ReNeuron Group plc (RENE) Earnings Call Transcript & Summary

Good afternoon, and welcome to the ReNeuron Group plc Strategic Update Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you would give that your kind of attention, I'm sure the company would be most grateful. And I'd now like to hand over to Catherine Isted, CFO; and Olav Hellebo, CEO. Good afternoon.

Thank you, Mark, and thanks, everyone, for attending today. We've had a bit of a rocky road on the strategy lately. So this meeting is really to tell you why we're excited about the future and how we're planning to give -- maximize our shareholder return going forward. So again, thank you for your support all the way through. And before we go into the details, here's the disclaimer about our forward-looking statements in this presentation. And with that, let's jump into it. So who is ReNeuron today? So in summary, we are working on exosomes. Exosomes is very much based on the stem cell work that we've done over the last many, many years. We're lucky in having a differentiated exosomes technology platform, and we are lucky that we had that going into a growing market. We have exosomes and our exosomes, in particular, is able to deliver a variety of payloads. So that means sRNAs, mRNAs, proteins, small molecules as well as genes. And if you look at viral vectors, which is the more commonly used delivery platform for the moment, they're only able to deliver genes. So exosomes have an opportunity to deliver a lot more than that. So this is probably why we have a large number of collaborations ongoing with partners because of both of the scientific and the commercial interest in delivering and creating more compounds. Having a great payload is of little interest if you're not able to deliver it properly. So our key advantage, and Catherine will come into this in more detail in a few slides, is that we are able to match the exosome with the tissue that we are targeting. So we're using a neural stem cell to deliver drugs into the brain, for example. We've got 7 collaborations ongoing with big pharma biotechs as well as academic institutions, and that gives us many shots on goal here. We also have induced pluripotent stem cell platform, the iPSC. This offers the ability for us to further expand this tissue targeting that I just mentioned of the exosome platform. And we also have some programs that are going directly from the iPSC platform. We have some work ongoing with UCL on CAR-T cell therapies. We have 2 stem cell programs that are -- have been out-licensed in China to Fosun Pharma, and they are available for licensing in other regions, so that's obviously something that we're working on as well. So there's potential revenue stream from that. And the last bit from kind of the top line summary here is that we are well-funded. We have cash of GBP 17 million as of end of September, and that gives us a runway into late Q2 next year, so that's a pretty good cash runway for biotech. So our strategy here to build maximum shareholder value is divided into 3 different revenue streams that we're targeting. So the first one is in the partner exosome programs. So it's very much like a CDMO model. We work with multiple partners here to offer many shots on goal. We received already a contribution from these partners to enable the research. We co-own the IP from the resulting program, so both parties have a stake, neither party can take that program forward into the clinic without an agreement from the other. And that would mean, in most of these cases, that we expect the other side to ask us for a licensing agreement to take it forward. And we do aim also for us to be the manufacturing partner here, so that when the large pharma company takes it forward into the clinic that we deliver the product and we do the manufacturing bit of the exosome and the new development there, while the partner pays for the clinical development and the commercialization going forward. We're good at this. We have a great team that have been working on exosomes for a very long time. Our CSO, Stefano Pluchino, and our VP of Research is just rejoining us after having worked for another exosome company. They've been working for decades in this field, so we have the expertise. And the other bit of this is the manufacturing expertise. Manufacturing is extremely important. Exosomes are made from cell therapies, so when you produce the cell therapy, you harvest exosomes from the media in manufacturing the cells. So this is something we, again, have great experience in. We've done several. We have 2 GMP cell lines. We've done IND approvals and many tech transfers, which means that if you're able to tech transfer your technology, it means that it's a stable technology, and we've done that a number of times. Our goal here is to maximize the number of partners because that maximizes the number of shots on goal. And this is a low-risk, low-spend strategy for us. This is -- most of the cost here is carried by the partners. They pay for the in vitro and in vivo preclinical work, while we're doing the loading. And obviously, the goal here is to go get the license deal done from one of these companies that we're working with, and that's what we're working towards. So that was number one. Revenue stream #2 is to work on proprietary exosome programs. So that means that we take advantage of all the expertise that we have, and we take our own candidate forward into preclinical development. So that means we do not need to find a partner for that yet, but we plan to do that later. As soon as we have what we think is a licensable package, preferably at the end of the preclinical stage, so ready for going into human trials will be the time for us to out-license those. But we do have the choice to keep pushing forward ourselves or not, it gives us an opportunity to balance our portfolio. Of course, if you do your own product development that offers a much larger upside going forward, so it's always a balance. So yes, our goal here is to produce further preclinical data that shows what the potential can be here and then have a balanced portfolio between our own and partnered early-stage programs. The third revenue stream is to take advantage of the work already done with CTX and hRPC, so to out-license these and to bank the milestones that we already have and that we will have. Fosun Pharma has the license for these 2 products for China, and the deal term secured there was GBP 80 million in milestones, 6 of those have been received so far. And we also have royalties of 12% to 14%, depending on the sales level and that's a very good royalty level for China. You typically see single-digit royalties for Chinese deals. So this is a good deal, and obviously, we will work on securing partners outside China as well. And Fosun Pharma's progress will help us in that because they will keep building data for these 2 products. So our goals are to progress these 2 products via Fosun for China. And then there is an ongoing discussion about technology transfer with Fosun, there was a small RNS on that some weeks ago because we've got a small payment on that, that we had to disclose, but it's actually a bigger technology transfer that we're working on. So we will share that with you when that's signed. And we're also looking then, as I said, to out-license both programs in other geographies. So with that, I will hand over to Catherine, who is our scientific -- CFO, to take you through more details on the tech platform.

Well, good afternoon, everybody. I thought it was worthwhile going through why we're so excited about exosomes and the potential of exosomes. Just as a reminder, as I appreciate there's probably quite a range of knowledge on this call. What an exosome is, is a way to be able to deliver a particular payload. If I bring that back to some technologies that we've all used over the last year, and we look at the COVID vaccines, there, the delivery of the spike protein was only possible because of either a viral vector or a lipid nanoparticle. These are effectively delivery technologies for that spike protein. What we have is another one of those delivery technologies. And what we can do is we can deliver a wide range of payloads, and that is a huge benefit. So we've written a list here, so from siRNA, microRNA, soluble proteins, small molecules and even genes. The other thing that's really important about our technology, which has alluded some of the other delivery platforms is that we have this tissue targeting. So because of our history in our various cell lines, we are able to match our cell lines to actually particular tissues. So we have a neural cell line that we can produce neural exosomes from, and that allows this particular tissue targeting. The other benefit is that exosomes are actually quite large, so they can carry more than one payload, and this could be very helpful. And finally, and I think one of the really important parts of exosomes is their safety profile. These are naturally occurring vesicles in nature. What they do is they message from one cell to another. So they're not seen as foreign. You don't have the inflammatory responses that you get when you are actually using potentially some of the other delivery mechanisms. And that is really good. So we have a very good safety profile. Going on to the market size, and again, we are excited about this. Now, exosomes is a really new technology. You don't need to go back that far, and there really wasn't that much written on them because people didn't really understand them. In the last few years, we've seen a really large growth in therapeutic exosomes, and we can see that in the chart on the top right-hand side. This -- these are publications on therapeutic exosomes. It's quite important that we pulled out the publications on the therapeutic side. So this is not just publications on what an exosome is. The other thing is that we are seeing a lot of pharma interest in this particular area. I go back to my time working at Oxford Biomedica and you look back to 2016, for example. The big pharmas did not believe in cell and gene therapy. They didn't invest in it. And it was really the only one exception was Novartis. You have Novartis and then a multitude of biotechs. What we're seeing in exosomes is at a similar point in time, we are already getting that large pharma interest. So on here, we can see Takeda and Lilly have done deals in the area. But also, we have 2 global pharma partners working with us. And you can see the number of deals and collaborations that we've got really increasing as the market size increases. It's not only just pharma partners that are interested. If we look at Lonza, recently, they acquired and did a long-standing collaboration with Codiak, one of the other exosome companies. And I think it's really important, one of the comments that their head of cell and gene therapy said was exosomes are emerging as a new modality for advanced therapies and could become the next frontier for biotherapeutics. So it's not only us that's talking about this growing exosome field. It's the big pharma guys, it's these other big companies that are seeing that there's a real potential here. And I think that's driven partly because the other modalities, in terms of delivering payloads, such as viral vectors or lipid nanoparticles, people are starting to realize they do have limitations or they only have certain type of payloads they can deliver. So big pharma partners have a payload and they're looking at what is the right technology. So this goes back to the comment we made at the interim results. It's the right place, the right time and the right technology. If we were talking about exosomes 5 years ago, that would have been too early. But now, big pharma partners, biotechs and others in the industry are looking for that solution to their delivery problems. So I think this is one of the really key important slides. So if we believe that exosomes are a growing market and somewhere where we want to play, why can't ReNeuron do something different from the partners. And this is all down to tissue matching. So if we take the competitors, and Evox and Codiak, for example, the 2 of the major players in this area, what they do is they take a single cell line that happens to be a cancer cell line. It's something that you actually buy out of a catalog. So there's no proprietary IP around it. From that, they produce exosomes. We've shaded these in different colors of blue because if you have a cell line that the exosomes that come from it, like the sons and daughters, there will be an inherent characteristic of the cell line that they came from. So therefore, if you are looking to tissue match these exosomes, in some cases, that may be the case, and in others not. And it's of note that one of the first clinical trials happens to be in cancer. We take a very different approach. We have our proprietary cell lines, so there's obviously IP around that. And the main 2 cell lines are our neural cell line that comes from CTX and our retinal cell line. The other key advantage for our partners is that we have a GMP starting material because both of these cell lines have actually gone into the clinic. So if we take our neural cell line, from that, we produce neural exosomes. So if a partner is looking to develop a product that is going to go in the brain or the CNS, we have that tissue targeting. The same if you look at the retinal side. If you have a retinal product, why wouldn't you use a retinal exosome to hopefully increase the targeting of the payload that you're looking to deliver? And then tying in our iPSC. So iPSCs, for those of you that are a bit unsure on the science, this is basically taking our CTX line and taking it back to a cell type that is before it knows what it's going to be. So it is -- it doesn't know if it's going to turn into a hair cell, a skin cell or an eye cell. And from that point, this iPSC, you can then move it back forward into a particular cell line. And then from that, you can generate exosomes related to that particular cell line. So a liver cell line will produce liver exosomes, a pancreatic cell line can produce pancreatic exosomes. So again, we can offer that full range of tissue matching and that is a real key differentiator. And also, while we believe our partners work with us. So going on to our partners. Now, we unfortunately can't give the names of those partners. But I think you can see here, we have some really good list of the types of companies we're working with. We have 2 global pharmas, a small biotech, a medium biotech and a large biotech. And also, 2 universities. The other thing I really want to highlight on this slide is the fact that there's a wide variety of payloads we're working for -- working with these companies. So it's not as if maybe exosomes are only any good in siRNA. No, that isn't the case. Companies are coming to us to work with them on a variety of payloads. These are all in the CNS area. Now, that's probably because our neural cell lines are the ones that are most characterized. We've even characterized them further into different regions of the brain as well. But that really is a USP to have these neuro cell lines. As you can see, they are moving through from discovery in vitro and then in vivo studies. An important point here, and probably quite unusually for a platform technology, is that we jointly own the IP on these programs, because we are enabling our partners to deliver their payload. Once we get to the end of in vivo, a large global pharma, for example, is not going to want to be sharing the IP with a small company, like ReNeuron. And that will be the time point that we'll be looking to announce a licensing deal with also further milestones and back-end royalties. As Olav pointed out earlier, one of our second revenue streams is around our own internal programs, and you can see those listed below, and these are in areas we think are very exciting, and we will look to take them forward towards the clinic. Although obviously, if we have a significant partner interest, we'll look to work with them in the same way as we are with the partners above. Now, also on my final slide, and this is just really sort of highlighting some really exciting proof of principle data that we had back in October. And this was showing the use of exosomes to deliver a therapeutic protein to the brain. Now, this is really important, because this is the first time ever that a therapeutic protein has been delivered to brain using an exosome, so this is really groundbreaking research. And also, it wasn't any protein, this is something called BDNF, which basically is implicated in conditions such as Parkinson's and Huntington's disease. However, you can't deliver the raw BDNF in its own right. Basically, it degrades. So it's something that has eluded science, how do you get something that could be a really interesting protein into the brain. So as you can see here, it is only with our loaded exosome, loaded with BDNF that we get presence in the brain. The other thing that's very interesting that it is actually targeting the striatum. So we didn't get BDNF in other areas of the brain, again, just showing that targeting potential. Our next steps really are to continue on this research, do some functional studies and also, then plan to look at which indications will be best suited for us to continue on developing. With that, I'll hand back to Olav.

Thank you, Catherine. I'll give a quick one-page summary here, and then we'll jump into Q&A. I see the questions are streaming in, and we have some pre-submitted as well. So the opportunity here for us is -- with exosomes, we believe we are on the right place, at the right time with the right technology. We have accelerated our investments into this field over some time [indiscernible] well in this field. We work on strengthening our -- and progress our existing partnerships and creating new ones. And this is a great place for us to maximize revenue. And for the long-term upside is to get some revenues from our existing programs as well as from the iPSC platform, which is in the earlier stage platform. So with that, I'll open up the Q&A. And Mark, maybe I'll hand over to you to read the pre-submitted questions.

[Operator Instructions]. The first question reads as follows. It's a bit long-winded, so I will cut it down, but this is from somebody who's been a shareholder since 2013 and believes that you're on to something special. But after the recent failures were developing a profitable product, can you see any potential to making a profit in the near future?

Yes. Thank you for that. Yes, we are also disappointed, obviously, that the best course of action for us was to stop our own clinical development of the previous 2 assets. That doesn't mean they're not going to be progressed. Fosun Pharma is progressing them for China. And when it comes to revenue and profitability, the point is that for biotech, the revenue generation does -- usually doesn't cover the product launch, it comes much earlier than that. And that has to do with licensing deals and also, manufacturing and development deals. So yes -- so I think -- probably, I think that answers the question. If I miss something, let me know, Mark.

Just turning to the next question. Is jCell really a direct competitor? Or could there be a synergistic effect if both are applied? Or an expectation that one might work when the other doesn't?

Yes. So jCell is the product of a company called jCyte, which is a private company based in California. And yes, we are direct competitors. We're treating the same disease with a similar product. And in this case, however, in terms of going against a competitor, we hope that they're doing well. We hope that they will have good results because that will show the value in hRPC as we work with partners, and it will be easier to find a new partner for that program with jCyte as well. The market is big enough for 2 or more. So yes, we are direct competitors, but there's room for both.

What are the products that you hope to market? And what is the time scale and what might be their revenue?

Yes. As you saw from the presentation, we're looking at 3 different revenue streams. The second one of those 3 was for us to develop our own products. It's too early to say still, when they will go into clinic, to when they will be launched. All of those things, that's too early to say as they were in early preclinical development.

Great. And apologies if you have touched on these, and these questions did come in ahead of the event, but it's always good, I guess, to put a little bit more clarity on them. Just turning to the next, we've only got a couple more after this one. Will the products require a full series of FDA tests as for your previous products?

Yes. All pharma products need that in order to get approval. But of course, we may choose to out-license long before all of those clinical trials, et cetera, are done.

When can investors expect to see the progress from lab into human trials?

So we're in early stages of preclinical development. We have not given any guidance yet about when we expect to start clinical trials.

Okay. And the final question that was pre-submitted. With your most advanced exosome collaboration being with the university, how do you intend to fund progression beyond proof of concept?

So yes, so we work in collaboration with universities, and that's actually a very cost-effective way to do things. It's also important to point out, I think that preclinical work is quite inexpensive. It is really when you hit human trials that the big investments need to go into the program. So for the moment, it's relatively inexpensive. The preclinical development that we're talking about here is already accounted for in the cash runway that we mentioned earlier. That goes into the end of -- late Q2 next year. So that's already in the budget and accounted for.

That's great. Olav, that does take care of all the pre-submitted questions. So thank you to those that took time to submit them ahead of today's event. If I may turn to the questions that investors have submitted during the live meeting. Again, thank you so much for your engagement. I mean, there are quite a few questions there. I don't think we have time to do all of them. But perhaps if I may, Olav and Catherine, if I can hand back to you to ask you to read out the questions and give a response where it's appropriate to do so. And I'll pick up from you at the end.

Yes. Thank you. There are a few questions, Catherine. I don't know how to answer those, about management buying shares at the current share price level. What are we allowed to say on that?

I think that is sometimes -- it's tricky to answer. So I think that, that's the best way to say that -- yes.

Olav, with any of those questions, obviously, we can review those post the meeting and publish responses to those...