Regenerative medicine specialist ReNeuron (RENE:AIM) is heading into what could be a milestone year in its history that could provide hope for those left disabled by a stroke. The £60 million cap expects to report initial results in the second half of 2015 from the second phase clinical trials of CTX, designed to aid recovery in those hit by a stroke. Positive data would move the treatment a step closer to reaching the market. We believe the shares are worth consideration at 3.328p.

After spending years in the development lab the second stage of the three-phase clinical trials process provides the first indication that a treatment works. The first phase only seeks to prove a patient have any negative side effects.

Small cap - Reneuron - 23 December 2014

Near-term, ReNeuron is scheduled to report safety data in the first half of 2015 for CTX to fight critical limb ischaemia, which restricts blood-flow to the hands, feet or legs causing pain and potentially sores.

The Guildford-based company works to make therapies that treat conditions where there is not yet an approved adequate product. It specialises in stem cells which repair damaged cells in the body. CTX is an injection into the brain that encourages the regeneration of neurons (cells that send information around the body known as nerve cells) that have been killed by a stroke.

Delivery schedule

ReNeuron’s stroke therapy is forecast to hit the market in 2020, according to N+1 Singer, but could be sold in Japan earlier due to legislation that allows conditional approval based on phase two data. The critical limb ischaemia treatment could be approved a year later.

N+1 Singer’s analysts estimate £1.1 billion peak sales within five years of the stroke treatment’s launch and £450 million for the critical limb ischaemia product, if approved.

ReNeuron is expected to form a partnership with a larger player to fund the treatment’s route to market, if 2015’s data is positive. Striking such a deal is expected to put the company into positive earnings with N+1 Singer forecasting a £26.2 million pre-tax profit in 2017.

Until then the company has £16.1 million cash which analysts at N+1 Singer expect to last until the third quarter of 2016. This is when CTX to treat those suffering from a stroke could be in the final clinical trials phase.

ReNeuron will be making its own products for the latter stage clinical trials after securing a £7.8 million grant from the Welsh government (22 Jul ‘13) to build its own factory. The company will re-locate to the site in Cardiff in spring 2015.

Issue Date: 05 Jan 2015