Australian clinical-stage regenerative medicine company, Regeneus Ltd (ASX: RGS) recently announced positive results from its preclinical trial of Progenza in the treatment of allodynia, a condition in which pain occurs from non-painful stimulation of the skin, such as light touch. The company utilizes stem cell technologies to establish a portfolio of novel cell-based therapies to cater to critical unmet medical needs.
The trial, completed with the University of Adelaide, showed a single injection of Progenza given on day 14 post-nerve injury was effective in gradually reversing allodynia to a level that is not significantly different than prior to the injury. This study supports the companyâs growth strategy targeting the global neuropathic pain market, which at present has limited successful treatment options and many with substantial unwanted side effects such as the addictive opioid pharmaceuticals.
In late January 2019, the Board of Regeneus Ltd had appointed highly experienced Mr. Leo Lee as its new CEO. Following his appointment, Mr. Lee has driven a review of the companyâs operations, assets and strategy to make sure that the company is well-positioned to maximise the value from its existing assets.
The company is aiming to finalise a Phase 2 clinical study, commercialise Progenza for osteoarthritis with Japan product launch in 2023. Subsequently, Regeneus plans to bring Progenza for osteoarthritis to huge and potential European and US markets. Over the longer-term, the company will focus on licensing Progenza for osteoarthritis globally.
Besides this, the company is exploring additional therapies in pain utilizing the companyâs Progenza and Sygenus technologies, with funding and activities supported by scientific partnership model. The Pre-clinical animal studies for both Progenza and Sygenus have demonstrated positive outcomes in the treatment of pain, disease modification.
Capital Raising Initiatives
In order to fund the Progenza Phase 2 development, the company recently announced a 1 for 6 pro rata non-renounceable entitlement offer of fully paid ordinary shares in Regeneus to raise around $3.2 million. This announcement follows the successful completion of $2.34 million placement which received strong support from institutional, sophisticated and professional investors from Australia, Japan, Singapore, China and the US.
Mr. Lee, on placement completion, expressed gratitude to the companyâs new and existing shareholders for their continued support and the confidence they had placed in the company in steering the company towards long term value creation.
The Timetable for the Entitlement Offer is as follows-
It is to be noted that the Entitlement Offer is partially underwritten to $1.8 million by the Companyâs Directors namely, Messrs Leo Lee, Glen Richards, Barry Sechos and John Martin. This demonstrates the Boardâs continued confidence in Regeneusâ strategic focus on delivering regenerative therapies for the US$69 billion global pain market and its immediate plans to commercialise Progenza in Japan.
The offer price of the Entitlement Offer is $0.08 per New Share which is representing a discount of 6% to the last traded price of the companyâs shares before the Entitlement offer was announced i.e., $0.085 on 29 July 2019 and a 18% discount to the 30-day VWAP i.e., $0.098 to 29 July 2019.
The total funds raised via placement and Entitlement Offer will amount to $5.5 million, which will provide the Company with sufficient funds to secure a commercial licensing deal for Progenza for osteoarthritis in Japan.
The company is currently on the verge of securing a commercial licensing deal. The funds, in combination with milestone payments to be received from the Companyâs Japanese partner, will be used to fully fund the commercialisation of Progenza for osteoarthritis in Japan, by 2023.
The Board is currently finalising various initiatives for implementation in early FY2020, which will align the Companyâs operations with its revised strategic direction and ensure the efficient and effective deployment of capital.
June Quarter Cashflow Analysis
During the June Quarter, the company spent around $130k of cash on research and development, $825k of cash on staff costs and $553k of cash on administration and corporate costs. The total net cash used in operating activities during the June quarter was around $1.5 million. At the end of the quarter, the company had cash and cash equivalents of $255k. In the September quarter, the company is expecting to spend ~$80k on research and development activities.
At market close on 2nd August 2019, Regeneus shares were trading at a price of $0.100, up 5.263% with a market capitalization of circa $19.84 million. Investors may look at the indicative development timeline of the company, as mentioned below:
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