LONDON ¿ ReNeuron Holdings plc said it signed a second agreement with a U.S. company, to use its neural stem cells as a tool for drug discovery, and it said it has not solved the production problems with its cell lines that have held back the start of clinical trials.

The unnamed company will use stem cells from different regions of the brain in the discovery of genes associated with mental disorders and the subsequent discovery of therapeutic agents. In June, ReNeuron announced a deal with Vistagen Inc., of Burlingame, Calif., to use ReNeuron¿s stem cells for in vitro screening of drugs for toxicity and efficacy.

Chief Financial Officer Michael Hunt told BioWorld International, ¿This second deal is in a similar field and will use our technology in a similar way. It is another step forward in the use of stem cells in drug discovery.¿ The terms of the deal were not disclosed.

ReNeuron¿s major focus is on stem cell transplantation, with its lead project a stem cell line for the treatment of stroke. The company was aiming to start clinical trials this year, but in June said it was having problems ramping up production of stem cells. It can make the cells and get them to divide, but at high-population doubling they are unstable. The company said last week that so far attempts to rectify the problem have not succeeded, but it is continuing to work on other methods for achieving genetic stability of the cells.

¿Obviously, it is an issue for us and a problem we would rather not have, but we are working through the alternatives,¿ Hunt said. ¿The implantation side is going to take us longer than anticipated.¿ As a result, ReNeuron is seeking to do deals. ¿We want to focus on taking the risk out of the mix and broaden the technology base of the company,¿ he said. ¿We are not just a stem cells company; we are a stem cells and CNS company.¿

Hunt said that other stem cell companies must be encountering similar problems to those faced by ReNeuron. ¿There is no good news at the moment on stem cell implantation. The feeling is there may be problems elsewhere, but companies are not being specific about them because, being privately owned, they don¿t have the duty to disclose, which we have.¿

ReNeuron, based in Guildford, Surrey, also announced it had positive results in a Phase Ia trial of its lead product, ReN1869, in the treatment of neuropathic pain. The data will be presented in October at the German Pain Congress in Berlin.