
for the six months ended 30 September 2019
Restated(1) Restated(1)
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
--------------------------------------- ---- ------------ ------------- -----------
Cash consumed by operations 13 (5,145) (7,535) (15,037)
Overseas taxes paid (605) - -
Income tax credit received - - 3,129
Interest paid (22) - (39)
--------------------------------------- ---- ------------ ------------- -----------
Cash outflow from operating activities (5,772) (7,535) (11,947)
--------------------------------------- ---- ------------ ------------- -----------
Cash flows from investing activities
Capital expenditure (81) (133) (239)
Interest received 185 188 342
--------------------------------------- ---- ------------ ------------- -----------
Net cash generated in investing
activities 104 55 103
--------------------------------------- ---- ------------ ------------- -----------
Cash flows from financing activities
Proceeds from exercise of employee
share options 186 - -
Bank deposits matured 3,878 4,297 4,359
Lease payments (69) (6) (45)
Lease finance 12 - 51
--------------------------------------- ---- ------------ ------------- -----------
Net cash generated by financing
activities 4,007 4,291 4,365
--------------------------------------- ---- ------------ ------------- -----------
Net decrease in cash and cash
equivalents 14 (1,661) (3,189) (7,479)
Cash and cash equivalents at
the start of period 20,432 27,911 27,911
--------------------------------------- ---- ------------ ------------- -----------
Cash and cash equivalents at
the end of period 15 18,771 24,722 20,432
--------------------------------------- ---- ------------ ------------- -----------
(1) For further details on the restatement of the reported
results for IFRS 16 in the 6 months ended 30 September 2018 and the
year ended 31 March 2019, see notes 2 and 16.
Notes to the interim financial statements
for the six months ended 30 September 2019
1. General information and basis of preparation
ReNeuron Group plc is an AIM listed company incorporated and
domiciled in the United Kingdom under the Companies Act 2006. The
Company's registered office and its principal place of business is
Pencoed Business Park, Pencoed, Bridgend CF35 5HY.
These Interim Financial Statements were prepared by the
Directors and approved for issue on 6 December 2019. They have not
been audited.
These Interim Financial Statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 March 2019 were
approved by the Board of Directors on 18 July 2019 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified and did not contain statements under 498
(2) or (3) of the Companies Act 2006 and did not contain any
emphasis of matter.
As permitted, these Interim Financial Statements have been
prepared in accordance with UK AIM rules and the IAS 34, 'Interim
financial reporting' as adopted by the European Union. They should
be read in conjunction with the Annual Financial Statements for the
year ended 31 March 2019, which have been prepared in accordance
with IFRS as adopted by the European Union.
2. Accounting policies
Following the signature of the licensing agreement with Fosun
Pharma in April 2019, the Group has expanded its revenue
recognition policy under IFRS 15 'Revenue from Contracts with
Customers', as set out below. Otherwise, the accounting policies
applied are consistent with those of the Annual Financial
Statements for the year ended 31 March 2019, as described in those
Annual Financial Statements. Where new standards or amendments to
existing standards have become effective during the year, with the
exception of IFRS 16 - Leasing, there has been no material impact
on the net assets or results of the Group.
Revenue
Revenue is accounted for in line with the principles of IFRS 15
'Revenue from Contracts with Customers'. It is measured at the fair
value of the consideration received or receivable, net of discounts
and sales-related taxes.
Licensing agreements may contain a number of elements and
provide for varying consideration terms, such as initial fees,
sales, development and regulatory milestones together with
sales-based royalties and similar payments. Such arrangements are
within the scope of IFRS 15 and are assessed under its five-step
model to determine revenue recognition. The distinct performance
obligations within the contract and the arrangement transaction
price are identified. The fair value of the arrangement transaction
price is allocated to the different performance obligations based
upon the relative stand-alone selling price of those obligations
together with the performance obligation activities to which the
terms of the payments specifically relate. The allocated
transaction price is recognised over the respective performance
period of each performance obligation.
Initial fees relating to the immediate transfer of intellectual
property are recognised as revenue upon signature of the
contract.
Development and regulatory approval milestone payments are
recognised as revenue when the respective milestones are
achieved.
Sales based royalty income and related milestone payments are
recognised in the period when the related sales occur or when the
relevant milestone is achieved.
Income which is related to on-going development activity or
technology transfer is recognised as the activity is undertaken, in
accordance with the contract.
IFRS 16 'Leases'
IFRS 16 'Leases' replaces IAS 17 'Leases' and IFRIC 4
'Determining whether an arrangement contains a lease', SIC-15
'Operating Leases-Incentives' and SIC 27 'Evaluating the Substance
of Transactions Involving the Legal Form of a Lease'. The standard
applies a single recognition and measurement approach for all
applicable leases under which the Group is the lessee.
The Group has lease contracts for property and equipment. Prior
to the adoption of IFRS 16, these were classified as operating
leases under IAS 17.and the lease payments were recognised as
rental costs in the Consolidated Income Statement. Any pre-payed
rent and accrued rent were recognised under prepayments and
accruals respectively.
The Group has applied IFRS 16 for the first time for the 6
months ended 30 September 2019 using the retrospective method.
Therefore, the Group has applied IFRS 16 at the date of initial
application as if it had already been effective at the commencement
date of existing lease contracts. Accordingly, the comparative
information in these Interim Financial Statements has been
restated. The impact of the implementation of IFRS 16 is described
in note 16 below.
At transition, the Group used the practical expedient allowing
IFRS 16 to be applied only to contracts that were previously
classified as leases under IAS 17 and IFRIC 4.
For leases where the Group is a lessee, IFRS 16 requires the
recognition of a right of use asset and a corresponding lease
liability at the lease commencement date.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of fixed lease payments, less any incentives
received. The lease payments are discounted at the rate implicit in
the lease.
Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to the Income Statement
over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each
period.
Right of use assets are initially measured at cost which
comprises the following:
-- the amount of the initial measurement of the lease liability;
-- any lease payments made at or before the commencement date,
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right of use assets are depreciated on a straight-line basis
over the shorter of the lease period or the useful economic life of
the asset.
Forward looking statements
Certain statements within this report are forward looking. The
expectations reflected in these statements are considered
reasonable. However, no assurance can be given that they are
correct. As these statements involve risks and uncertainties, the
actual results may differ materially from those expressed or
implied by these statements.
3. Going concern
The Group is expected to incur significant further costs as it
continues to develop its therapies and technologies through
clinical development. The operations of the Group are currently
being financed from funds that have been raised from share
placings, commercial partnerships and grants and the Directors are
currently considering a number of options for further funding of
the Company's ongoing clinical programmes.
The Group actively seeks business development and fundraising
opportunities in order to support its ongoing development
programmes. The Board places considerable emphasis on communication
with shareholders, potential investors and other commercial
organisations in order to maximise the chances of success in
exploiting these opportunities. However, there is a risk that the
Group may not be able raise sufficient funds as needed which could
have a negative impact on its financial condition and ability to
pursue all of its ongoing development programmes.
After making enquiries, the Directors expect that the Group's
current financial resources can, where appropriate, be managed such
that they will be sufficient to support the business for at least
the next 12 months from the date of this announcement. The Group
therefore continues to adopt the going concern basis in the
preparation of these financial statements.
4. Revenue
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Royalty income 30 27 49
Initial licence fee 6,000 - -
-------------------- ------------ ------------- -----------
6,030 27 49
-------------------- ------------ ------------- -----------
On 9 April 2019, ReNeuron Limited signed an exclusive licensing
agreement ("the Agreement") with Shanghai Fosun Pharmaceutical
Development Co. Ltd ("Fosun Pharma"), a subsidiary of Shanghai
Fosun Pharmaceutical (Group) Co. Ltd. for the development,
manufacture and commercialisation of ReNeuron's CTX and hRPC cell
therapy programmes ("the Licensed Products") in the People's
Republic of China ("China").
Under the terms of the Agreement, Fosun Pharma will fully fund
the development of ReNeuron's CTX and hRPC cell therapy programmes
in China including clinical development and subsequent
commercialisation activities. Fosun Pharma has also been granted
rights to manufacture the Licensed Products in China. ReNeuron
retains the rights to the Licensed Products in the rest of the
world.
In May 2019, ReNeuron received an initial licensing fee of
GBP6.00 million (before withholding tax). Only the initial
licensing fee has been included in the transaction price. It has
been determined that the development, regulatory and sales
milestones should be included in the transaction price when each
performance obligation is met.
Under the terms of the Agreement, ReNeuron is entitled to
further payments based upon the achievement of development,
regulatory and sales milestones. The Agreement also entitles
ReNeuron to royalty payments based upon future net sales of the
Licensed Products in China.
5. Segment information
The Group has identified the Chief Executive Officer as the
Chief Operating Decision Maker (CODM). The CODM manages the
business as one segment, the development of cell-based therapies.
Since this is the only reporting segment, no further information is
included. The information used internally by the CODM is the same
as that disclosed in the Interim Financial Statements. The Group's
revenue derives wholly from assets located in the United Kingdom.
Revenue is analysed in note 4 above. Analysed by location of
customer all royalty income is derived from the United States of
America. The initial license fee is derived from the People's
Republic of China.
6. Other operating income
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
------------- ------------- -----------
Government grants 64 508 778
Exclusivity fee - 1,893 1,893
64 2,401 2,671
------------------- ------------- ------------- -----------
7. Finance income
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
------------- ------------- -----------
Interest received 164 146 291
Foreign exchange gains 424 747 812
588 893 1,103
------------------------ ------------- ------------- -----------
8. Finance expense
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2018 2017 2018
GBP'000 GBP'000 GBP'000
------------- ------------- -----------
Finance lease interest 22 19 39
======================== ============= ============= ===========
9. Taxation
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
----------------- ------------ ------------- -----------
R & D tax credit 1,850 1,457 2,887
Foreign taxation (605) - -
1,245 1,457 2,887
----------------- ------------ ------------- -----------
10. Basic and diluted loss per share
The basic and diluted loss per share is calculated by dividing
the loss for the financial period of GBP3,897,000 (September 2018:
GBP5,360,000, March 2019: GBP14,348,000) by 31,789,724 shares
(September 2018 and March 2019: 31,646,186 shares), being the
weighted average number of ordinary 1p shares in issue during the
period. Potential ordinary shares are not treated as dilutive as
the entity is loss making.
11. Right-of-use-asset
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------- ---------
At beginning of the period 704 755 755
Additions 12 - 51
Depreciation charge (62) (48) (102)
At end of the period 654 707 704
--------------------------- ------------ ------------- ---------
The net book value of the underlying assets is as follows:
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
------------------------------ ------------ ------------- ---------
Land and buildings 612 707 659
Computer and office equipment 42 - 45
At end of the period 654 707 704
------------------------------ ------------ ------------- ---------
12. Share capital and share premium
Number of Share Share Total
shares capital premium
GBP'000 GBP'000 GBP'000
---------------------------- ---------- --------- -------- -------
As at 30 September 2018 and
1 April 2019 31,646,186 316 97,704 98,020
Share options exercised 186,084 2 184 186
As at 30 September 2019 31,832,270 318 97,888 98,206
---------------------------- ---------- --------- -------- -------
13. Cash consumed by operations
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------- -----------
Loss before income tax (5,142) (6,817) (17,235)
Adjustment for:
Finance income (588) (893) (1,103)
Finance expense 22 19 39
Depreciation of tangible fixed
assets 206 185 384
Share-based payment charge 691 564 1,040
Changes in working capital:
Receivables (110) 186 397
Payables (224) (779) 1,441
--------------------------------- ------------ ------------- -----------
Cash consumed by operations (5,145) (7,535) (15,037)
--------------------------------- ------------ ------------- -----------
14. Reconciliation of net cash flow to movement in net funds
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------ ------------- -----------
Decrease in cash and cash equivalents (1,661) (3,189) (7,479)
Non-cash inflow from increase
in finance lease liability (12) - (51)
Finance lease repayments 91 6 84
Finance lease interest (22) (19) (39)
Net funds at start of period 19,427 26,912 26,912
Net funds at end of period 17,823 23,710 19,427
-------------------------------------- ------------ ------------- -----------
15. Analysis of net funds
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------- -----------
Cash and cash equivalents 18,771 24,722 20,432
Finance lease liabilities (948) (1,012) (1,005)
Net funds 17,823 23,710 19,427
-------------------------- ------------ ------------- -----------
16. Implementation of IFRS 16
The Group has adopted the fully retrospective approach to
transition for IFRS 16 and accordingly, the opening consolidated
balance sheet at 1 April 2018 and the comparative consolidated
balance sheets at 30 September 2018 and 31 March 2019 have been
restated. Details are set out below.
Impact on the Consolidated Income Statement
The implementation of IFRS 16 has resulted in the following
changes to the Consolidated Income Statement:
Six months
Year ended ended
31 March 30 September
2019 2018
GBP'000 GBP'000
--------------------------------- ------------ -------------
Result as previously stated (14,292) (5,325)
Research and development costs
- lease payment 15 -
General and administration
costs:
------------ -------------
Rent charged 70 32
Depreciation of right of use
asset (102) (48)
------------
(32) (16)
Finance cost - lease interest (39) (19)
Result adjusted for IFRS 16 (14,348) (5,360)
---------------------------------- ------------ -------------
The adjustments arise from the replacement of the operating
lease rentals charged under IAS 17, with charges in respect of
depreciation of the right of use asset and also finance lease
interest.
Impact on the Consolidated Statement of Financial Position
Upon adoption of IFRS 16, the Group recognised right-of-use
assets and lease liabilities for lease payments on the discounted
future obligations.
The impact of IFRS 16 on the relevant lines in the Consolidated
Statement of Financial Position as at 31 March 2019, 30 September
2018 and 1 April 2018 is illustrated below:
31 March 30 September 1 April
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------- -------- ------------- --------
Assets
Non-current assets
Right-of-use-asset 704 707 755
704 707 755
------------------------------------- -------- ------------- --------
Current assets
Trade and other receivables (41) (3) (3)
(41) (3) (3)
------------------------------------- -------- ------------- --------
Total assets 663 704 752
------------------------------------- -------- ------------- --------
Equity
Equity attributable to owners of the
Company
Accumulated losses (172) (152) (117)
------------------------------------- -------- ------------- --------
Total equity (172) (152) (117)
------------------------------------- -------- ------------- --------
Liabilities
Current liabilities
Trade and other payables (170) (156) (130)
Lease liabilities 141 108 31
------------------------------------- -------- ------------- --------
(29) (48) (99)
------------------------------------- -------- ------------- --------
Non-current liabilities
Lease liabilities 864 904 968
------------------------------------- -------- ------------- --------
864 904 968
------------------------------------- -------- ------------- --------
Total liabilities 835 856 869
------------------------------------- -------- ------------- --------
Total equity and liabilities 663 704 752
------------------------------------- -------- ------------- --------
The above adjustments to the Consolidated Statement of Financial
Position reflect:
-- The recognition of a right-of-use asset;
-- The writing back of prepaid rent;
-- The writing back of accrued lease incentives;
-- The creation of a lease creditor, initially corresponding to the right-of-use asset; and
-- A reduction in reserves representing the cumulative impact of the above.
Impact on the Consolidated Cash Flow Statement
The adoption of IFRS 16 has no impact upon the net cash flows of
the Group. However, the presentation of the Consolidated Statement
of Cash flows is amended because lease payments that were
previously recognised within cash consumed by operations are now
split between the interest element, which remains within cash
consumed by operations and the capital element that is now
presented within cash flows from financing activities as a
reduction in the lease creditor. This is illustrated below:
Six months
Year ended ended
31 March 30 September
2019 2018
GBP'000 GBP'000
Cash consumed by operations 84 6
Interest paid (39) -
Cash consumed by operations 45 6
Cash flows from investing activities
Capital expenditure (51) -
---------------------------------------- ------------ -------------
Cash outflow from investing
activities (51) -
---------------------------------------- ------------ -------------
Cash flows from financing activities
Repayment of lease obligations (45) (6)
Lease finance 51 -
---------------------------------------- ------------ -------------
Cash inflow/(outflow) from financing
activities 6 (6)
---------------------------------------- ------------ -------------
Net movement in cash and cash - -
equivalents
---------------------------------------- ------------ -------------
The above adjustments reflect:
-- The effect on working capital of adjustments to accruals and
prepayments arising from the implementation of IFRS 16;
-- The split of lease payments into interest and capital elements as described above; and
-- The creation during the year ended 31 March 2019 of a right
of-use asset and a corresponding lease creditor of GBP51,000 in
respect of IT equipment acquired under an arrangement previously
treated as an operating lease under IAS 17.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FSEFWIFUSEIE
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