ReNeuron Group plc (RENE) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the ReNeuron Group plc investor presentation for the preliminary results for the year ended 31st of March 2021. [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. These will be available via your Investor Meet Company dashboard and you'll be notified once they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Olav Hellebo, CEO; Dr. Richard Beckman, CMO; John Hawkins, Financial Controller; and Shaun Stapleton, VP of Regulatory Affairs. Good afternoon to you all.

Thank you very much. Good afternoon. And I answered yes on that poll question, and I think there will be a lot of people saying that. Before we dive into the results of the last financial year, I just wanted to start with the great news of the day for us, which is that we're back on track with our clinical trial in retinitis pigmentosa. So it probably gets a bit buried on all the news from our results press release, but that's the latest news, and we're very happy to be back on track with that program. So with that, I'll lead you through the presentation together with the team. And we have some pre-submitted questions that we will get to in the end, and then I will take the live questions as well. So just as a warm up for the people that don't know us that well. So we're obviously a cell therapy company based in the U.K. and in the U.S. We work mainly with retinal and neural stem cell therapy platforms. Everything we do is allogeneic, that means it's off-the-shelf with a large commercial potential. The lead program is in retinitis pigmentosa, and Rick will take you through that in much more detail. We have very, very good Phase II data already in hand for that program. We have decided to expand on that clinical trial. And that expansion study is ongoing, so we'll get more data on that in a second. The exosome program is ongoing in -- mainly in collaborations. We have a couple of -- sorry, mainly in collaborations with large biotechs/pharmas. We have a couple of collaborations also with academic institutions. And we'll go into that in a bit more detail. And of course, we did a fundraise at the tail end of last year that garnered GBP 17.5 million. So that has given us the opportunity to deliver on a very exciting program. There's a lot happening over the next 6 months for ReNeuron and it's great to have a good cash cushion to deliver all of that. So these are the platforms that we're working on. Human retinal progenitor cells are the lead program. As you know, we are delivering this subretinally. And we have a cryopreserved formulation, which is very important because it not only allows us to be able to create bigger batches but we can ship anywhere in the world in a cryopreserved formulation. These are shipped in shippers -- cryoshippers, kind of like scuba tanks that have 10 days of dating, so you can really ship it anywhere in the world for a clinical trial and commercially. It can get stuck in customs for a couple of days, and it doesn't matter. And that just makes life a lot easier. It is not an easy thing to do. And so we're very happy that we have sold that. The data we have so far is positive in RP. There are obviously other indications we can pursue but RP is what we're focusing on right now. We have a partner in China for this program. And other than that, we are unencumbered. So we have a lot of opportunity going forward there. Exosomes are coming from our neural stem cell. So we have obviously GMP stem cell line in CTX. So these exosomes have been in man already and giving us a great starting point. We've proven that we can load them with sRNAs, mRNAs and proteins. We've shown that we can get them across the blood brain barrier, which is not an easy task, and there's a lot of demand for that. And we're working with them as really a drug delivery vehicle for gene therapies for -- with other companies. The iPSC platform is a newer one, and we haven't talked that much about it yet, but I have very much want for the future. So this is -- these are pluripotent stem cells rather than multipotent, meaning that they can make -- we can make any cell really from an iPSC. We can engineer them. And when we do that, we're preserving the immortalization that we had as a starting point. And the immortalization means that we can go to much higher doublings, meaning much higher quantities when we produce them. And that's one of the big issues for other companies in that field. It gives us the potential to create such wonderful things as androgenetic CAR-Ts and we're also working on pancreatic islet cells for diabetes. Last, the CTX program. So we have, as you know, stopped the program that we had ongoing with CTX last year, and we're now pursuing that purely with partners. We obviously have Fosun Pharma in China for that. So in terms of pipeline, I'm going to flash this up for you. The next milestones on the right is kind of -- this is a good chart and -- kind of to keep track on where things are going for hRPCs, very much about finishing the expansion study, and we'll talk more about that. And obviously, subject to the data supporting that, we will go in then to a pivotal study late next year, so second half 2022 is the starting time for that. That will run about 2 years for recruitment and garnering the 12-month data for that study. Exosomes is all about working with these collaborations, getting the right proof-of-concept data that will then lead to a licensing deal. In all these instances, we have collaborators who obviously would like to have a new program, and they are much, much larger than us. So they're pretty clear that they will take it forward otherwise they would not come into this collaboration in the first place. For iPSC, the next step is about proving that we have a new platform here. So more on that in the near future. And CTX, I mentioned, China is working on it in -- sorry, Fosun is working on that in China, and we're looking for other partners outside China. So that takes me to the highlights for the last financial year. So for the retinal program, as I mentioned, we've observed clear efficacy signals over those 12 months in that study. And we decided to expand the study with an additional 9 subjects. We made a number of protocol changes. And maybe the most important one of those is that we have doubled the dose from 1 million to 2 million cells, hoping that we can see even better efficacy going forward. What we've seen is that some patients have really excellent efficacy and some patients have some efficacy, but much less. We'd like to see doubling the dose is going to push those people that are on the lower end, all the way up to the high end. The study was suspended temporarily because we had a serious adverse event due to what we think was a bacterial infection. We've done all the investigation around that and be able to restart the study. It's restarted in the U.S. and in Europe. There is a regulatory step, which is that we need to file an application in the U.K. and Spain to reopen. I believe we filed that one in the U.K. yesterday, and we will file Spain tomorrow, so that's very much imminent to restart that in those countries as well. For exosomes, last year, we signed a number of agreements with major companies. What's great about this is that it generates data for us without us actually having to pay for it. So these companies send us their targets, their payload, let's say, and we work loading them into the exosomes and then we send them back to the partner for them to test in the lab and in animal studies. It's not just a one-way street. There's a lot of back-and-forth in those kind of collaborations where we're trying to improve and make it as good as possible. We already have data from those. We've shown that we have efficient loading and functional delivery of exosomes and now we're working on getting the efficacy rates higher and higher. In -- for the iPSC program, we'll come back to that, but we have created new cell lines, as we already alluded to, both for in cancer as well as diabetes. A couple of other highlights, more operational. For the last financial year for CTX, we decided to stop the program that we were running in order to focus our resources on the ophthalmology and the exosome side. And Fosun is continuing that program in China. In terms of Board, we announced last week that Iain Ross has been appointed Chairman and we are absolutely delighted to have Iain Ross around. He's, as you know, very, very experienced operator when it comes to biotech in the U.K. We're really delighted that he accepted the offer to join us as Chairman. In terms of CFO, we're in very good hands with John Hawkins, our Controller, but we are recruiting a new CFO and that's going very well. But in the meantime, thank you, John, in doing a great job. Going on to the financials, and I'm going to hand the word -- hand over to John in a second. I mentioned already the fund raise for last year. You can see here that the decision to change our priorities has resulted in a big saving in terms of cost and we see that already in this financial year that's passed. And we're sitting on a very healthy bank balance, which is obviously helpful so that we can deliver on all of these opportunities that we have in front of us. And with that, I'm going to hand over to John.

Yes. Hi there everyone. Thanks, Olav. Yes, I'm pleased to be able to take you through a summary of the results for the year to March 2021. I'll take you through the items line by line. I won't go into too much detail, but there is a lot more detail in the preliminary announcement that was released this morning. So as you can see there, the revenues for 2021 are materially lower than they were in 2020. However, it should be noted that 2020 included a GBP 6 million upfront license fee from Fosun Pharma. So the GBP 0.3 million this year is purely royalties and also income from research collaborations and no milestones included in that figure for the year, hence, the reduction. And as Olav just mentioned, in relation to the costs, you can see there's significant reduction across both research and development and also general and admin, a total reduction in all of just over GBP 7 million. And that reduction does follow the review of our sort of programs and also the associated resource linked to those programs. So that then takes us to an operating loss where the actual reduction in that loss isn't as great as the costs would suggest because of the income. But nonetheless, still a reduced operating loss for the period. In terms of the net finance expense and income, I probably ought to explain what that is because that does show a material swing from one year to the next. The main contributor to that line is foreign exchange. So we hold our cash in both dollars and euros to cover our spend in those currencies. As you can imagine, a lot of our spend is in U.S. dollars because the RP study has been taking place over in the U.S. until recently. So we try to hold cash in the foreign currencies to cover around about 12 months' worth of spend. Now in this past year, sterling strengthened against those currencies. Hence, we suffered a foreign exchange loss. And that was the opposite in the prior year where we actually had a foreign exchange gain. Just below that net finance income, you can see the line taxation. Being a research and development company, we do benefit from being able to claim R&D tax credits. It's a nice cash income stream for us. And the amount you received or we're due to receive for this year just gone is a little over GBP 2 million. Last year's figure of GBP 2.4 million actually also included a GBP 0.6 million of overseas tax. So the underlying R&D tax credit in 2020 was actually GBP 3 million. So the reduction this year is linked to the reduction in the research and development costs as you would expect. So then taking us to the cash. So you can see we've got a net increase in cash this year of just under GBP 10 million. That does obviously include the GBP 16.2 million net of cash received from our December fund raise. If we take that cash out of that movement, and we had a burn of just over GBP 6 million, which is significantly lower than the burn seen in the prior year of just under GBP 14 million. So that's left the company in a very strong cash position at the year-end of GBP 22 million. This provides us with a runway of at least 12 months from today, which should enable us to reach some very important milestones across our programs over that period. So we are in a very healthy position. And that brings me to the end of my chat around the numbers. So I'd now like to hand you over to Rick, who will discuss our lead program. Thank you very much.

Thanks, John. So let's talk about retinitis pigmentosa and the unmet medical need. RP is an inherited retinal disease. It's a devastating disease. It probably affects 1 in 4,000 worldwide. In the U.S., that's about 100,000 people. And in the U.K. and the EU about another 150,000 people. What's bad about this disease is it starts early maybe in the teens or early 20s, and the patients start to notice that they're losing their night vision. And then as it progresses, they start to lose all their peripheral vision as their rods degenerate, the rod photoreceptors, and they get something known as tunnel vision, which you can see in the slide. But the worst thing that this disease does is after that all that has gone on, it then attacks their central vision and they lose the ability to read and to navigate and to drive and that happens around the time when they're at the peaks of their lives. So they've known that they have this devastating disease for years and years. And up until very recently, there was no hope for any type of cure. You may have heard about Luxturna, which has just been approved in the last 2 to 3 years as the first gene therapy for retinitis pigmentosa. There's about 100 different genes that are -- that we've discovered that affects and results in this condition. And Luxturna probably treats about 1% to 2% of those patients. There's multiple companies that are looking at different gene therapies, and each of those would address low single digits. And so we're very, very happy that what we're doing is a retinal progenitor cell therapy that we believe is agnostic to the genetic type. And therefore, we believe that we can provide a potential cure for patients who have all different types of genetic mutations, which opens up the market significantly, but it also allows us to help the lives of many more individuals. So just exactly what are these human retinal progenitor cells? These are stem cells that have already differentiated down the pathway of becoming the neural elements of the retina. And so these cells can become the rods and cones, which are called the photoreceptors, and they can also become some of the structural components and connections necessary for sight. We've shown in animal models that these cells can differentiate in the retina and become new photoreceptors who regenerate photoreceptors and make the connections. We've also shown that by integrating in the animal model that they could become a durable source of trophic support for dysfunctional retinal tissue. We believe that this technology can address a wide variety of retinal conditions. However, we're working right now on retinitis pigmentosa. We have orphan drug designation in the U.S. and in the EU and U.K., and we also have Fast Track designation in the United States. The cells that we're using are the results of a research collaboration between Schepens Eye Research Institute, which is part of Harvard in Boston and University College in London. Our proprietary technology and the experience of ReNeuron in working in stem cell therapies has allowed us to make the step of developing a cryopreserved formulation, which Olav alluded to before, allows us to treat patients at the site where they're being seen by their physician as opposed to having to transport patients all across the country or across the globe to a center, which is treating patients with something that is not cryopreserved and only has a shelf life of about 16 hours. We believe there's a large commercial potential on the basis of this cryopreserve formulation and also because our mechanism of action is independent of the genetic type involved. So our clinical development started about 4 years ago at Mass Eye & Ear Infirmary in Boston, where we did a single ascending dose study for our Phase I. We started with a 250,000 cell dose of fresh cells. We went to a 500,000 cell dose of fresh cells. And then we generated a cryopreserved version and we went to the 1 million cell level. These were patients that didn't have any real visual potential and such it was a safety study. But what we did is we demonstrated adequate safety to move on into patients that have better visual potential. And that's what the Phase IIa study started off. We've treated 10 subjects in that study. These are patients with better visual potential. This is with the 1 million cryopreserved cell dose. And we've shown a very good safety profile and we've shown a very early but strong signal of efficacy, and I'll show you a little bit more about that. The IIa study, we expanded into an additional site, the Retinal Research Institute in Phoenix, in addition to Mass Eye & Ear Infirmary. This is showing the injection technique, and I'm not sure if I can get that -- does that -- if not, what you're doing is you're actually looking at a picture inside the eye and that little brown cannula is injecting cells underneath the retina. We believe that the anatomic placement of the cells underneath the retina is very important because cells being placed in that area can therefore integrate into the retinal structure itself and can do 2 different things. One, as I mentioned before, they can differentiate into new photoreceptor cells and make the connections necessary for sight; and the other thing that they can do is they can serve as a durable reservoir of trophic support or nutritive to support to the cells that are degenerating there. This is showing you the data from 1 year of those first 10 subjects. You'll notice that we don't have a complete data set. COVID has made it difficult for patients to return to some of their appointments. However, what I'm going to show you in this data is very important. If you look at the light blue line on the graph, that represents the mean change in visual acuity for the treated group across the different time points. Down below that, the dark blue line represents the mean change in visual acuity in the untreated patients as a comparator. And what you can see is those lines separate very early and the treated patients maintain between an 8 and 10 letter gain in visual acuity out of 1 year. A 10-letter gain is a visually and clinically significant improvement in vision, especially in a disease of retinitis pigmentosa, where left alone, patients will continue to lose vision over time. And we believe that this is a very important thing. What you're looking at right here at day 365, I'm going to show you in a little bit more detail on the next slide, and there's 2 real take-home points from this slide. One is that the mean change in visual acuity at 1 year, we believe, is an approvable endpoint in the U.S. and in the EU and in the U.K. for a treatment for retinitis pigmentosa. The second point, as you can see on the right, some of the patients have had a very remarkable response. And you can see on the left that some of them have had a lesser response. And so in drug development, when you have no dose-limiting toxicity and you have a variability in the clinical response, the first question that you want to answer is what would happen if I increase the dose. So instead of going for a regulatory approval pathway on the basis of the 1 million cell dose, we decided to stop and go into another cohort of patients where we actually doubled the dose. And so we designed the Phase IIa extension study, which I'll talk about a little bit now. That's the study that's ongoing right now. We went from 1 million to 2 million cells. We also added microperimetry or a measure of retinal sensitivity as an additional way of looking at efficacy. Visual acuity is well established as a functional measure of efficacy, but the sensitivity of the retina at each different point has been shown by Nightstar to be a very valid method of showing functional improvements in efficacy. And so we added that as an additional endpoint and we select out patients that are capable of doing that test. We've also done a modification of the surgical technique, which is important. Initially, we decided that it was appropriate to inject the cells right underneath the functioning retina. That can have a double edge to the sword because you're actually elevating the retina away from its nutritive blood supply. So what we decided to do in this is we now do injections that are carefully planned by a committee of our investigators before surgery to be able to put the cells in an area adjacent to the functioning tissue with the idea of not exactly lifting off the functioning tissue. We added additional sites because we wanted to expand into the U.K. and into Europe. We added Oxford Eye Hospital with Dr. Professor Robert MacLaren, we added an additional U.S. site, Casey Eye Institute, and we added a site in the EU in Barcelona, Spain, with Dr. Jordi Mones as the investigator. So where are we right now? The next steps is to continue with recruitment in the Phase IIa extension study. As Olav mentioned, we had to temporarily suspend enrollment because we had an unfortunate incidence of the severe bacterial infection. There is a known incidence of those type of infections in any type of biosurgery. It doesn't make it easier to take. However, our Data Safety Monitoring Board and a meeting -- multiple meetings of our investigators felt confident that this was what the cause was and they have given approval for us to move forward. We've already started up, enrollment is able to be done in the United States. And as Olav mentioned, amendments are being submitted this week to allow us to restart the study. The good news is we still feel that we're on track to have data on these 9 patients by the end of this year. We hope to be presenting at a major ophthalmic meeting sometime this fall. And we look forward to moving on into a further clinical trial, which we believe will be a single study. That would be a pivotal clinical trial, the design of which we've already discussed with the FDA and it's well-known to us. In this type of surgery where you actually inject cells under the retina, you really can't do a placebo group because it's too invasive to have to inject underneath the retina. You're not going to want to go into somebody's eye and inject saline. So the way that these studies are done is you have 3 different groups. You have an untreated control group, you have a low dose group, which is ideally designed to be a dose that's probably lower than you would want as your clinical dose, and then you have your high dose, which is probably the dose that you're going to achieve the results with and this is a standard design, probably about 100 patients or so. And we hope to be able to kick off that study by the end of 2022. And the last brief slide just to show you that other people are playing in the sandbox that we're in right now, inherited retinal diseases. The only really direct competitor that we have in using human retinal progenitor cells is a company called jCyte. However, there's a couple of notable differences between us and jCyte. While they are injecting human retinal progenitor cells, they do it into the vitreous, into the center of the eye and therefore, they have no ability to have cells integrate into the tissues of the retina and to regenerate and have differentiated new neural photoreceptors. The other thing is jCyte does not have the capability of generating a cryopreserved formulation. And so all of the patients that have been treated in their clinical trials have to fly across the country because they have about a 16-hour leash to get their fresh formulation of cells. Looking at the other companies out here, you have Spark Therapeutics, which we know has been very successful and was acquired by Roche a couple of years ago for a very large amount of money. They also have other gene therapy programs. Nightstar was acquired by Biogen, they're working in the same space. And then you have AGCT and MeiraGTx, which are both going after single mutation diseases retinitis pigmentosa. And then ProQR is another very interesting company, which instead of doing gene therapy, they're actually using RNA therapy to fix genetic defects. And we hope that all these people are successful. I think that the big point here is that aside from jCyte, they're going after specific genetic mutations, and we believe that the real answer is to be agnostic to genetic cost. I think that's all I have, and I'll turn that back over to Olav.

Thank you, Rick. Yes, I wanted to spend a very short time on the exosome program since really the retinal program is the most important. But the kind of quick recap on exosome. So these are naturally occurring delivery system. So these are nanoparticles or nano vesicles, and we hijack them as a delivery system and it's naturally occurring. So there's a lot of research going into using exosomes that way, and it's a pretty hot area for research. We are lucky that we've been working on this for a while. We've seen favorable distribution across the Blood Brain Barrier, but we are able to engineer them to target any tissue in the body. We have proven that we can load them. We've proven that they're stable, and we can have consistent high yields. We have very good analytics behind it, which is more and more important here as the regulators get involved. The -- I mentioned in the introduction that we're working with collaborators with very significant programs. And we have co-development or co-rights for any program that we develop here. So obviously, the payload and the truck together creates a new entity, and we own that entity, 50-50. If we show a proof of concept here, our expectation is that the other company will license our rights so that they can take it forward into clinical development. And in all cases, they are much, much larger than us and they wouldn't start these programs if that wasn't their intention. I wanted to share with you, though, some of the potential value realization that we can take advantage of here. So on the right-hand side of that slide, you see the 4 recent exosome deals. So Codiak and Evox are the 2 leading companies in the exosome field, they're all fully dedicated to exosomes, and they both signed a couple of very significant deals each. So just to give you something to kind of compare to. And also for our retinal program, Rick mentioned jCyte. jCyte is a little bit ahead of us. They -- and that they're in the IIb study, and they have delivered some data, and the data is strong enough for the -- of the size that you can see here. They got $50 million -- or rather $62 million upfront, and that is for non-U.S. rights only. U.S. -- the value of the U.S. rights is much higher than the international rights. And I know Santen wanted everything, but jCyte did not want to get rid of the U.S. rights. So I think it's a very credible deal for a company that we're quite similar to in many ways. So we know what we're working towards. So I wanted to summarize the opportunity before we go into the Q&A. So yes, there are absolutely major value creation opportunities for us for the coming year, both hRPC and for the research platform. And we're well-funded that we're able to actually get there and deliver on this. The exosome program is being advanced in a partnering fashion, while obviously hRPC we're running ourselves. The data -- we'll have more data later in the year, but the data we have already is -- compares very, very well to what else is out there. So with that, I think we will hand over to the operator for the questions that have been sent in advance. And then when we're done with that, we will go to the live Q&A.

Fantastic. Thank you, indeed. Olav, Rick, John, thank you very much for the presentation. [Operator Instructions] But just while the company take a few moments to review those investor questions submitted already, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our Investor dashboard on the Investor Meet Company platform. I'd also like to remind you your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations. We have received a number of presubmitted questions, you said Olav. And perhaps the first one I can address to you if that's okay. It reads as follows, "Where are Fosun with their CTX trial?"

Thank you very much. Yes, Fosun is concentrating on tech transfer or manufacturing for both CTX and hRPC. So that's what they're working on. They are very much committed to CTX for China even if we have stopped the program in the U.S., so they are very much committed to that program. Stroke is a huge commercial opportunity in China. That's a very large indication there, maybe due to very high smoking rates. So Fosun is very much behind that program.

Fantastic. The next one, if I could address to Dr. Beckman, "Does dose amount affect the cost of an injection? And is the delivery dose expected to change over time?"

So the answer to that question is that currently, the vials that we manufacture for the clinical trial hold enough for either 1 million or 2 million. So there's been no effect on the dose volume in terms of the cost. As we determine exactly what the dose that we're going to go for approval on, then we will probably modify things to make it the most cost-effective way of doing that. And then the question is, is the dose going to change? I don't know. It's possible that we might end up going with the 1 million cell dose because as I showed before, we think that the efficacy is at the level that would render an approval possible. However, we still don't have the data yet on the 2 million cell dose and a whole judgment into that time.