Appendix 4D and Half Yearly Report
Sydney, Feb 29, 2016 AEST (ABN Newswire) - Regeneus Ltd (
ASX:RGS) is an ASX-listed clinical-stage regenerative medicine company developing cell-based therapies to treat unmet medical needs with a focus on osteoarthritis and other musculoskeletal disorders and oncology diseases for both humans and animals.
The Company is focused on unlocking value in its clinical-stage human and animal pipeline products through generating positive clinical data, technology development and partnering.
During the half-year, the Company achieved significant clinical development and commercial milestones that build upon the efforts over the last financial year.
Human health
Progenza - allogeneic stem cells for human osteoarthritis
The half-year saw the successful completion of the first cohort of 10 patients in the STEP trial. Enrolment is now open to the second and final cohort of 10 patients. The STEP trial (Safety, Tolerability and Efficacy of Progenza) is the first clinical trial of Progenza for knee osteoarthritis.
The completion of Cohort 1 and opening of enrolment to Cohort 2 demonstrates excellent progress towards the clinical development of the Company's allogeneic stem cell therapy. It is anticipated that Cohort 2 will be recruited before the end of FY16.
The trial includes 20 participants with knee osteoarthritis treated at two different doses of cells. Participants receive ultrasoundguided injections of Progenza or placebo directly into their arthritic knee joint. One in five patients receive a placebo injection. The primary objective of the trial is to evaluate the safety and tolerability of Progenza. The secondary objectives are to investigate the effect of Progenza on knee pain and function, quality of life, knee joint structures using magnetic resonance imaging and osteoarthritis biomarkers. Participants will be monitored for 12 months.
Progenza is a scalable platform technology that has the potential to be used as an off-the-shelf treatment option for musculoskeletal disorders and inflammatory or immune-mediated conditions that have limited treatment options. The company has demonstrated the capacity to produce millions of doses from a single donor.
In November 2015, the Company was granted a key Australian patent covering the use of Progenza for the treatment of osteoarthritis and other inflammatory conditions for human and animal applications. The patent is also being pursued for grant in other key territories.
Japan strategy for Progenza
Regeneus has identified Japan as a key target market for the clinical development, manufacturing and partnering of Progenza. In late 2014, laws were enacted in Japan that reform the pharmaceutical and medical regulations providing an accelerated approval process specifically designed for regenerative medicine products, such as Progenza. These new laws allow for the conditional marketing approval of regenerative medicine products that demonstrate safety and probable efficacy without the need for Phase 3 trials. These new laws have resulted in increased R&D investment in Japan and partnering activity over the last 12 months.
Regeneus is in advanced discussions with potential Japanese partners for the manufacture, clinical development and commercialisation of Progenza in Japan.
RGSH4K - human cancer vaccine
In October 2015, a first-in-human clinical trial for RGSH4K was commenced and the first patient was dosed. The trial, known as ACTIVATE, is a single centre, open label, Phase 1 dose escalating study to evaluate the safety, tolerability and preliminary efficacy of RGSH4K. This technology uses a patient's tumour to harness the body's own immune system to fight cancer cells. As part of the trial, the Company has established a tumour bank to enable the banking of both previously collected and new tumours. These tumours are used as source material for the manufacture of the cancer vaccine by the Company.
In December 2015, an Australian patent was granted covering the use of the cancer vaccine technology for the treatment of a range of cancers in humans and animals. The patent is also being pursued for grant in other key territories.
Cell secretions cream for inflammatory conditions
During the first-half, the Company focused its efforts on demonstrating the capacity to produce the cell secretions at commercial scale and identifying and testing the optimal base formulation. The Company has partnered with the CSIRO on scale up manufacturing. Clinical testing is planned for the second half of FY16.
Partnering discussions are progressing well, with a commercially available cosmetic cream, regulated under the National Industrial Chemicals Notification and Assessment Scheme (NICNAS), being planned to be available in Q2 FY17.
HiQCell - autologous cell therapy for human osteoarthritis
In keeping with the Company's announced strategy of transitioning from autologous to allogeneic cell therapy technologies for the treatment of osteoarthritis, the Company has ceased offering HiQCell services for osteoarthritis to medical specialists and no longer collect data in the Joint Registry.
Furthermore, there is continuing uncertainty regarding the regulation of autologous cell therapies in Australia. The Therapeutic Goods Administration (TGA) has not provided any further public guidance following the publication on 29 April 2015 of the submissions it received to its discussion paper on the regulation of autologous stem cell therapies issued in January 2015.
Animal health
CryoShot - allogeneic stem cells for canine and equine osteoarthritis
In November 2015, the Company announced it had secured a partner to jointly fund a pre-pivotal study assessing CryoShot as a treatment for canine osteoarthritis. This study will be undertaken at the University of Pennsylvania School of Veterinary Medicine.
The results of the trial will be used to finalise the design of a pivotal US Food and Drug Administration (FDA) trial with good manufacturing practice (GMP) grade product. The initial results of the study are anticipated in Q1 FY17.
Upon completion of the study, the animal health partner has a period in which to exercise its option to enter into an exclusive licence over the CryoShot technology. Under the terms of the licence, Regeneus will receive an upfront licence fee and be entitled to other developmental milestone payments to be agreed at the time. The animal health partner will be responsible for funding the pivotal study and GMP manufacture of CryoShot and have exclusive global rights for sales and marketing for canine applications.
Regeneus will receive a royalty on all CryoShot sales.
Kvax - autologous canine cancer vaccine
During the first-half, the Company's focus has been on conducting clinical trials for Kvax. Recruitment is now completed in the small osteosarcoma trial being conducted by Dr. Phil Bergman at VCA in the USA. A review of clinical data from the trial will be expected before the end of FY16.
In November 2015, the Company initiated a 45 dog trial of Kvax in combination with chemotherapy for the treatment of canine lymphoma. The trial will be conducted at Small Animal Specialist Hospital (SASH) in Sydney.
Technology development
In November 2015, the Company announced that it had entered into a licence and collaboration agreement with Macquarie University to develop and commercialise a new cell identification and selection technology for high secreting stem cells.
Researchers at the Centre for Nanoscale BioPhotonics at Macquarie University developed this technology. The Company will fund further collaborative development of the technology and its applications.
Financial results
Operating results
The net loss before tax for the half-year period, from continuing operations was $3.1m (31 December 2014: $5.7m). The current half-year results are substantially better than the 2014 half-year. The improvement reflects the containment of costs and the wind down of HiQCell activities. Additionally, FY14 included non-recurring redundancy costs in excess of $0.5m.
Revenue from continuing operations
Revenue during the current period was $881k, a decrease of $385k over the same prior period (2014: $1,267k). The reduction of revenue is due to a number of key factors including the wind down of HiQCell activities and changes in third party R&D licence agreements.
Licence fee income in 6 months to December 2015 of $577k was slightly higher than the prior year (2014: $548k), reflecting the licence option fee received for CryoShot offset by the arrangements with Cryosite being finalised. HiQCell revenue at $170k was $358k below the prior year revenue of $528k.
Cost of sales
The cost of sales reflects the direct manufacture of both the allogeneic product - CryoShot and the autologous product Kvax. The reduction in cost of sales by $432k is predominantly due to the cessation of HiQCell services.
Expenses from continuing operations
Research
The comparative expenditure on research in the half-year period to 31 December 2015 was $1.9 million compared to 31 December 2014 of $3.2 million.
Research expenditure includes costs associated with product development as well as clinical trials. In the 6 months to 31 December 2014 there was significant expenditure incurred in the development of Progenza necessary for the clinical trial. The development of Progenza included outsourced expenditure associated with the Cryosite research arrangement. In the current period the expenditure is significantly less as it is more reflective of the clinical trials being undertaken. These trials are longer term in nature and expenditure will be incurred over an extended period.
The current accounting policy, and to comply with the accounting standards, is that all costs incurred for research are fully expensed. This is being continually reviewed as some products move towards commercialisation.
Selling
In accord with the transition from HiQCell the necessity to incur significant marketing expenditure has ceased. The current year costs are reflective of licensing and business development activities associated with product licensing including CryoShot and Progenza.
Corporate
Corporate expenses have declined slightly, 2015: $1.4 million, 2014: $1.5 million. These costs include patent costs, ASX and other regulatory costs as well as the corporate staff.
Occupancy
Occupancy expenditure at $248k is well down year on year (2014: $449k). This is the result of reduction in premises required for HiQCell in Australia and Singapore.
To view the full half year report, please visit:
http://media.abnnewswire.net/media/en/docs/ASX-RGS-909469.pdf
About Regeneus Ltd
Regeneus Ltd (ASX:RGS) is a Sydney-based clinical-stage regenerative medicine company using stem cell technologies to develop a portfolio of novel cell-based therapies. The regenerative therapies seek to address unmet medical needs in human health markets, focusing on neuropathic pain, including osteoarthritis and various skin conditions, with its platform technologies Progenza(TM) and Sygenus. Visit www.regeneus.com.au for more information.
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