Can the Japanese Deal Carve-Out New Potential Growth For Regeneus Ltd?

  • Nov 19, 2018 AEDT
  • Team Kalkine
Can the Japanese Deal Carve-Out New Potential Growth For Regeneus Ltd?

Regeneus Limited (ASX: RGS), a clinical-stage regenerative medicine company, has a strong product basket which includes its proprietary stem cell and the immuno-oncology technologies. Technologies used by RGS such as allogeneic stem cell and secretions-based technology have the ability to provide treatment for varied symptoms.

RGS has signed a strategic collaboration and licensing agreement with a leading Japanese biopharmaceutical manufacturer AGC to get the exclusive rights for the manufacturing of Progenza for all. The two companies with 50:50 stake focused mainly on the development and commercialization of Progenza in Japan which will be used towards symptoms pertaining to Osteoarthritis and inflammations.

The Japanese joint venture has established a cell production facility at AGC’s Yokohama research center and is working towards the process development for having a commercial manufacturing setup.

On February 2018, Progenza was classified under Advanced Therapy Medicinal Product by the committee for European Commission.

On October 18, 2018, RGS has received a notice of Intention to grant a European patent, covering the usage of Progenza by the European patent office. The patent to be granted will give RGS commercial rights and expand in around 38 European member states of the European patent office, that include Germany, France, UK and Italy by March 15, 2032. These patents will join the already secured patents in New Zealand, Australia, Japan and the United states of America that will act as strong guard for the RGS commercial rights for Progenza technology platform used in some of the largest regenerative therapeutic markets across the world.

Meanwhile on financial performance front, RGS has faced loss of approximately $5.18m in 2017-18. RGS has approximately $2.7million in cash at the end of September quarter. Loan facility of around $1.4million from Sydney’s Paddington Street Finance will be repaid either after the receipt of 2018-19 R&D payment or by September 30, 2019. The company has not raised any equity funding in last four and a half years.

The successful completion of this licensing deal will result in another cash outflow which has to be paid in the June quarter of 2019.

Japan being the second largest healthcare market in the world has huge potential for Regenerative Med Sector which is projected to grow up to US$5.5bn by 2030. All eyes are now on this pending licensing deal in Japan for Progenza. Currently, the company is in talks with several parties and has reached towards the advanced stage of its discussion process for entering into an agreement for the clinical development and its commercialization in Japan in Q2FY19.

RGS growth story lies with the securement of this Japanese deal but setting proper timeline for such agreements sometimes becomes difficult to follow. But the deal can pave strong road to success for the company, as per its management.

RGS shares have touched the low of $0.10 to the high of $0.27 this year. The scrip is currently trading at the levels of $0.21, up 5% on November 19, 2018.

While biotech and healthcare stocks are pretty risky, this one would be a close watch based on promises that the management is priming its growth on.


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