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Edison: Regeneus preparing for a clinical licence deal in Japan
Regeneus is aiming to sign one or more clinical development licence deals for Progenza in the current financial year. It is well placed to achieve this goal, having already granted AGC an exclusive licence to manufacture Progenza for Japan, reported promising signs of efficacy from the successful Phase I trial of Progenza in knee osteoarthritis and been granted a Progenza patent in Japan. Regeneus reported an A$3.3m profit in FY17, thanks to the US$5.5m upfront payment and US$1m milestone from the AGC licence deal; further milestone payments are likely to keep it in the black in FY18. Other potential catalysts for FY18 include results from the ACTIVATE Phase I cancer vaccine trial and the CryoShot Canine pre-pivotal trial. Our valuation is virtually unchanged at A$146m or A$0.70/share.
Successful Phase I arthritis trial supportive of a deal
The Phase I trial of Progenza in knee osteoarthritis (OA) met its primary safety endpoint and produced promising signs of efficacy, including clinically meaningful reductions in pain for the majority of patients and improvement in knee cartilage volume. Once AGC has commenced GMP manufacture of Progenza, we expect the next step to be a Phase II efficacy trial in patients with knee OA in Japan, which could support an application for conditional market approval in that country. The Regeneus Japan JV with AGC is in discussions with potential partners for the clinical development of Progenza for OA and other indications in Japan. Regeneus is also in discussions with potential partners to develop Progenza outside Japan.
High regenerative medicine deal values in Japan
We have seen several high-value regenerative medicine deals in Japan in the past 18 months, encouraged by its fast-track regulatory approval pathway. The most relevant example is the January 2015 licence deal between Kolon Life Science and Mitsubishi Tanabe Pharma for the Japanese rights to a cell and gene therapy for knee OA. That deal was worth US$24m upfront, plus US$410m in development, regulatory and sales milestones and a double-digit sales royalty.
Valuation: Adjusted to A$146m, A$0.70 per share
Our valuation increases slightly to A$146m (vs A$145m) or A$0.70/share (unchanged) due to the roll forward of the DCF model, partly offset by changed milestone timing and minor changes to near-term sales forecasts. A deal with a partner for the clinical development and commercialisation of Progenza in Japan is the main near-term valuation driver for the company. If the Regeneus Japan JV was to sign a deal with comparable financial terms to the Kolon/Mitsubishi deal (with half of milestone payments for sales and regulatory milestones) this would increase our valuation to around A$194m or A$0.93 per share.
Full-Year Results 2017
Regeneus Ltd (ASX: RGS), a clinical-stage regenerative medicine company, today released its Full-Year Report for the 12 months ending 30 June 2017.
This financial period has seen the company achieve major milestones that build the foundation for the businesses future success.
Strategic collaboration with AGC of Japan
As part of our Japan strategy, we were successful in securing a strategic collaboration and licensing agreement of our Progenza stem cell technology with AGC of Japan (TYO:5201). AGC is a world-leading glass solution provider and a leading manufacturer of biopharmaceuticals. This is the first collaboration of its type by an Australian biotechnology company in Japan. Under the terms of the collaboration:
- AGC has the exclusive rights to manufacture Progenza in Japan
- AGC will have a 50% interest in Regeneus Japan, which holds the exclusive rights for the clinical development and commercialisation of Progenza for osteoarthritis and all other clinical indications in Japan
- In January 2017, Regeneus received US$5.5 million as an upfront payment and a further US$1million in June upon meeting the primary endpoint in the Progenza STEP trial for osteoarthritis. The company will be entitled to 2 further payments of US$5m upon meeting specific development and approval milestones.
On 22 May, we announced the positive results from the Phase 1 STEP trial of Progenza in patients with knee osteoarthritis, meeting the primary endpoint of safety and tolerability.
Other key outcomes from the trial were:
- significant, rapid and sustained reduction in knee pain at both Progenza doses
- significant improvement in cartilage volume compared to placebo
- positive signs of disease modification consistent with preclinical results
Other key achievements for the period include:
- advanced discussions with potential partners for clinical development of Progenza for a range of indications in Japan and other territories
- patent allowed in Japan covering Progenza technology for the treatment of OA and other inflammatory conditions
- patent allowed in EU, USA and China covering Sygenus stem cell secretions technology for the topical treatment of acne
- commenced Australian Research Council linkage funded collaborative research project with Macquarie University and University of Adelaide to explore Progenza and Sygenus use in the treatment of chronic pain
Sygenus technology shows more potent and longer lasting effect on pain than morphine
Regeneus (ASX: RGS), a clinical-stage regenerative medicine company, today announced that a preclinical post-operative pain study has shown that topical application of Sygenus, has significantly greater and longer lasting analgesic effect than an injection of morphine.
Sygenus is an allogeneic cell secretions technology platform that comprises cytokines, growth factors and exosomes from adipose-derived mesenchymal stem cells (MSCs). These bioactive molecules are known to reduce pain and inflammation and encourage accelerated healing and repair.
These promising results show that Sygenus is having a sustained analgesic effect above and beyond the anti-inflammatory effect that others have observed with MSCs and their secretions.
The study, performed by MD Biosciences, a preclinical CRO in Israel, involved modelling a minor surgical procedure. Sygenus (high dose and low dose), applied topically to the wound area was tested head-tohead with a standardised dose of morphine, the opioid analgesic. The analgesic properties of the treatments were assessed using a reflex response time to a thermal stimulus. Importantly, Sygenus showed a dose dependent analgesia with the beneficial effect of the high dose lasting for up to 3 hours. In comparison, morphine only had short-lived benefits and had lost its effect within 3 hours (see figure below).
Investigations into pain
These results will inform our collaborative ARC Linkage program between Regeneus, Macquarie University and the University of Adelaide that is investigating the use of stem cell technology for the treatment of pain. The investigations are being led by Professor Mark Hutchinson of the University of Adelaide and Professor Ewa Goldys of Macquarie University.
Professor Hutchinson is an expert in pain and the role of the immune system in pain. “These are very impressive results, the MSC secretions are having a powerful and rapid analgesic effect that rival and outlast the gold standard opioid analgesic. We are keen to translate this work into our current research programs with the potential to explore this further in clinical trials on pain in humans” said Professor Hutchinson.
Sygenus is a cell secretions technology platform that utilises the molecules (including cytokines, growth factors and exosomes) that are secreted by adipose-derived MSCs and work to reduce pain and inflammation and encourage accelerated healing and repair. Regeneus has developed technology for the production of secretions of MSCs which have the potential to be used for multiple indications and in a range of delivery methods. Regeneus is currently exploring the use of Sygenus for topical application to inflammatory skin conditions such as acne and the reduction of pain and accelerated healing for wounds.
Regeneus appoints Japan-based non-executive director with extensive pharmaceutical industry experience
Regeneus (ASX: RGS), a clinical-stage regenerative medicine company, is pleased to announce the appointment of Leo Lee as an independent non-executive director of Regeneus with effect from December. Leo is a senior executive with over 20 years of experience in pharmaceutical innovation, commercialization, regulation and policy development. He has worked in North America and Asia and has spent the last 12 years living and working in Japan. Leo is President of Merck Serono, Japan and was previously the President of Allergan, Japan.
Regeneus Chairman, Dr Roger Aston said: “On behalf of the Directors, I welcome Leo to the Regeneus Board. Leo brings a wealth of pharmaceutical business experience gained from his senior leadership roles in Allergan and Merck Serono. His skills, experience, network and knowledge of the Japanese market make him a valuable and strategic addition to the Board particularly with our recent collaboration with AGC in Japan and our focus on clinical licensing.
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