ReNeuron Group — Zero overhang

ReNeuron Group (AIM: RENE)

Last close As at 28/03/2024

3.38

0.00 (0.00%)

Market capitalisation

2m

More on this equity

Research: Healthcare

ReNeuron Group — Zero overhang

The last 16.42% of the former Woodford stake in ReNeuron has now been sold to Obotritia Capital. The rest of the former Woodford stake, 16.58%, is now managed by Schroders in an investment trust. Removing the 16.42% overhang should help the shares to stabilise and recover. Clinically, ReNeuron aims to present more retinitis pigmentosa eye data during 2020 adding to the strong initial data. Stroke data from the CTX PISCES III trial are expected around mid-2021. We value ReNeuron at £197m, unchanged.

Analyst avatar placeholder

Written by

Healthcare

ReNeuron Group

Zero overhang

Shareholder update

Pharma & biotech

10 February 2020

Price

150p

Market cap

£47m

$1.32/£

Cash (£m) at 30 September 2019

21.3

Shares in issue

31.6m

Free float

99.7%

Code

RENE

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.0

17.7

165.5

Rel (local)

7.5

15.6

148.4

52-week high/low

325.00p

47.50p

Business description

ReNeuron Group is a UK biotech company developing allogeneic cell therapies. The first pivotal Phase IIb trial for CTX neural stem cells for chronic stroke disability is underway. Human retinal progenitor cells are also being studied for RP (in Phase I/IIa).

Next events

Further hRPC Phase I/IIa data

Ongoing

Chronic stroke US Phase IIb study readout

Mid-2021

FY20 results

July 2020

Analyst

Dr John Savin

+44 (0)20 3077 2500

ReNeuron Group is a research client of Edison Investment Research Limited

The last 16.42% of the former Woodford stake in ReNeuron has now been sold to Obotritia Capital. The rest of the former Woodford stake, 16.58%, is now managed by Schroders in an investment trust. Removing the 16.42% overhang should help the shares to stabilise and recover. Clinically, ReNeuron aims to present more retinitis pigmentosa eye data during 2020 adding to the strong initial data. Stroke data from the CTX PISCES III trial are expected around mid-2021. We value ReNeuron at £197m, unchanged.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/18

0.9

(21.0)

(55.66)

0.0

N/A

N/A

03/19

2.7

(17.2)

(45.34)

0.0

N/A

N/A

03/20e

6.1

(22.8)

(60.33)

0.0

N/A

N/A

03/21e

3.1

(30.8)

(83.69)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Woodford’s shares now held in Germany

By mid-2019, Woodford Investment Management held 32.99% of ReNeuron split over two funds. On 17 October, 16.42% from one fund was transferred to Link Solutions. The 16.58% in the other fund was transferred on 16 December 2019 to an investment trust managed by Schroder Investment Management. The Link holding has been sold to the private German investment firm Obotritia Capital. Obotritia states (website) that it invests in real estate, venture capital, financial services and other corporate opportunities. The crucial factor is that these shares have ceased to overhang the market.

hRPC cell-based therapy might treat any RP patient

Retinitis pigmentosa (RP) is an inherited, degenerative eye disease caused by one of more than 100 different gene mutations. ReNeuron’s human retinal progenitor cell (hRPC) therapy is cell-based and not mutation specific, so it could potentially treat any RP patient. The dataset for hRPC is currently eight patients, all of whom had at least three months of follow-up (data presented at the 2019 American Academy of Ophthalmology Meeting). The overall result was confounded by two patients who had surgery-related adverse events leading to vision loss. The other six patients had a mean ETDRS visual acuity improvement of 17.8 in the treated eye vs 8.3 in the untreated eye.

Valuation: £197m with cash into 2021

ReNeuron recorded a net loss of £3.9m in H120. Cash and equivalents on 30 September were £21.3m, providing funding into 2021. We retain our indicative value of £197m or 624p per share. This uses a 25% probability of success for hRPC. It is possible that hRPC could become the major valuation contributor as more data emerge over 2020, and its positioning against gene therapy products and path to FDA review become clearer. The CTX stroke indication is a major unmet need, but the current PISCES III trial cannot produce data before mid-2021, our expected launch window as from 2024 onwards is unchanged .

Exhibit 1: Financial summary

£'000s

2018

2019

2020e

2021e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

897

2,720

6,094

3,094

Cost of Sales

0

0

0

0

Gross Profit

897

2,720

6,094

3,094

R&D expenses

(16,657)

(16,240)

(24,685)

(28,634)

SG&A expenses

(4,616)

(4,779)

(5,078)

(5,586)

EBITDA

 

 

(20,222)

(17,915)

(23,448)

(30,965)

Operating Profit (before amort. and except.)

 

(20,376)

(18,299)

(23,575)

(31,032)

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Operating Profit

(20,376)

(18,299)

(23,575)

(31,032)

Other

0

0

0

0

Net Interest

(591)

1,064

792

240

Profit Before Tax (norm)

 

 

(20,967)

(17,235)

(22,783)

(30,792)

Profit Before Tax (FRS 3)

 

 

(20,967)

(17,235)

(22,783)

(30,792)

Tax

3,352

2,887

3,579

4,152

Profit After Tax (norm)

(17,615)

(14,348)

(19,204)

(26,640)

Profit After Tax (FRS 3)

(17,615)

(14,348)

(19,204)

(26,640)

Average Number of Shares Outstanding (m)

31.6

31.6

31.8

31.8

EPS - normalised (p)

 

 

(55.66)

(45.34)

(60.33)

(83.69)

EPS - FRS 3 (p)

 

 

(55.66)

(45.34)

(60.33)

(83.69)

Dividend per share (p)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

912

1,522

1,682

1,959

Intangible Assets

186

186

186

186

Tangible Assets

726

632

792

1,069

Other

0

704

704

704

Current Assets

 

 

41,706

29,988

11,684

15,849

Stocks

0

0

0

0

Debtors

1,285

834

834

834

Cash and deposits

37,411

26,386

8,082

12,247

Other

3,010

2,768

2,768

2,768

Current Liabilities

 

 

(5,949)

(7,402)

(7,402)

(7,402)

Creditors

(5,949)

(7,261)

(7,261)

(7,261)

Short term borrowings

0

0

0

0

Short term leases

0

(141)

(141)

(141)

Other

0

0

0

0

Long Term Liabilities

 

 

0

(864)

(864)

(30,864)

Long term borrowings

0

0

0

(30,000)

Long term leases

0

0

0

0

Other long term liabilities

0

0

0

0

Net Assets

 

 

36,669

24,108

5,965

(19,593)

CASH FLOW

Operating Cash Flow

 

 

(14,887)

(11,947)

(18,808)

(25,733)

Net Interest

383

342

792

242

Tax

0

0

0

0

Capex

(235)

(239)

(287)

(344)

Acquisitions/disposals

0

0

0

0

Financing

0

0

0

0

Dividends

0

0

0

0

Other

0

0

0

0

Net Cash Flow

(14,739)

(11,844)

(18,304)

(25,835)

Opening net debt/(cash)

 

 

(53,061)

(37,411)

(26,380)

(8,076)

HP finance leases initiated

0

0

0

0

Other

(911)

813

0

0

Closing net debt/(cash)

 

 

(37,411)

(26,380)

(8,076)

17,759

Source: ReNeuron accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by ReNeuron Group and prepared and issued by Edison, in consideration of a fee payable by ReNeuron Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by ReNeuron Group and prepared and issued by Edison, in consideration of a fee payable by ReNeuron Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2020. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on ReNeuron Group

View All

Latest from the Healthcare sector

View All Healthcare content

Research: Investment Companies

Utilico Emerging Markets Trust — Offering long-term value in emerging markets

Utilico Emerging Markets Trust (UEM) is managed by Charles Jillings at ICM Group. It is a specialist fund focusing on infrastructure and utility assets in emerging markets. The manager is encouraged by the prospects for UEM’s investee companies, supported by urbanisation and significant growth in the regions’ middle classes. He also suggests that it ‘is a very interesting time in the world’, with issues such as climate change and the shift to renewable energy high up on the global agenda, which should be beneficial for UEM’s investments. While not used as a formal benchmark, as shown in the chart below, the trust’s NAV has markedly outperformed the MSCI Emerging Markets Index over the last decade.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free