RE: Rene11 Jul 2019 08:47
Stifel research :
We continue to believe 2019 could turn out to be a breakthrough year for ReNeuron. The strong efficacy signal generated by initial results from the Phase IIa trial with hRPCs in retinitis pigemntosa (RP), showing dramatic improvements in vision in all three patients, is now being put to a broader test with planned dosing of three further patient cohorts in the trial. Therefore in October, when the company is scheduled to present clinical data from the retinal programme at a leading US medical conference, from 12 patients with a 1-9 month duration since treatment with hRPCs, we see the potential for further significant re-rating of the stock. In turn, we would expect ReNeuron to have multiple fresh financing and/or licensing/M&A options available. Although it is an open label trial, management remain blinded to the data, and our working hypothesis is that no news between now and October should be seen as good news, given it implies continued strong response rates in keeping with the data presented thus far. ReNeuron ended FY19 (31 March) with £26.4m in cash, and coupled with £12m due in upfront and near-term milestones from the recent Fosun Pharma deal in China, ReNeuron is well placed to continue investing behind both its clinical programmes (includes Phase IIb for CTX in chronic stroke) to drive long-term value. We continue to like the risk-reward profile here and see a number of potential catalysts to build on recent momentum in the stock, hence we reiterate our Buy rating.
Key Points
Looking ahead to October. At the American Academy of Ophthalmology (AAO) annual meeting (12-15 October 2019), the company has been invited to present a 'late-breaker' abstract on its hRPC clinical programme for the treatment of a degenerative retinal disease, retinitis pigmentosa. By then the trial will have treated 12 patients, with a post-treatment follow-up period of 1-9 months. Assuming the full data show a similar level of vision improvement as seen in the three patients from the first efficacy cohort (reading an additional +20 letters, or +4 lines, on an ETDRS eye chart), in our view the implications would be significant in terms of share price recognition, partnering interest and fresh financing options. We continue to have conservative expectations in terms of time to market (launch in 2025 on assumption of two further trials, Phase IIb and Phase III, being required), and probability of success (20%), hence we see upside potential to our current rNPV for the programme at £98m.
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