BioWorld International Correspondent
LONDON - ReNeuron Group plc announced it is going public again, raising £10 million on the junior market in London just two years after being forced to delist from the market by a funding crisis.
The money will pay for initial U.S. clinical trials of the company's stem cell treatment for stroke, which it aims to start in 2006, becoming the first to trial human neural stem cells for that condition. The company expects to have a market capitalization of £25 million to £30 million.
The previous funding difficulties largely were due to problems with the genetic instability of its neural stem cell lines. ReNeuron since has solved that problem and last week cross-licensed the technology with its U.S. counterpart StemCells Inc., clarifying the intellectual property position in adult neural stem cells and giving both companies freedom to operate across the space.
ReNeuron's cell lines are based on stem cells derived from fetuses that have been genetically manipulated to make them easy to culture, while StemCells purifies and expands stem cells found in adult human tissue. The deal gives ReNeuron access to StemCells' patents for the development of neural stem cell therapies targeting stroke, Parkinson's disease and Huntington's disease. In return, StemCells can use ReNeuron's c-mycER technology for immortalizing stem cell lines in its areas of therapeutic focus, which include lysosomal storage disorders, spinal cord injury, cerebral palsy and multiple sclerosis.
Palo Alto, Calif.-based StemCells has the broader IP portfolio, with 40 issued U.S. patents and 100 patents worldwide, plus 100 applications filed, and it has received an equity interest in ReNeuron, also.
No money is changing hands at this stage, but the agreement provides for reciprocal royalties and milestone payments. Guildford, UK-based ReNeuron will supply cell lines for use by StemCells. The size of StemCell's equity share was not revealed.
"This clarifies the position in the adult stem cell space," Michael Hunt, CEO of ReNeuron, told BioWorld International. "StemCells' areas of immediate focus are somewhat distinct from ours and this really strengthens our IP in neural applications."
Hunt said an important consequence was avoiding royalty stacking that has occurred in other fields, such as antibodies. "I'm absolutely confident that if the technology plays out, the commercial returns will be there."
Martin McGlynn, president and CEO of StemCells, said the move was an initial step toward possible collaborations between the companies. "ReNeuron's exclusive focus on conditionally immortalized adult human stem cell technology complements our approach of using highly purified, normal adult neural stem cells that have not been genetically modified."
Despite adding to the regulatory complexity, ReNeuron believes its technology confers advantages in terms of its ability to generate stable cell lines that can be scaled up to produce sufficient cells for treating large patient populations.
The company has demonstrated efficacy in a preclinical model of stroke and is working on Type I diabetes, Parkinson's disease, Huntington's disease and diseases of the retina. Its wants permission for a U.S. trial in stroke to begin in 2006. "The regulatory position is becoming clearer, and we are encouraged by the responses we have had thus far," Hunt said. "It is not trivial getting approval, but we think the preclinical work we are doing at the moment covers most, if not all of the bases."
The company is making similar overtures to regulators in the UK and Europe. "In the U.S. there is precedent for clinical trials in cell therapy and regulators are more receptive; in the UK and Europe it is trickier because there is a patchwork of regulations," Hunt said.
ReNeuron has considered a number of possibilities before opting to go public again, with Hunt noting ruefully, "Stem cells is not the easiest space to raise money." ReNeuron was formed in 1997 with £5.25 million from Merlin Biosciences, of London. The company went public in November 2000, raising £19.5 million and becoming the only quoted stem cell company in Europe. In 2003 Merlin put fellow investors out of their misery, paying £3.6 million to take the company private again.