2023-05-25 08:25:10 ET
ReNeuron Group plc (RNUGF)
Q1 2023 Earnings Conference Call
May 25, 2023 04:30 AM ET
Company Participants
Iain Ross - Executive Chairman
John Hawkins - CFO
Randolph Corteling - Chief Scientific Officer
Conference Call Participants
Presentation
Operator
Group plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll.
I'd now like to hand over to Executive Chairman, Iain Ross. Good morning to you.
Iain Ross
Good morning, everybody. I see from the screen, we've got a number of attendees. And we're really pleased to give you an update on our preliminary results. The first page talks about developing a valuable and differentiated drug delivery platform. And you will recall, at the beginning of the year, that we made it very clear that that's where we're going to focus. And that's where we're going to produce data. And so what we want to do this morning, is just to take you through our presentation, you will have all read the announcement this morning.
And I have to be honest, there's not a huge amount to tell you, because we are actually doing what we said we would do at the beginning of the year is that we are working hard to produce the data. And I can say to you that we're on course to be producing data within the next 2 to 3 months. And from that data, we hope, we will be able to conclude a number of discussions that are already in progress. So just moving through the disclaimer, which everybody I'm sure is read in detail.
Moving on to the first slide. The story for ReNeuron is very simple. We have leading edge science. And I believe that drug delivery is not easy. If it was easy, then many of the different modalities that are out there would have succeeded. But the truth is, you have to actually tailor things to where you want to deliver the particular cargo in the body. And we believe that our delivery platform really gives us that flexibility, that it's not just enough to have an exosome, it's essential to have the right sort of exosome in order to deliver the right sort of payload to a specific target in the body.
And we have continued over the last, particularly over the last 6 months, we've continued to develop our platform. And I believe that our proprietary stem cells technology differentiates us from the competitors. And we believe that we will produce data to show that. We have cut the team down to focus very specifically on the development of the exosome technology platform.
We have 23 of us now and we reduce the headcount by about 40%. We have Randolph, who's sitting beside me here, who is supported by an excellent Scientific Advisory Board. But Randolph, of course, was the person that originally started the exosome research in ReNeuron a number of years ago, and we were very lucky for him to rejoin it.
We've also appointed Simon Dew, as CBO, who has a lot of experience in doing specific deals with exosomes. And so the other thing I'd say is that it's really important, it's all very well to have a good delivery technology, but you have to be able to manufacture, and you have to be able to manufacture at scale. And that's the one thing that ReNeuron certainly has a lot of experience on. And the last thing to say here is we have a strong pattern to state and we are filing patents as we continue to go forward.
So if I move to the next slide, and just look at some of the operational highlights, and by the way, I've had a number of questions that were pre-submitted, so I'm going to try and answer some of those questions as we go along. But firstly, we are focusing on [indiscernible]. We did proof-of-concept studies last year, last calendar year in in vitro. And to be absolutely honest, that was not enough to convince people to either invest in the company or go into a collaboration with us.
We have continued to do more in vitro work. So we have broadened our expertise in that area, but the real question is doing in vivo work. And that is what we set out at the beginning of the year that we will do in vivo work to provide data to support the uploading of a cargo, the delivery of that cargo in terms of by distribution and the body, and also the unloading of that cargo at the specific site and to show some functionality. We're doing that. We're on track.
I've had a huge number of questions saying when are you going to give us data? We're going to give data when we have that data. And we're very excited about what we're seeing as we move forward with our external advisors, and also the companies that are working with us. But at the moment, we don't have that data in a form that actually we can present. But we did say at the beginning of the year that we would do that within the second and third quarter and we're on track to do that.
We have changed the leadership. Basically I'm now full time running the business. John has stepped up to CFO; Randolph is the CSO; and Suzanne Hancock is in charge of our operations and we were joined by Simon Dew. Stefano, the Chairman of the Scientific Advisory Board has revised that Board and brought in some real experts in that area. And just before anybody asked me, is that costing us money? No, it's not costing us money. It's people who want to work with us because they're excited by our platform. So operationally, we've moved forward. John, maybe you want to cover the finances?
John Hawkins
Yes. Hello, everybody. Yes, as, Ian mentioned, in January, we undertook a restructuring of the business to realign our resources towards the validation of CustomEX. We are very much focusing on preserving cash. The cash is the shareholders money, and we're only spending it where we think we can achieve the maximum payback. This -- the restructure resulted in a 40% reduction in headcount and a lowering of variable costs. That results in reduction, the underlying cost base has enabled us to preserve our cash, such that at the 31st of March, we had cash of $7.2 million, which is which is ahead of market expectation, and the runway extending into 2024.
So you can see there, I won't go into detail on the items on the slide, you can see our revenue was up slightly. You can see our cost base did reduce quite significantly on the prior year, and that that led into the reduction in the loss for the year. Okay, so that was that was all.
Iain Ross
So just before we move to mind off, who's going to cover some of the questions that we've had in terms of the science, and where we are with producing the data, it's worth saying there are number of questions are coming in saying where are we with commercial partnerships? We are exactly where we want to be. We are setting those up. We are talking to people. Simon is extensively travelling and talking to companies and saying, if we produce this data, will you actually enter into an agreement with us? Now it's very easy for them to say yes, but obviously, the data will be the test. And so that's where we're really focused at the moment is producing that data, and using shareholders funds judiciously.
So perhaps we move to Randolph and you can tell us how you're getting up.
Randolph Corteling
Great. Thank you, Ian. So as Ian mentioned, we are developing that next-generation drug delivery platform. And we're doing that by harnessing the natural capabilities of exosomes, stem cell derived exosomes, because they have a natural ability to overcome some of the limitations around current delivery platforms. For instance, safety, viral vectors have been plagued by side effects. They also are limited on the type and the size of the cargo they carry, and lipid nanoparticles suffer from efficiently delivering their cargo. And all of them really suffer from a limited or a small amount of targeting.
However, when you look at a stem cell exosomes, these exosomes are safe. They are naturally occurring nanoparticles that evade the immune detection. This opens up the possibility of repeat administration. They have broad applicability when it comes to delivering different bio -- bioactive cargoes. We've shown that they can simultaneously deliver proteins as well as nucleic acids. But the key thing for our platform, and the critical thing is that they can target recipient cell types by different surface proteins on them and they do this by changing where that -- where the cell of origin is. So really, the exosome cell source is an important consideration when targeted drug delivery.
And we've already shown this in vitro. So the last 12 months, we've shown -- as Ian mentioned, we've shown this categorically in vitro, that actually starting on the left hand side of our slide, we show that there are different exosomes that have different sort of like cell markers, so unique cell surface markers. When you put these different exosomes on different cell types, so looking at the middle graph here on the slide, you can show that by putting these on different recipient cell types, things like epithelial cells, endothelial cells and neuronal cells, and comparing them with a HEK 293-derived exosome, you can see a significant improvement in delivery from 10 to 20-fold improvement.
That uptake, we then took that one step further on the right hand side and looked at whether that uptake of exosomes that specific targeting of exosomes actually relates and is part of the delivery of the cargo and what you can see on the right hand side there, the pink line illustrates the fluorescently labeled siRNA delivered to by a HEK 293. And the two lines above illustrate an up to 6-fold improvement in that delivery. So we've shown that we can target and deliver cargoes in vitro.
So this is why we've developed the CustomEX platform, a customizable exosomes platform made up of multiple producer cell lines, which allow different exosome candidates to be selected for their ability to target specific cell types. On the left hand side, we show what the standard approaches by many of our competitors using a single cell line giving you a single outcome, a single exosome candidate, but one size fits all approach.
Whereas in the blue box, you see what ReNeuron has with their CustomEX platform. They have multiple conditionally immortalized producer cell lines. So we currently have four neuronal stem cell lines, and three non-neuronal stem cell lines, which can be chosen depending on their specific targeting ability. But it doesn't stop there. We also have an induced pluripotent stem cell lines. So if that exosome candidate doesn't exist, we can make new existing -- new lines, which can target different regions of the body. So you can choose the exosome that you would like based on tissue targeting both on and off target effects, how it delivers, and coupled with some of the engineering and loading capabilities, we can show that we can deliver this cargo in vitro.
But it's not just the cell lines that is critical to our platform. What is also critical and what actually differentiates us from many people in the industry is our technology, which allows us to stably produce cells and the exosomes to a scale that is clinically relevant. And this technology is called ReNeuron's conditionally immortalization [ph] technology. It allows -- stem cells has a tendency to change in culture. But what [indiscernible] can do by this technology is actually control the proliferation of these stem cells.
So by adding -- by genetically engineering the cell lines, we can now add a small molecule which allows us to switch on cell proliferation or switch off proliferation, which keeps the cell type very -- that the phenotype maintained over multiple different pathologies, so we have a stable producer cell lines. This process is fully qualified to GMP and tightly regulated with strict release criteria is there for scalable, we can then produce the cells and hence the different exosomes are commercially relevant scales. And the exosomes are stable and safe. The technology isn't transferred into the exosomes, and we've recently gained safety data for the cells with 10 years in [indiscernible].
So basically, what we've done over the last sort of calendar year is actually we have already shown that our exosomes, our CustomEX platform can deliver a range of biologically active cargoes. As I said, we've shown with nucleic acids, but also with proteins. We have shown that they can target recipient cells by the surface markers in vitro, depending on where those exosomes came from. So not all exosomes are the same, and it really shows that you need a catalogue of exosomes to be able to target different areas. And so what we've done is everything so far today, we've shown that we can do this in vitro. The keys next stage is to show this in vivo.
And my last slide really shows us what is ongoing and as mentioned -- as Ian mentioned briefly before, that the last 6 months we have been focused on looking at that ongoing in vivo validation. So the key things that we are showing right now is that we are to demonstrate in vivo demonstration that our exosomes can target tissues and cells in vivo with that different capabilities of those different exosome candidates.
We want to confirm the safety profile of our assets and basically show that we -- this then opens up repeat administration, demonstrate a clear advantage of the stem cell derived exosomes that CustomEX platform over the HEK based platform that one size fits all. And then finally demonstrate that targeted and functionability -- that functional delivery in vivo of a therapeutic payload.
Iain Ross
So what we're looking at, look at the goals coming here is we're going to continue to do what we said we would do. And that is to actually develop the platform, produce data to verify and validate that platform, to then take that data and use that in those discussions and looking in terms of partnering licensing discussions. We also have plans, how we can take things forward thereafter. We are looking at non-diluted funding, and the number of questions is saying, are you going to need more cash? Of course, we're going to need more cash. But we are committed to doing that through collaborations and partnerships.
If the data is stunning, and we believe it's in the interests of the shareholders to further invest, we will come to the shareholders. But my view is that partnering is the way that we take this forward. And we have a number of discussions ongoing. People are asking where we are with our collaborations. We are so focused on producing data, Simon is talking to all those people updating them exactly when we believe or have data that will be relevant to them. And we will take those discussions forward.
I think it's also important to emphasize people are coming to us now. It wasn't the other way around a year or so ago, it was we were going out touting our platform. Now that people are coming and asking is when we have the data we're interested to see. And I'm telling you, some of these people are afraid of large groups. So I believe that in summary that we are looking after your money, which I think is really important. We're using it very judiciously. We have a catalogue of different cell lines, so we can have a catalogue of different types of exosomes. We are producing the data, and we are progressing those third-party discussions. I would very much hope in the next 2 to 3 months, we will make a number of announcements along those lines.
Yes, somebody has just asked us about our thoughts on Codiak ? I have to say that we were very close to Codiak. We're very sorry to see what actually happened to them. But that is a case of where they really were betting the farm on the therapeutic pipeline. We have no intention of going down the therapeutic pipeline. We will work with partners, we will work and solve their problems, delivery problems. So yes, Codiak have gone. But there are a number of other exosome companies out there. And yes, we do talk to them, because they may well have technology that which can improve our situation or is complimentary to us. And we're continuing to talk to everybody.
Is there any other specific questions? Sorry, I'm just looking down the list. Are there any competitors doing this work? We're not aware of any competitors using the technology that we are. There tends to be a very much a view is like one size fits all. And we just don't believe the data is out there to support that. And so we are going head to head, and when we are producing this data, we're not just producing data to say we can do this, we are actually producing data to differentiate [indiscernible].
Oh, somebody said they worked with me at Celltech. And they play golf with me. This is very interesting. What is the half life of the exosomes?
Randolph Corteling
Those studies are ongoing right now, so we are doing the bio-distribution studies right now. That's the sort of the question that we are answering that targeted ability -- are excreted rapidly. But obviously, if you get targeted delivery, that won't be the case. So this is very much sort of like in the package coming forward, which will have that data in the next 2 to 3 months.
Iain Ross
Somebody has asked a question about one of the legacy assets, about the retinitis pigmentosa. We have basically played down the legacy assets. So any upside we get from that will be a positive. But the question was, have we been under CDA with any potential part of the retinitis pigmentosa? The answer is yes.
What timetable are we looking at in terms of to start achieving value? That's a really good question. Because we really have to create some value this year, this calendar year. And we believe that we are doing that based on the data and the partnership discussions that we've got ongoing.
Somebody said answer the pre-submitted questions. Well, we have several pre-submitted questions. So do you just want to have a look round off and see if there's any science, what was there?
Randolph Corteling
Yes. One of the questions asked about the -- [indiscernible] inherent variation in the exosome populations produced from cell lines? That's absolutely correct. There is. And we've shown that. We've shown that in our preclinical. Each cell line produces a unique exosome that has distinct targeting abilities. So that's what our platform does, it has a catalogue of different exosomes, from manufacturing from batch to batch, that's where we are significantly different from others. We have the conditionally immortalization of those stem cell lines, which means from batch to batch, we get not only scale, but high degrees of consistency. So that was something that we answered ourselves at the beginning. And we are convinced that we have a very stable product.
Iain Ross
Okay.
Randolph Corteling
Yes.
Iain Ross
So the other questions I was asked, and somebody has just asked, do you think ReNeuron is going to go bust? No, ReNeuron is not going to go bust. We're very confident that we are basically delivering on the promise that we laid on at the beginning of the year. Somebody else has asked is, is there going to be a bidding war to take place for ReNeuron? I very much hope so. But I don't hope it's not for the next 2 or 3 years. Because obviously, if you want to bidding more [ph], you want to do it from a higher value than this.
What do I think is fair value for the [indiscernible] with the business? Well, you can judge it by the share price today. What do I think is fair value, certainly we've seen the analyst report as such about $35 million I think.
John Hawkins
Yes, $35 million
Iain Ross
Personally, I have to say, having been involved in the industry for 40 years, I believe that we produce some data, and we get a validating partnership, I think we will see the value of the company rocket pretty quickly. Because exosomes are here, they are naturally occurring and they are aware of delivering drugs. And that's the biggest challenge in the pharmaceutical industry. It's not so much the sexy science in producing the original molecule. It's actually about getting that molecule being able to manufacture to scale and being able to target it. And I believe that we have experienced, and we'll have data, proving the exosomes will be fundamental as things go forward. [Indiscernible] questions.
Randolph Corteling
Yes, there's another pre-submitted question for me. The question says, do you need to show differentiation against your competitors in order to move forward with your partners doing in vivo trials? If you show good efficacy, but not necessarily superior to the competition, would this still present an opportunity? And thanks for the question. You're absolutely right. This does still open an opportunity. I said on my first slide, that there are significant issues with the current delivery platforms in terms of safety, efficacy, and targeting. All three of those are actually part of our exosome platform. So we don't have to beat the HEK 293, but we believe that we can, and that is what we're trying to achieve.
John Hawkins
So there's a question come up, what's the current cost base of the company post the staff rationalization were? The easiest way I suppose to explain, without any further funds, the cash at the end of March will take us into quarter 2024. Our forecast assumes some extra funding and that takes us through into middle of 2024. And PwC have worked with us for the audit and they’re comfortable with those assumptions. So they challenged us, but I think I don’t [indiscernible] that question.
Iain Ross
Will we be able to raise financing if required in these times, unlike what happened to with 4D companies are finding [indiscernible] impossible to raise currently. But I'm also Chairman of other companies and I have to say you're absolutely right. It's a really tough environment. And the only thing that can move the dial here is producing solid data. And that's why we took the decision at the beginning of the year to produce the in vivo data. I don't pretend it's going to be easy. But we believe we can do non-dilutive funding through partnerships. And if we have to go to the shareholders, then we have to go to the shareholders with an absolutely compelling story. But we have no plans to do that at this point.
And [indiscernible] what are the chances of the current ReNeuron strategy not working out? Well, that's a great question. Sciences is unpredictable. I have to say, every week we sit down, and we review where we are with the data generation. And at the moment, it's going extremely well. So we took a basically a calculated risk at the beginning of the year to put all our efforts behind the development of the exosome platform. And I believe that that risk is been minimized, and that we will actually make it. But there's always a chance it doesn't work. But one of the great things about talking to third parties is we are looking all the time at different technologies that can enhance us, and who knows where some of those discussions could possibly lead. But there's no point at my age sitting here working in a company, on the basis of it's not going to work, it's going to work.
Any more questions? What's the biggest risk pending for us? Well, the biggest risk is that the data doesn't live up to what we believe it will. And so that is a risk. But we are managing risk as we go forward. For [indiscernible] I don’t see that all companies -- somebody has just congratulating us for being transparent. I think we have to be transparent with you. This company has spent a lot of money over the years. And so what we're saying is that we are looking after your cash now and we're trying to spend it wisely, I can assure you, if we run into a problem, we will stop spending the money. We are not in the business of just keeping the company going. We are in the business of actually achieving the milestones that we set out to achieve.
Any more questions? After the data is received [indiscernible] how long will it take? That's a really good question. So one cannot assume that the minute we get the data that will sign deals. Big Pharma is very good at keeping you hanging on. And that's why Simon is out there now talking about it, and making sure that there is some competitive interest in what we're doing. And we're also, as I said earlier, very pleased that people are coming to us and asking us how we're getting on. And so we're very open with them. We're telling them what we're doing. But we're not revealing the data until we are absolutely convinced that is solid data. Too many companies go out with data, which is in vitro and early.
When will the in vivo data that has been discussed become available? What studies are being conducted?
Randolph Corteling
John, a couple of studies that have been conducted?
John Hawkins
Yes, certainly. So yes, some of the key studies is that heads up comparison with the classic one size fits all. Looking at safety, by distribution, and the key thing is tissue and cellular targeting, all are being done in parallel at the moment, and will feed out in the next 2 to 3 months.
Iain Ross
And I think that's the question, we're still on time to do in the next 2 to 3 months. The questions coming in. Just checking the pre-submitted ones. Somebody is asking if I'm seeing any signs of improvement in the capital raising market? No, I'm not actually at the moment. It's very tough out there.
Are you seeking to acquire any of the IP of other assets of Codiak Biosciences which is undergoing reorganization under Chapter 11? Yes, we've been looking at that. But unfortunately, you have to realize that I've just said to you that we're going to spend your money judiciously. And whilst I'm sure there's things within the Codiak portfolio that we might quite like to acquire, I think you wouldn't thank me if I was out there spending money buying somebody else's IP. Not at the moment. We have to stand by what we've got and believe in what we've got.
Can you provide an update on the development of CTX in China? That is progressing. And we will trigger milestones in financial year '24? Well, I'm not going to sit here and make forecasts, but basically the relationship with Fosun is actually progressing. Anything else?
Randolph Corteling
Actually, I've got one here on the pre-submitted. Can you confirm that the regulatory authorities are comfortable with the use of exosomes as carriers, for example, pre-existing therapeutics? Absolutely. We've spoken about one of the other companies, Codiak, they do have a clinical trial -- did have a clinical trial doing exactly that. Looking at the improvements for delivering a preexisting therapeutic and just improving the safety of that cargo. So very much within the scope of the CustomEX platform as well. Any more questions, John?
No, I think that is it. So in summary, I think what you've got is very focused company. We have a very focused platform, which we believe has utility to be able to deliver a number of different cargoes. And that's because we have basically got a CustomEX platform. We've got a good knowledgeable team, and that team have been working together for quite some time. Randolph has come back and has really put energy into the exosome program. We believe we can deliver for you, and we're looking forward to having further updates later in the year.
Unidentified Company Representative
Ian, John, Randolph, thank you very much indeed for updating investors today. Could I please ask investors not to close this session, as you will now be automatically redirected to provide a feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure will be greatly valued by the company.
On behalf of the management team for ReNeuron Group plc, we would like to thank you for attending today's presentation. That concludes today's meeting. Good morning. See you.
Question-and-Answer Session
Q -
[No formal Q&A for this event]
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ReNeuron Group plc (RNUGF) Q1 2023 Earnings Call Transcript