Operational Highlights
- Significant progress with late pre-clinical development of lead ReN001 stroke therapy, including repeat efficacy and dose response data and completion of scale-up to full cGMP1standard
- Pre-clinical testing programme for ReN001 cell line approaching completion, with IND2clinical trial application expected by the end of 2006
- Scale-up and late pre-clinical development commenced for ReN005 therapy for Huntington’s disease
- Early pre-clinical data presented for ReN004 programme for Parkinson’s disease and ReN003 programme for degenerative diseases of the retina
- Manufacturing and marketing rights licensed to Chemicon, Inc. for ReNcellTMneural stem cell lines for non-therapeutic applications
- ReNcellTMhepatocyte (liver)cell line developed for non-therapeutic applications
- Cross-licence and cell supply agreements signed with StemCells, Inc.
- Intellectual property portfolio greatly strengthened
Financial Highlights
- Successful flotation on AIM, raising £9.5 million before expenses
- Interim funding of £0.7 million announced today, satisfying outstanding licence obligation regarding aggregate funds raised by the Company
- Loss for the year of £6.3 million (2005: £3.2 million) after non-cash, non-recurring exceptional charges of £1.2 million (2005:nil)
- Net cash outflow before cash management and financing items £4.6 million (2005: £2.7 million)
- Cash and short term investments at 31 March 2006 of £5.1 million (2005: £0.4 million)
Commenting on the results, Professor Trevor Jones, Chairman, said:
“Over the past year, we have made significant progress towards the execution of our strategy to exploit the full potential of ReNeuron’s stem cell technologies. Most importantly, we remain on track to achieve our 2006 objective of submitting an IND application to the FDA for approval to commence human clinical trials with our lead ReN001 stem cell therapy for disabled stroke patients. This filing will represent a substantial milestone for the Company and will be a significant event, we believe, in the wider stem cell field in its efforts to translate the potential of stem cell science into safe and effective therapies addressing major unmet medical needs.
We have also been able to demonstrate progress with our other therapeutic programmes during the year, as well as successfully exploit the near-term revenue potential of our stem cell lines in non-therapeutic applications. We look forward to building on the progress made over the past year as ReNeuron moves towards becoming a clinical stage biotechnology company in one of the most exciting fields in medicine.”
Chairman’s and Chief Executive Officer’s Joint Statement
REVIEW OF OPERATIONS
The year ended 31 March 2006 has seen a transformation in the fortunes and prospects of the Group, with respect to both its research and development programmes and its financial condition.
ReN001 stem cell therapy for stroke
ReNeuron’s most advanced therapeutic programme is its ReN001 stem cell therapy for disabled stroke patients, a group representing a significant unmet medical need. During the period, our original ReN001 pre-clinical rodent efficacy data in stroke were published in the Journal of Experimental Neurology. Importantly, we were able to replicate these results during the period using ReN001 cells drawn from production lots manufactured to cGMP standard, equivalent to those that will be used in clinical trials. These new results also showed a clear dose-ranging effect, indicating that a higher ReN001 dose has the potential to reverse both the sensory and motor symptoms associated with stroke disability. We believe that this is the first time such a dose-ranging effect has been clearly sho wn using neural stem cells in a pre-clinical model of a neurodegenerative condition.
During the year, we have made significant progress in driving ReN001 through an intensive pre-clinical safety testing programme ahead of our first application to commence clinical trials with this therapy. In designing this pre-clinical testing programme, we benefited greatly from input received at meetings taken with regulatory authorities in the UK, mainland Europe and the US during the year, including our pre-IND meeting with the US Food and Drug Administration (FDA) held in July 2005. A pre-IND meeting is a formally minuted precursor to the filing of an IND application to the FDA, and serves to alert the applicant to items or concerns that the regulator may have with the proposed therapy, and which the regulator will consequently expect to have been addressed in the IND submission. We have been encouraged by the FDA’s response at our pre-IND meeting and by the results of the ReN001 pre-clinical testing programme thus far, which indicate that our cells are safe when tested across a range of important in vitro and in vivo studies.
During the year, we have also successfully completed the scale-up and cell banking of the ReN001 product. One of ReNeuron’s key competitive advantages is the ability of its proprietary c-mycERTAM expansion technology to scale up human stem cells into a well-characterised, consistent and stable product for wide-scale clinical use. Master and working cell banks of ReN001 cells have now been manufactured to full cGMP standard, and fully tested for purity, sterility and stability. These cell banks contain the vials of ReN001 cells from which all future clinical and in-market product will eventually be grown. This gives us the potential to progress our ReN001 stroke therapy to the clinic and beyond without the need to re-derive ReN001 cells from source material at any stage in the future, thereby reducing risk, cost and time from the development pathway for this product.
As a result of the above progress, and subject to successful completion of the remaining pre-clinical testing programme, we intend to submit an IND application to the FDA, by the end of 2006, for approval to commence initial human clinical trials with ReN001.
Other therapeutic and non-therapeutic programmes
We have made considerable progress with our follow-on therapeutic programmes during the year. In February 2006, we signed a contract with Angel Biotechnology Holdings plc to scale up our ReN005 stem cell line for Huntington’s disease, initially producing a master cell bank to full cGMP standards. We have already generated positive pre-clinical efficacy data with this cell line in a Huntington’s disease model, and the ReN005 programme is currently in pre-clinical development.
During the period, we announced that initial in vivo testing of our ReN004 candidate stem cell lines showed them to have attributes that may favour the reversal of the neurological deficits seen in Parkinson’s disease. Further pre-clinical studies are underway in appropriate models of this disease. A further medium term goal with this programme is to develop a delivery system which will serve to protect the ReN004 cells once implanted.
The early development work associated with our ReN004 programme for Parkinson’s disease and our ReN005 programme for Huntington’s disease is being funded in part under the £2.2 million UK Department of Trade and Industry Technology Programme grant awarded to ReNeuron and the other consortium members in January 2005.
Shortly after the year end, we also announced initial survival efficacy data with our ReN003 stem cell therapy programme for diseases of the retina, as well as signing a collaborative research agreement with the Schepens Eye Research Institute at Harvard Medical School in Boston to further pursue this programme.
We have made good progress during the period wit h our ReNcellTM stem cell lines for drug discovery applications in the pharmaceutical industry. Shortly after the year end, we licensed two of our first generation ReNcellTM neural stem cell lines to Chemicon International, Inc., a leading US-based provider of biological products. Under the licence, Chemicon will exclusively manufacture and distribute the cell lines worldwide for research purposes, providing ReNeuron with a near-term royalty stream. During the period, we also completed initial development of a second generation ReNcellTM hepatocyte (liver) cell line with high potential utility as a drug toxicology testing and screening tool. We have generated and presented key functional data relating to this cell line and we are currently optimising its growth characteristics ahead of seeking a partner to launch the line commercially.
Other activities
In July 2005, we signed a landmark cross-licence with StemCells, Inc., a leading US, NASDAQ-quoted adult stem cell development company. In April 2006, we signed a further agreement with StemCells providing for ReNeuron to supply StemCells with cell lines generated using our c-mycERTAM stem cell expansion technology, for use in StemCells’ areas of therapeutic focus. These cell lines will be produced to standards appropriate for clinical and commercial use, and ReNeuron will derive a commercial return from the supply of the cell lines.
During the period, we have continued to strengthen our intellectual property position. In January 2006, we received a Notice of Allowance from the US Patent and Trademark Office concerning a key patent application. This application contains broad claims covering methods of treatment of different types of brain damage by the transplantation of conditionally immortal3 neural stem cells, such as those generated by ReNeuron’s c-mycERTAM stem cell expansion technology. Equivalent patents to this US application had already been granted in Europe and other significant territories.
We have filed further patent applications during the year relating to specific cell lines for both therapeutic and non-therapeutic applications. Our cross-licence with StemCells, Inc. has also greatly strengthened our overall portfolio of proprietary and licensed patents covering both neural and other stem cell types. As a result, the Group remains well-placed to aggressively protect its stem cell products and technologies from an intellectual property perspective as those products move towards commercialisation.
In August 2005, we successfully floated the Company on the London AIM market, raising £9.5 million before expenses from both UK and US institutional investors and making ReNeuron the only publicly-quoted adult stem cell company in the UK. As part of the flotation, warrants were also issued on the basis of one warrant for every two new Ordinary shares, exercisable at 30p per share by 12 February 2007.
In April 2006, we announced our intention to raise further funds through an institutional placing. The resolutions pertaining to this proposed funding were carried at an Extraordinary General Meeting of the Company held on 28 April 2006. We have, however, decided to defer the bulk of these fundraising efforts pending further progress with the ReN001 stroke programme later this year, most notably the filing of the IND application for this programme. We believe that this will offer the Company a greater opportunity to raise the funds required for the early clinical phase of the stroke programme on terms less dilutive to existing shareholders. In the meantime, we have today announced a small interim funding of £0.7 million at a narrow discount to current mid-market price. This interim funding, when combined with the funds raised on flotation, will satisfy an outstanding licence obligation regarding aggregate equity funds raised by the Company.
During the year, we have restructured the Board of the Company to reflect its public company status. As a result, Bill Edge and Mark Clement stepped down during the period and we welcomed Dr Paul Harper to the Board. We intend to make further appointments to the Board and senior management team in due course, reflecting the ongoing transition of the Company from a research-centred organisation to a product-focused, clinical stage enterprise.
SUMMARY OF RESULTS
In the year ended 31 March 2006, the Group recorded turnover of £9,000 (2005: £3,000), principally representing sub-licence income arising from the out-licensing of a non-core patent jointly owned by the Group and a UK academic institution.
Net operating expenses before exceptional items increased in the period, as expected, to £5.9 million (2005: £3.4 million). Of this increase, £1.9 million relates to research and development costs which increased to £4.3 million (2005: £2.4 million) in the period, principally due to the late pre-clinical development costs associated with the ReN001 stroke programme. The balance of the increase in operating expenses relates to general and administration costs which increased by £0.6 million to £1.6 million (2005: £1.0 million) in the period. Again, this increase was expected, and was largely attributable to costs associated with business development activities during the period, as well as incremental costs associated with the Company’s newly acquired public status following its flotation.
Exceptional charges in the period totalled £1.2m (2005: £nil). Of these, £0.9 million relates to a provision against the intangible asset arising from the licence granted to ReNeuron in July 2005 to certain patents and intellectual property owned by StemCells, Inc. Based upon an impairment review, the directors believe that it is appropriate to fully provide against this asset, given the early stage nature of the technologies to which this licence relates. The £0.3 million balance of exceptional charges in the period relates to non-recurring net charges associated with the cancellation and re-issue of employee share options.
Other operating income increased to £270,000 in the period (2005: £43,000), representing grant income recognised as the Group’s UK DTI Technology Programme stem cell grant was initiated.
Interest receivable increased to £197,000 in the period (2005: £53,000), due to interest earned on proceeds from the Company’s flotation. Interest payable in the period totalled £250,000 (2005: £250,000), representing the premium payable on short term debt issued prior to the Company’s flotation.
Tax credits booked against research and development expenditure increased to £0.5 million in the period (2005: £0.3 million), reflecting the Group’s increased research and development expenditure during the period.
The resulting loss for the financial year increased to £6.3 million (2005: £3.2 million), with £1.2 million of the increase attributable to the non-recurring, non-cash exceptional charges explained above.
Net cash outflow before management of liquid resources and financing increased to £4.6 million (2005: £2.7 million) in the period. This was due to the increase in underlying operating expenses, offset in part by increases in other operating income, interest received and short term creditors and accruals in the period. The increase in creditors and accruals of £0.7 million in the period reflects a general increase in research and development activity in the period and also ReN001 pre-clinical development work contracted for and undertaken in the period but not billed or paid for as at 31 March 2006.
The Group had cash and short term investments totalling £5.1 million as at 31 March 2006 (2005: £0.4 million). The increase is lar gely due to net flotation proceeds of £8.3 million received in the period, together with a further £1.25 million of short term debt financing, including premium, which converted to equity on the Group’s flotation in August 2005. The directors estimate that the Group’s current cash resources, including the funding announced today, are sufficient to meet expenditure requirements into the second quarter of 2007. The directors are confident of raising further funds subsequent to the IND application for ReN001 towards the end of 2006. Consequently, the going concern basis has been adopted in the preparation of the preliminary announcement.
SUMMARY AND OUTLOOK
ReNeuron has developed and maintained a clear strategy to exploit the full potential of its stem cell platform technology in therapeutic areas offering the best chances of clinical benefit and commercial return. Over the past year, we have made significant progress towards the execution of this strategy. Most importantly, we remain on track to achieve our 2006 objective of submitting an IND application to the FDA for approval to commence human clinical trials with our lead ReN001 stem cell therapy for disabled stroke patients. This filing will represent a substantial milestone for the Company and will be a significant event, we believe, in the wider stem cell field in its efforts to translate the potential of stem cell science into safe and effective therapies addressing major unmet medical needs.
We have also been able to demonstrate progress with our other therapeutic programmes during the year. Furthermore, we have successfully exploited the near-term revenue potential of our stem cells in non-therapeutic applications, culminating in the first commercial licence of our ReNcellTM range of stem cell lines, to Chemicon, Inc., in April 2006.
We look forward to building on the progress made over the past year as ReNeuron moves towards becoming a clinical stage biotechnology company in one of the most exciting fields in medicine.
Professor Trevor Jones – Chairman
Michael Hunt – Chief Executive Officer
28 June 2006
- Good Manufacturing Practice
- Investigational New Drug
- Conditionally immortal stem cells are those that, through modification, are capable of dividing indefinitely in vitroto produce stem cell lines, but whose division can be fully arrested by various means, such as removal of certain constituents present in the cell culture media.
- The terms �ReNeuron’, �the Company’ or �the Group’ used in this statement refer to ReNeuron Group plc and/or its subsidiary undertakings, depending on the context.
ReNeuron Group plc Consolidated profit and loss account
For the year ended 31 March 2006
| Note | Year ended 31 March 2006 Unaudited £’000 |
Year ended 31 March 2005 Audited £’000 |
|
|---|---|---|---|
| Turnover | 9 | 3 | |
| Cost of sales | – | – | |
| Gross profit | 9 | 3 | |
| Net operating expenses excluding exceptional items | 2 | (5,885) | (3,382) |
| Exceptional operating costs | 3 | (1,167) | – |
| Net operating expenses including exceptional items | (7,052) | (3,382) | |
| Other operating income | 270 | 43 | |
| Operating loss | (6,773) | (3,336) | |
| Interest receivable and similar income | 197 | 53 | |
| Interest payable and similar charges | (250) | (250) | |
| Loss on ordinary activities before taxation | (6,826) | (3,533) | |
| Tax credit on loss on ordinary activities | 513 | 319 | |
| Loss for the financial year | (6,313) | (3,214) | |
| Loss per 10p ordinary share | |||
| Basic and diluted | 4 | (8.7p) | (9.0p) |
All results arise from continuing operations.
The group has no recognised gains and losses other than the results above and therefore no separate statement of total recognised gains and losses is presented.
ReNeuron Group plc Consolidated balance sheet
As at 31 March 2006
| Note | 2006 Unaudited £’000 |
2005 Audited £’000 |
|
|---|---|---|---|
| Fixed assets | |||
| Negative goodwill | 5 | (1,421) | (1,609) |
| Tangible assets | 1,208 | 1,383 | |
| (213) | (226) | ||
| Current assets | |||
| Debtors | 1,027 | 624 | |
| Short term investments | 6 | 361 | |
| Cash at bank and in hand | 5,134 | 70 | |
| 6,161 | 1,055 | ||
| Creditors: amounts falling due within one year | (1,320) | (579) | |
| Convertible loan | 7 | – | (1,250) |
| Net current assets/(liabilities) | 4,841 | (774) | |
| Total assets less current liabilities | 4,628 | (1,000) | |
| Creditors: amounts falling due after more than one year | – | (8) | |
| Net assets /(liabilities) | 4,628 | (1,008) | |
| Capital and reserves | |||
| Called up share capital | 8 | 9,355 | 3,587 |
| Share premium account | 8 | 5,472 | – |
| Other reserves | 8 | 365 | 365 |
| Warrant reserve account | 8 | 436 | – |
| Profit and loss account | 8 | (11,000) | (4,960) |
| Total equity shareholders’ funds | 8 | 4,628 | (1,008) |
ReNeuron Group plc Consolidated cash flow statement
For the year ended 31 March 2006
| Note | Year ended 31 March 2006 Unaudited £’000 |
Year ended 31 March 2005 Audited £’000 |
|
|---|---|---|---|
| Net cash outflow from operating activities | 9 | (4,995) | (3,150) |
| Returns on investments and servicing of finance | |||
| Interest recieved | 179 | 50 | |
| Net cash inflow from returns on investments and servicing of finance | 179 | 50 | |
| Taxation | |||
| UK corporation tax – research and development tax credits received | 329 | 364 | |
| Capital expenditure | |||
| Purchase of tangible fixed assets | (92) | (27) | |
| Net cash outflow from capital expenditure | (92) | (27) | |
| Acquisitions | |||
| Refund of VAT on acquisition expenses | – | 86 | |
| Net cash inflow from acquisitions | – | 86 | |
| Net cash outflow before use of liquid resources and financing | (4,579) | (2,677) | |
| Management of liquid resources | |||
| Decrease in short term investments | 10 | 361 | 1,615 |
| Financing | |||
| Incr ease in loans | 1,000 | 1,000 | |
| Issue of ordinary share capital | 9,500 | – | |
| Share issue costs | (1,218) | – | |
| Increase/(decrease) in cash in the period | 10 | 5,064 | (62) |
Notes to the financial statements
For the financial statements for the year ended 31 March 2006
1. Basis of preparation
These preliminary results do not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. Results for the year ended 31 March 2006 have not been audited. The results for the year ending 31 March 2005 have been extracted from the statutory financial statements of ReNeuron Holdings Limited that have been filed with the Registrar of Companies and upon which the auditors reported without qualification. The statutory accounts and audit report for the year ended 31 March 2006 have not yet been signed by the directors or the auditors respectively.
These preliminary results for the year ended 31 March 2006 have been prepared in accordance with the accounting policies set out in the statutory financial statements of ReNeuron Holdings Limited for the year ended 31 March 2005. The following additional accounting policies are applicable to the preliminary results for the year ended 31 March 2006:
Going concern
The preliminary announcement is prepared on the going concern basis. Should the Group not be a going concern, the balance sheet would need to be reviewed with assets restated to net realisable values and all long term assets and liabilities being reclassified as short-term and provision would be made for further liabilities that might arise. The Directors estimate that cash held by the Group at the date of approval of the annual results (which includes cash received subsequent to the period end) will not be sufficient to continue funding the trading activities of the Group for a further twelve months from the date of approval of the annual results. However, the directors are confident of raising further funds as outlined in the Chairman’s and Chief Executive Officer’s Joint Statement, both through further fundraising activity and through the exercise of the outstanding warrants. Consequently, the directors have adopted the going concern basis. If further funds were not to be raised over the coming months in the ways described, the Company would be unable to meet its future financial obligations as they fell due.
Basis of consolidation
The consolidated accounts include the financial statements of the Company and its subsidiary undertakings, made up to 31 March 2006. A reconstruction of the ReNeuron Group took place during the period, as described below, in preparation for the admission of the Company’s shares to the AIM market of the London Stock Exchange in August 2005.
The Company was incorporated as MF59657 Limited on 7 June 2005. On 21 June 2005, the Company acquired the entire issued share capital of ReNeuron Holdings Limited by way of a one-for-one share exchange. On 22 June 2005, the Company was re-registered as a public limited company and its name was changed to MF59657 plc and then to ReNeuron Group plc on 23 June 2005.
As a result of the above reconstruction, the results of ReNeuron Holdings Limited and its subsidiary undertakings have been consolidated using the principles of merger accounting, and the comparative results have therefore been presented as if the new group had been established throughout the year to 31 March 2005.
Warrants
Where warrants have been iss ued together with ordinary shares, the proportion of the proceeds received that relates to the warrants is determined by reference to the relative market values of the warrants and options. The proportion of the proceeds that relates to the warrants is credited to a warrant reserve within equity shareholders’ funds.
2. Net operating expenses excluding exceptional items
| Year ended 31 March 2006 Unaudited £’000 |
Year ended 31 March 2005 Audited £’000 |
|
|---|---|---|
| Administrative expenses | 1,589 | 987 |
| Research and development expenditure | 4,296 | 2,395 |
| 5,885 | 3,382 |
3. Exceptional operating expenses
| Year ended 31 March 2006 Unaudited £’000 |
Year ended 31 March 2005 Audited £’000 |
|
|---|---|---|
| Exceptional administrative expenses: | ||
| Share option compensation charge | 273 | – |
| Exceptional research and development expenditure: | ||
| Impairment of intangible assets acquired | 894 | – |
| 1,167 | – |
Share option compensation charge
A charge of £453,000 was made to the profit and loss account in the period, relating to the grant of replacement options over shares in the Company on flotation, the charge being the estimated market value of the shares at the date of grant less the exercise price of the options. This charge was credited back to the profit and loss account reserve. Similarly, a number of share options were cancelled during the period. Compensation charges totalling £180,000 previously made in respect of these options were consequently written back to the profit and loss account in the period, the credits previously made to reserves in respect of these compensation charges being similarly reversed.
Provision against intangible assets acquired
On 1 July 2005, ReNeuron entered into licence and subscription and share exchange agreements with StemCells, Inc., whereby the Group was granted a licence to certain intellectual property and patents owned by StemCells, Inc., and pursuant to which the Company issued, as part consideration for the licence, a total of 8,939,493 ordinary shares of 10p each to StemCells, Inc. Due to the early stage nature of the underlying technology, the directors have carried out an impairment review of the intangible asset so created, and consider that it is appropriate to provide against the asset in full.
4. Loss per share
The basic and diluted loss per share are calculated by dividing the loss for the financial year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. The loss for the financial year ended 31 March 2006 is £6,313,000 (2005: £3,214,000) and the weighted average number of 10p ordinary shares in issue during the year ended 31 March 2006 is 72,532,756 (2005: 35,874,704)
Potential ordinary shares are not treated as dilutive as the group has made a loss in each year.
5. Negative goodwill
Negative goodwill arose during the period ended 31 March 2004 on the acquisition of ReNeuron (UK) Limited by ReNeuron Holdings Limited. The amount of negative goodwill arising on acquisition was £2,830,000. The amount that was in excess of the fair values of non-monetary assets acquired was immediately amortised to the profit and loss account. The remaining negative goodwill of £1,883,000, being equal to the fair values of non-monetary assets acquired, is being amortised over a period of 10 years, the period over which the non-monetary assets are expected to be recovered.
6. Short term investments
Short term investments comprise fixed rate deposits with banks and money market funds, which are not repayable on demand.
7. Convertible Loan
The convertible loan outstanding at 31 March 2005 was an amount payable to Merlin General Partner II Limited in respect of a bridging loan. The convertible debt increased to £2,500,000 in the period, including accrued repayment premium, and was converted into equity on the Group’s flotation.
8. Share capital and reserves
| Share capital account £’000 |
Share premium account £’000 |
Other reserves £’000 |
Warrant reserve £’000 |
Profit and loss account £’000 |
Total equity shareholders’ (deficit)/funds £’000 |
|
|---|---|---|---|---|---|---|
| At 1 April 2005 | 3,587 | – | 365 | – | (4,960) | (1,008) |
| Issue of new ordinary shares | 5,768 | 6,690 | – | – | – | 12,458 |
| Issue of warrants | – | – | – | 436 | – | 436 |
| Costs of share issue | – | (1,218) | – | – | – | (1,218) |
| Loss for the financial year | – | – | – | – | (6,313) | (6,313) |
| Share option compensation charge | – | – | – | – | 273 | 273 |
| At 31 March 2006 (unaudited) | 9,355 | 5,472 | 365 | 436 | (11,000) | 4,628 |
On 21 June 2005 the Company issued 35,874,704 ordinary shares of 10p each to the shareholders of ReNeuron Holdings Limited as part of a one for one share exchange.
ReNeuron Group plc was admitted to trading on the AIM Market of the London Stock Exchange on 12 August 2005, raising £9.5 million before costs of £1.2m, placing 38,000,000 new ordinary 10p shares at a price of 25p per ordinary share. At the same time, the Company issued warrants to subscribers of new ordinary shares on the basis of one warrant for every two new ordinary shares. Each warrant holder is entitled to subscribe for ordinary shares at a fixed price of 30p per share. The warrants expire on 12 February 2007.
A credit was made to the warrant reserve during the period, reflecting the proceeds received from the issue of the warrants issued at the time of the Company’s flotation. The proceeds attributable to the warrants has been determined by reference to the relative market values of shares and warrants following the flotation.
A total of 8,939,493 ordinary 10p shares were issued in relation to the licence and subscription and share exchange agreements with StemCells, Inc. See Note 3
A total of 10,666,666 ordinary 10p shares were issued in relation to the conversion of the debt finance on flotation. See Note 7.
A total of 67,068 ordinary 10p shares were issued in relation to the settlement of the Merlin fee agreement entered into on 31 March 2000.
Other reserves relates to a me rger reserve arising on consolidation, being the share capital and share premium account balances of ReNeuron Holdings Limited at 1 April 2005 less the nominal value of the shares issued by the Company to acquire the shares, reflecting the position as if the merger had occurred on 1 April 2005.
9. Reconciliation of operating loss to net cash outflow from operating activities
| Year ended 31 March 2006 Unaudited £’000 |
Year ended 31 March 2005 Audited £’000 |
|
|---|---|---|
| Operating loss | (6,773) | (3,336) |
| Depreciation of tangible fixed assets | 265 | 269 |
| Amortisation of negative goodwill | (188) | (188) |
| Impairment of intangible assets aquired (see Note 3) | 894 | – |
| Loss on sale of fixed assets | – | 2 |
| Share option compensation charge (see Note 3) | 273 | – |
| (Increase)/decrease in debtors | (199) | 184 |
| Increase/(decrease) in creditors | 733 | (81) |
| Net cash outflow from operating activities | (4,995) | (3,150) |
10. Reconciliation of movement in net (deficit)/funds
| At 1 April 2005 Audited £’000 |
Cashflow £’000 |
Non Cash Movements £’000 |
At 31 March 2006 Unaudited £’000 |
|
|---|---|---|---|---|
| Cash at bank and in hand | 70 | 5,064 | – | 5,134 |
| Short term investments | 361 | (361) | – | – |
| Convertible loan | (1,250) | (1,000) | 2,250 | – |
| Net (debt)/funds | (819) | 3,703 | 2,250 | 5,134 |
As referred to in Note 7, the convertible loan outstanding at 31 March 2005 was an amount payable to Merlin General Partner II Limited in respect of a bridging loan. The convertible debt increased to £2,500,000 in the period, including £500,000 accrued repayment premium (of which £250,000 was accrued in the year), and was converted into equity on the Group’s flotation.
Notes to editors
ReNeuron is a leading, UK-based adult stem cell therapy business. The Group is applying its novel stem cell platform technologies in the development of ground-breaking stem cell therapies to serve significant and unmet or poorly-met clinical needs.
ReNeuron has used its c-mycERTAM technology to generate genetically stable neural stem cell lines. This technology platform has multi-national patent protection and is fully regulated by means of a chemically-induced safety switch. Cell growth can therefore be completely arrested prior to in vivo implantation.
The Group’s lead stem cell therapy, ReN001 for chronic stroke disability, is in late pre-clinical development. Subject to successful completion of pre-clinical testing, the Company plans to file for approval to commence initial clinical trials in stroke by the end of 2006, with trials commencing as soon as possible thereafter.
The Group has also generated pre-clinical efficacy data with its ReN005 stem cell therapy for Huntington’s disease, a rare, genetic and fatal neurodegenerative disorder that affects around 1 in 10,000 people. This programme is in pre-clinical development.
In addition to its stroke and Huntington’s disease programmes, ReNeuron is developing stem cell therapies for Parkinson’s disease, Type 1 diabetes and diseases of the retina.
ReNeuron has also leveraged its stem cell technologies into non-therapeutic areas � its ReNcellTM range of cell lines for use in drug discovery applications in the pharmaceutical industry.
ReNeuron’s shares are traded on the London AIM market under the symbol RENE.L, and its warrants are traded under the symbol RENW.L. Further information on ReNeuron and its products can be found at www.reneuron.com
Further information
ReNeuron Group plc
Michael Hunt, Chief Executive Officer
+44 (0)1483 302560
Financial Dynamics – Europe
David Yates
Sarah Macleod
+44 (0)20 7831 3113
Financial Dynamics – US
Jonathan Birt, John Capodanno
+1 (212) 850 5755