Dr Boreham's Crucible: Regeneus

Thursday, 8 August 2019

Biotech Daily: Dr Boreham’s Crucible: Regeneus

By TIM BOREHAM

Flush with fresh funding, the stem cell play’s overhauled management is supremely confident of striking a partnering deal in Japan pertaining to its lead osteoarthritis treatment Progenza.

This confident assertion - accompanied by a $5.54 million capital raising - lifts a burden of guilt for your columnist, who late last year put the mozz on the company by describing its board - barely changed since the company’s listing in 2013 - as remarkably stable.

Lo and behold, in January CEO John Martin resigned to pursue other opportunities, to be replaced by existing director Leo Lee.

Mr Martin stayed on as a director, but in early April both he and chairman (and biotech legend) Dr Roger Aston resigned.

As the Aston-Martin MkII combo motored off, they were replaced with another biotech hero, Dr John Chiplin and Florida-based Dr Alan Dunton, who has sat on more life sciences boards than he has consumed syrupy waffles for breakfast.

The rationale behind the management shake-up is to sharpen the company’s focus on neuropathic pain - a quest that has been vindicated by positive new clinical results (see below).

Regeneus’s institutional investors like what they hear, having subscribed $2.34 million in a placement at eight cents apiece. The company is now in the throes of a one-for-six rights issue to raise up $3.2 million more.

Who let the dogs out?

With patents in the US, Europe and Japan, Regeneus began with adipose (fat) based stem cells for knee joints in dogs – and hopefully humans – but has changed its focus to mesenchymal stem cells. More specifically, it’s about the secretions from these cells that have the ability to be clinically developed to treat multiple candidates.

Progenza is an off the shelf (allogeneic) treatment for osteoarthritis pain. Progenza cells secrete cytokines - a protein that regulates the cells and sends signals to them - and other growth factors.

Osteoarthritis pain is usually treated with non-steroidal anti-inflammatory drugs, which can induce side-effects including stomach ulcers and gastro-intestinal bleeding.

The company’s second product, Sygenus is a topical acne treatment. It has also shown a strong analgesic effect in post-operative pain studies, with longer lasting effects compared with morphine.

While Progenza has been subject to phase I testing, Sygenus is at the laboratory stage.

Regeneus focuses on a subset of secretions called exosomes, which are not a direct regeneration agent but signal to the body that a cartilage (or other defective part) should be repaired.

Regeneus was the brainchild of inventor Pro Graham Vesey and was founded by Prof Vesey and Dr Benjamin Ross. Both have strong Macquarie University links.

Chipping in for Dr Chiplin

Dr Chiplin is the managing director of biotech wheeler and dealer New Star Ventures. He is also on the boards of the ASX listed Adalta, the London-listed immunotherapy play Scancell Holdings and the private Batu Biologics.

Up to mid-May he was on the board of ASX listed stem-cell chum Cynata Therapeutics.

But he is best known here for heading ASX-listed cancer immunotherapy house Arana Therapeutics (formerly Peptech with Evogenix inside), which Cephalon Inc (now Teva) acquired in July 2009 for $329 million - a 70 percent premium despite the ravages of the global financial crisis.

Dr Chiplin also is very adept at passing the hat, having mustered GBP20 million ($A36 million) for Scancell. He also steered the ASX-listed gene-silencing play Benitec’s Nasdaq listing that raised $46 million (okay, Benitec’s fortunes have soured since then and the company’s in danger of being turfed from the Nasdaq, but that’s not the point).

“That’s where my Rolodex comes in handy,” Dr Chiplin says. “Like other Aussie biotechs, Regeneus needs to think global for funding. In one block of Manhattan there’s more money for life sciences than the whole of Australia - but it’s not easy money.”

Dr Dunton founded the pharma consultancy Danerius LLC.

Mr Lee meanwhile was Japanese president of Merck, Sharp and Dohme and Allergan and is fluent in Japanese and Mandarin. As Matildas’ skipper Sam Kerr would say, “Suck on that Kevin Rudd”.

Turning Japanese

As with ASX-listed stem cell peers Mesoblast and Cynata, Japan is a tempting market for Regeneus because of favorable regulatory settings and a creaking, ageing population.

Regeneus has a 50:50 manufacturing partnership with AGC, an arm of Mitsubishi AGC Asahi Glass. But it’s also been working on that elusive partnership to distribute its knee osteoarthritis product in Japan.

Last November, management promised that, like the Great War, it would be done and dusted by Christmas that year.

“It’s a work in process, it’s been mooted for a while,” concedes Dr Chiplin, who describes Japan as “one of the most enlightened regulatory environments in the world”.

In Japan, Mesoblast is marketing the graft-versus-host disease treatment Temcell (acquired from Osiris in 2014).

Cynata is partnered with Fujifilm for its graft-versus-host disease treatment Cymerus, but like a nervous suitor it’s waiting for Fujifilm to commit (Cynata has also fielded a non-binding takeover offer from another party).

Mr Lee says Regeneus intends to commence a phase II study in Japan “in the near future” - probably 2021.

“We expect to have a product in market in 2023, which is very good news for us,” he says.