ReNeuron Group plc (RENE) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the ReNeuron Group plc interim results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it 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 we'll notify you by email when it's ready for your review. I'd also like to remind you that today's presentation is being recorded. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Olav Hellebo, CEO; Catherine Isted, CFO; and Stefano Pluchino, CSO. Good afternoon to you.

Thank you very much. Welcome, everyone. I look forward to spending the next hour or so with you. Let's jump into the presentation. There will be some opportunity for Q&A later on. So welcome to the interim results for the 6 months from April through September for ReNeuron. Let me introduce to you, Catherine Isted, our new Chief Financial Officer. She joined us in the middle of October from Oxford Biomedica, where she was in the finance leadership team heading up Corporate Development and Investor Relations. And I'll also introduce Professor Stefano Pluchino, our CSO, who joined us in May. So 6 months in already. This is the first time that he's doing one of these calls, so I'll introduce him today. He is a professor of regenerative neuroimmunology at the University of Cambridge and world-leading expert on exosomes, which comes in very handy for us. So with that, a quick disclaimer on -- since we are a public company. So I'll leave it there for your reading. And then we'll jump into a quick overview of ReNeuron. So we have deep experience in the areas of stem cells and exosomes. Our most advanced program is in the retinitis pigmentosa where we expect data from the extension study in late Q1 next year. We are expanding our exosomes platform. We have now 7 ongoing collaborations with Big pharma and significant biotechs as well as academic institutions. Our financial foundations are solid. We have GBP 17.4 million in cash. So that secures us at least a 12-month runway from today. Our strategy is to leverage our expertise for both products and technology platforms. hRPC is exciting as we're talking here about an off-the-shelf medicine with the potential to reach a broad patient population, and we'll get much more into this later. There's a lot of value in our platform technologies, especially true for exosomes, where we have significantly grown the number of ongoing collaborations. And I would like to highlight that we are the only company in the exosome space that matched exosomes with the target tissue item. And we will come into much more details on that as well later on. But before we get there, let's have a look at the highlights for the period. For hRPC, we have continued to progress the Phase IIa extension study. After a temporary suspension enrollment was restarted in all geographies in October, we expect enrollment to be completed by the end of the year with data in late Q1, as I mentioned. The exosomes platform is expanding. We have 7 collaborations as I mentioned. We have achieved proof-of-concept showing that our exosomes can deliver a therapeutic protein to the brain. This opens up a number of important neurological diseases as potential therapeutic targets. And Stefano will share that data with us a little bit later. We expect to deliver further proof-of-concept data from our existing collaborations as well in the year ahead. For the iPSC platform, we have initiated a collaboration with Dr. Claire Roddie at UCL on generating CAR-Ts and NK cells from our iPSCs. In another UCL collaboration with James Philips, our iPSCs have already been differentiated into Schwann cells, and they have a potential application in repairing a peripheral nerve damage. We've made important changes to our Board and management teams as well that I'm very pleased with. Iain Ross has joined us as Chairman; Barbara Staehelin as Senior Independent Director and Head of the Audit Committee. And I already introduced our new CFO to you. But I'd like to add to what I said earlier that I'm glad to have someone of Catherine's caliber on the senior management team. She possesses a great combination of scientific and financial knowledge. There are not many accountants who have worked as bench scientists. So we're very happy to have her on the team. So over to Catherine, for the financials.

Thanks very much, Olav, that's very kind. First, I just want to say what an exciting time it is to be joining a company such as ReNeuron. In terms of the retinitis pigmentosa program moving ahead, but I think particularly also on the exosomes program, which we will be coming into a lot of more detail later on. It really is in a right time, right place for this technology as we see a growing market in exosomes. And I really see I believe that ReNeuron is leading the way. So on to the financial highlights for the first half of 2021. Revenue for period was GBP 58,000 relating to royalty income. The loss for the period was GBP 5.2 million. So that was lower than last year of GBP 7.1 million. This is driven by lower costs. On the cost front, R&D was GBP 4.3 million, a decline of GBP 1.6 million compared to the prior period. This was based on the decision previously to not progress the stroke disability program internally and instead focus resources on the company's RP program and our exosomes and iPSC platforms. G&A also declined in the period slightly. We had an increased net cash used in operations of GBP 4.6 million, but that is more reflecting the lower figure in the prior year, where we actually received the 2019 tax credit in this particular period. So hence, the cash -- we have less cash used in that particular period. And then finally, as Olav mentioned earlier, we have cash in the bank or of GBP 17.4 million, and that provides us a 12-month runway. I should say that's a 12-month runway from today as opposed to the date of the accounts. I'll now hand over to Stefano to go through exosomes in more detail.

Thanks so much, Catherine. So I think I have to start from the very basic of exosomes in order to give the audience a clear idea of what exosomes are and how ReNeuron aims at diversifying from potential competitors. Next slide. Okay. So exosome is something mother nature has provided every cell, every eukaryotic cell with. They are nano vesicles which are released continuously into the extracellular space and they intrinsically classic a number of potential conveyors, a very, very complex information between cells. What is being done in the technology space by different companies is to make good use of what mother nature created to develop a fully natural, fully biologic, new generation means of delivering potential molecules. There is very established evidence out there that with exosomes, we are able to deliver nucleic acids, and we're also able to deliver biologically active proteins and peptides. So this is not new. What is new at ReNeuron? ReNeuron possesses a number of clinically relevant and biological development cell lines from the brain, from the retina and from even pluripotent iPSC lines, which provides the company with a unique opportunity of developing a world-leading repertoire of proprietary assets with potential application in generation of a new wave of precision medicine approaches. We make a strong claim of being able to produce tissue for tissue exosomes. Plus, we have a very extensive internal expertise with the end-to-end processing of exosomes, from the initial production of cells to the isolation to the characterization and manufacturing. Next slide. So the technology we are discussing today is a new wave of drug delivery technology, which exosome [indiscernible] in the possibility of delivering a wide range of payloads using exosomes. This has been extensively claimed by other companies, which is in nucleic acids, soluble protein, protein associated to the membranes, and including also entire gene therapy methods. What ReNeuron is different about is the potential to produce complete tissue matching between the parental producer cell line of the exosomes and the final tissue to target by means of these new type of drug delivery technology. Furthermore, ReNeuron has the capacity to use external loading to further assist in targeting the correct tissue. We are able to functionalize our own exosomes with 2 plus payloads, which can be either [indiscernible] into the inner compartment of the exosome or even carried externally. And also, we rely on the extensive evidence of a very, very good safety profile as well as little immunogenicity of exosome compared to parental cell line as well as the capability of being redoseable and reinjected. So these are a number of key features, which all point towards an extraordinary versatility of the exosome technology platform, which is combined with ReNeuron potential of making fully tissue matched, really go back to the initial statement made by the CEO and CFO, which is the right technology at right place right time. Next slide. Right time. Yes, the time is now. There is growing interest in the market, which is still growing [indiscernible]. There is growing interest and focus in the scientific community towards developing more and more applications of exosome based therapeutics. And as a matter of fact, it's a byproduct of this growing market and growing interest. Even ReNeuron has significantly increased number of academic and industry collaboration that we have developed in[indiscernible] see that we moved from only 2 collaborations in 2019 up to 7 collaboration right now. You can see there that there are listed 3 alliances between competitors, Evox/Takeda, Codiak/Jazz and Evox/Lilly. Only one Evox/Lilly is targeting neurological disorders -- neurological diseases like ReNeuron. All the others are either targeting rare diseases or cancer. So there is lots of interest, the interest is increasing, and the commercial value and potential of exosome-based deals is increasing as well. Next slide. So what is the advantage of our approach. On the left of this slide, you'll see what competitors used to propose. They used to start from a single, fully characterized, stable cell line. Usually, they are counter cell lines and to apply cellular or exosome engineering approaches to the exosome produced out of that individual cell line, proposing targets without any claims toward tissue matching. So they work with single cell lines, they identify multiple clinical indications. They don't play. They don't care about tissue matching. What ReNeuron's study is proposing is a novel tissue precision -- sorry, tissue for tissue approach, a precision medicine approach, by which using the different cell lines that we have in our portfolio starting from neural moving to retinal and then ending up with pluripotent stem cell lines to develop tissue precise exosome therapeutic with full tissue matching with a final issue to target for our indications. Next slide. How do we do this? We do this by combining a very extensive knowledge of the cell lines that we have developed in the course of the years. We have several brain stem cell lines from the cortex, from the striatal, from the hippocampus. They are producer lines, which have been extensively characterized. They're also conditionally immortalized and this conditional immortalization feature provides these cells with unique feature being much more stably expandable than non conditionally immortalized competing cell lines. They're also GMP compliant. And the GMP compliance can also be applied to human retinal stem cells and human retinal stem cell exosomes, which hold the promise of being potentially superior in the contribution to the target cells as compared to parental cells. We also have a very early stage technology platform, which is based on our proprietary CTX cell line, which is a neurosensory line that researched at ReNeuron and managed to successfully reprogram into a study expandable iPSC line, which is pluripotent in nature, and just, therefore, the potential to produce a multitude of tissue specific [indiscernible] expandable intermediate stage progenitor cells for production -- for downstream production of exosomes, which opens the opportunity for a completely new era of fully personalized tissue specific exosome therapeutic. So it is a very exciting repertoire of assets with huge potential for applications in a number of diverse therapeutic areas. Next slide. The way we modify our exosomes is very, very exciting. We apply the principles of passive or active loading of exosomes as compared to what other companies are proposing a native unmodified exosomes by, therefore, only using the intrinsic potential of exosomes continues to produce by itself. So the passive loading is very simple. Basically, we collect exosomes out of tissue culture media from producer cell lines. And we apply sophisticated means of exosome engineering to the exosomes in order to increase their capacity to deliver specific paydowns. Usually, the passive loading is applied to payloads, which have to be carried on the membrane of the exosomes, and which applies to specific clinical indications. It is said the cases for making exosomes smart enough to be able to deliver in such exosomal payloads, then we apply what we call active loading or cellular engineering protocols by which we modified the producer cell line in a way that will produce appropriately modified exosomes with specific payloads in the inner compartment. Combination of passive and active loading provides ReNeuron with a hugely expanded capability of producing exosomes for several clinical indications. Next slide. And this is what the CEO briefly mentioned at the beginning of our webinar today. Our portfolio of collaborations has increased significantly in the last few years. We now count total of 7 academic or industrial collaboration, among which you can identify here 2 global pharma, 1 large, 1 medium, 1 small biotech and 2 university collaborations, all of which are fully diversified in terms of payload to functionalize into exosomes, all of which have shown different pace of progression from discovery to proof-of-concept studies and all of which hold significant potential to transition in vivo late stage projects. We also have very exciting internal corporate programs, among which using exosomes to deliver micro RNAs, which is in vitro at the moment, using exosomes to deliver gene editing technology, including CRISPR and CAS9 enzymes and also using exosomes to deliver therapeutic growth factors. And the reason why I have listed as last this EXO-GF program is because I'm going to show you in a moment, a very exciting set of proof of concept data that have increased substantially the enthusiasm at ReNeuron towards the possibility of delivering therapeutically sound protein molecules in vivo into the brain using exosomes. Next slide. So I've started exosomes under my academic hat for more than 15 years. And I have to be honest, I've never seen such an exciting proof-of-concept set of data in vivo. The experiment that we run here was aiming at delivering a specific growth factor, which is called BDNF, BDNF stands for brain derived neurotrophic factor. It's a neurotrophic factor, which has been extensively studied for its capacity to modulate neuronal and glial functions in the brain, specifically into the brain. And when [indiscernible] drug delivery technologies, even old fashion or new generation drug delivery technology, the brain has always been a nightmare. It's a site of preferential targeting. So in this specific context, we used the intrathecal injection by a lumbar puncture route to access the cerebrospinal fluid. So it is a minimally invasive approach, whereby exosomes are injected directly into biological fluids, which naturally spread over the entire brain and spinal cord, and we compare in vivo, the capacity of signaling towards its cognate receptor of the unmodified exosomes, the native protein as it is coming from commercial sources of -- or protein loaded exosomes, which you can see in light purple in the bar graph. And what we mentioned to our [indiscernible] injection was the expression of an allele gene, which is usually expressed only after that protein is able to bind to each cognate ligand on to target cell. And you can see how much is the difference and how much efficient the 3 -- between 3 to 4 x more efficient were those protein loaded exosomes in achieving the type of signaling, which is reminiscent of a therapeutic outcome. A therapeutic outcome is not there yet. We have filed the patent application in October this year. And the next step, which is what we are excited about is to perform a number of studies, all functional in vitro and in vivo, to demonstrate what is relevance of delivering BDNF to a much higher extent of signaling into the brain in laboratory animals with specific disease modes. BDNF is relevant because it might be applied to diseases like Parkinson's and Huntington’s for which there is not cure yet. I think I'm done with the exosome presentation, and I'm happy to pass it to the CEO as well, again.

Thank you, Stefano. Yes. So let's move over to the retinitis pigmentosa program. So RP is an inherited eye disease, close to 100,000 patients in the U.S. It's orphan, but it's a large orphan, if that makes sense. There are more than 100 different genetic mutations that lead to RP. So that means it's not a great disease to use gene therapy. You're not going to solve all of those different gene mutations with gene therapy, it's a very fragmented market. Having said that, there is a gene therapy available, which is Luxturna. It is available for patients with RPE65 gene deficiency. But for the other 98% or 99% of patients, there's nothing available for the moment. One benefit of using retinal progenitor cells that we do is that they have the potential to benefit all RP patients, no matter the cause of the disease, the gene [indiscernible] balance. We've shown in animal models that our hRPCS differentiate into photoreceptors and integrate into the optic nerve. Integration is likely to provide a durable trophic support also. You need to realize that photoreceptors, you're born with all the photoreceptors you'll ever have. So if you lose them, the body will not create new ones. So being able to re-create or create photoreceptors would be really the holy grail here. The program was licensed in from Schepens Eye Research Institute at Harvard, and we still work closely with them as well as with UCL and Moorfields here in the U.K. The invention of the IP protected low oxygen manufacturing culture has enabled us to produce the cells in large quantities. So this breakthrough was really the foundation and enabled us to grow the cells enough to be able to make them into a potential medicine. The development of cryopreserved final product formulation also has been very important that enables us to ship and treat patients globally. We can deliver the vials to the patient rather than patients having to go to where the manufacturing is happening. The commercial potential for this is without doubt, very large, particularly for this -- since this is gene independent, the gene therapy, Luxturna is launched, as I mentioned, and is priced at $850,000 per patient in the U.S., GBP 615,000 is the NICE approved price in the U.K., so it's similar pricing globally. So in a [indiscernible] patient Phase I study, we established safety and advance from fresh to cryopreserved cells. And what you see here is our Phase IIa study. We treated a further 10 patients. They were all treated with a dose of 1 million cells. And the chart at the top right here shows the results that we collected so far. So 9 patients had successful surgeries, enabling them to benefit from the cells. Some patients have not been able to comment for prespecified visits due to COVID. So that explains why the end drops from 9.0 to 7.0, between 6 and 12 months. It's patients not coming into visits. 6 months is the primary end point in the protocol, but we do expect FDA to be asking for 12 months data in later studies. So 12 month is important as well. The key measurement in ophthalmology studies is the number of letters read on an eye chart. So the chart has 5 letters per line. If you could read every single letter, you read 100 letters. And if you read less than 35 letters, you are legally blind. If you read 85 letters, you have 20/20 vision. So there's 50 letters from being legally blind to having perfect vision just to give you a kind of feeling of the scale. So a few letters are very important. Having said that, any improvement or even a stabilization of vision is valuable because this disease -- with this disease, you're on a path to a total loss of vision, that is an unavoidable event. So even having any impact will be extremely important to patients. So having said all of this, if you look at the chart, the top line there is the change in vision compared to baseline in treated -- in the treated eye. And the bottom line is the untreated eye. So we treat one eye for the patient and not 2. And we have observed rapid effect in most patients resulting in a sustained effect overall -- overall, the time points, including the 12-month one. We're encouraged by the rapid and sustained effect of around 8 to 10 letters, as you can see here. With so few patients, it makes sense to look at the individual patients, and that's what we're doing here at the bottom right. We've taken the 12-month data point and the 7 patients that we have data for. And you noticed that all the patients had some improvement from baseline, some in the 6 to 8 letter range and 3 patients actually about 10 letters, which is really fantastic. That's an improvement by 2 lines or more on the eye chart. Now as we have promising efficacy result, but no dose-limiting toxicity, we expanded the study to treat an additional 9 patients with a higher dose. Let me call that the extension study. So this is double dose of 2 million cells. So we would like to see if this could give additional benefits, particularly to those patients who are on the left-hand side, the lower end on the previous page. We also added some additional efficacy measures in consultation with our opinion leaders, and we have added 3 additional clinical sites. Professor MacLaren's site in Oxford is one of them. We are currently recruiting the remaining patients in the extension study, and we look to complete recruitment by the end of the year. That means we'll have some early efficacy data in late Q1 next year. So analyzing this data will inform us then on kind of what's the right dosing, 1 million, 2 million, how does the commercial profile emerge from this? And then what kind of study will be embarked on next. And it will also inform us on the best routes in terms of partnering and licensing this drug going forward. So a quick round up on iPSC and CTX [Technical Difficulty]. So we are also very excited about the opportunity we have with the iPSC platform. We have reprogrammed our neurostem cells into a pluripotent stage -- state, which means that they're able to differentiate into any other form of cell. Now while doing this, our iPSCs have retained the immortalization from CTX, which results in highly stable cell lines. So immortalization means that you don't need to re-derive and you can make very large quantities, which obviously has a huge advantage. There are 2 collaborations with UCL ongoing: one, investigating the potential use of CTX, iPSC cell lines to generate CAR-Ts and CAR-NK cells. And in the other one, we have already succeeded actually in differentiating our iPSCs into Schwann cells, and that means we have a potential use there in peripheral nerve repair. We will continue to expand the work we do in this very exciting area of science. For CTX, it's being pursued by our partner, Fosun Pharma in China. Stroke is a very large issue in China, mainly due to smoking, high rates of smoking. So it's a very large interest for Fosun. So they're pushing this ahead. There are other potential indications also for CTX, well supported by preclinical data that Fosun is interested in looking at, but we have not started any formal work on that. We will continue to look for a partner in other geographies as well for CTX. So I'm going to do a quick summary, and then we'll go into Q&A. So for exosomes, we are in the right place at the right time with the right technology. We might -- we may have been too early with our stem cells, but it has enabled us to now be ready and hit the sweet spot for exosome. We are accelerating our investments and creating a know-how and valuable IP in that area. hRPC has a near-term potential to build near term value, and we're looking forward to the data on our next steps there. And iPSCs as well as CTX are upside to build long-term value. So we're very excited about the future and look forward to your questions.

Olav, Catherine, Stefano, thank you very much for your presentation. Ladies and gentleman, please do continue to submit your questions using the Q&A tab situated on the right hand corner of your screen. [Operator Instructions] But just while the company takes a few moments to review those investor questions that have already been submitted, I'd like to remind you that a 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 that your feedback is important to the company. And immediately after the presentation is ended, you will be redirect for the opportunity to provide your feedback in order that the company can better understand your views and expectations. We received a number of questions from investors. And if I may, I'll read the first one. Will shareholders get any news on actual data obtained in these collaborations on exosomes or we wait until any licensing deal is signed?

Yes. If I understood the question correct, so this is about exosome collaborations. We obviously work with partners on them. So there's always a question of having a discussion with a partner, what is released when. Having said that, when there is material news for ReNeuron, we will share that with the market. We might have to disguise it depending on the discussions with the partner. So we -- it might have to be product X rather than exactly what it is, but we understand that there is an obligation to report that to market. So that's on the data. We do also hope/expect that proof-of-concept data will then eventually lead to a deal if it is with one of the pharma partners. And then obviously, when the deal is signed, that will be announced immediately on signature.

Thank you. The next question reads as follows. Within the next few years, do you anticipate when you're on listing on the Nasdaq?

So fortunately or unfortunately, it seems to be the goal of every successful European biotech to have a U.S. Nasdaq listing. So we're not different. We have the same ambition. So -- but I think our immediate focus is to have success in the U.K.

Thank you. Are you in discussions to license IPC -- iPSC platform to larger pharma companies?

No. It's probably a little bit too early. I think we're still developing that technology. And I think these kind of academic collaborations is the right way forward for the moment. And I see Stefano nodding too.

Yes, yes.

So then that's what's going to happen.

Thank you. The next question reads as follows: Do you think ReNeuron will use the 1 million or 2 million cell dose for that pivotal Phase III approval study?

I'll let you know in March.

Could you clarify the ownership of your cell production suite and what its capacity is as you start to produce cells for partners, i.e., is further upscale investment required?

So depending on the platforms here. So for the clinical-grade materials such as hRPC, as well as CTX, they are produced with CDMOs externally. Exosomes, we have a capacity to produce those now internally. When you come to kind of further down the road and you want clinical-grade material, we have to make a decision if you want to invest in our own GMP manufacturing capacity or work with partners on that. So it's a political answer, but we kind of have 2 routes on that.

Thank you for that. Does the exosome platform benefit from lower regulatory burden as it is derived from CTX cells, that's already approved for trials? If so, how could this be seen in trials design?

So I think the -- if I'm reading the question correctly, so our exosomes are derived from CTX. So there is some of them. We -- the basic or the original exosomes, we're starting with exosomes from other tissues as well and from iPSCs that Stefano was explaining. But the CTX derived exosomes obviously come from a clinical-grade starting point. So that's helpful. It's also very highly valued by partners because that they know that is a stable, highly analyzed line that we've reproduced many times. I'm not sure it's going to change anything later on in terms of clinical trials. It might just mean that it's a little bit easier to get there.

The next question asks if you'd consider running any Phase III hRPC trial in-house if funds became available through a commercial exosome licensing deal or would such funds only be used to further develop the exosome and iPSC platforms?

I obviously can't kind of answer categorically about how we intend to use funds going forward. But we always look at the -- there's always a balance between partnering a program, where you share the future revenues and profits for the partner, but you lower your risk versus keeping all -- everything for yourself with a higher risk and then higher potential future return. It's always a conversation with shareholders. It's -- and it also depends on what deals are on the table. So again, slightly political answer, but it's because it has to be that way. We are open to both of those approaches. We love to create an important longer term, viable biotech company based in the U.K. but that doesn't mean we're not going to do lots of deals.

The next question reads as follows. Because my wife has early stage Parkinson's disease, I am personally very interested in a huge amount of research work worldwide on the use of stem cells for treatment, many with apparent success. Is ReNeuron involved with any partners in this work and in particular, the possibility of finding a delivery system for the dopamine drug to be carried across the blood-brain barrier. This would seem a great application for the company's exosome product. And as this is a potentially hugely profitable market, I would like to know any current or future plans to become involved by the company.