Professor Stefano Pluchino assumed the role of Chair of the new Scientific Advisory Board (SAB) combining working with ReNeuron with his academic work in Exosomes and Regenerative Neuroimmunology at the University of Cambridge. The new exosome focused SAB has also been established composed of leading academics and industry executives, Prof. Giuseppe (Beppe) Battaglia, Prof. Edit I Buzás, Prof. Dr. rer. nat. Bernd Giebel and Prof. Kenneth W. Witwer and chaired by Prof. Stefano Pluchino. This new SAB brings a world-class breadth of expertise across the extracellular vesicle (EV) field. Its role is to advise the Company on scientific matters relating to its exosome platform research and development strategy.

Research & Development

In FY22 the Company's R&D team established CustomEX™, the first scalable, consistent, targeted and customisable stem cell-derived exosome drug delivery platform. This unique exosome platform is based upon the exosomes produced from different stem cells having the unique cellular targeting properties of the stem cells from which the exosomes were produced. Proof-of-concept studies have determined unique in vitro targeting and delivery characteristics for all seven exosome populations and demonstrated a significant improvement in uptake and subsequent delivery of a therapeutic siRNA cargo using the CustomEX™ platform compared to current delivery methods and a HEK 293-derived exosome.

Further proof-of-concept in vivo studies are ongoing to validate the benefits observed in vitro of the CustomEX^TM platform to deliver therapeutic cargoes

To demonstrate the enhanced utility of the CustomEX™ drug delivery platform, the R&D team has made significant improvements to the loading of nucleic acid cargos. In-house optimisation and further modifications to the downstream manufacturing process has led to increases in exosome concentration and purity, leading to an approximate 30-fold increase in siRNA being associated with CustomEX™ exosomes. In addition, further in vitro proof-of-concept for our engineered exosome product, Exo-BDNF was established through a collaboration with Cardiff University that demonstrated the products efficacy to improve retinal ganglion cell survival in a model of glaucoma.

The Group's iPSC platform continues to support the expansion of the CustomEX™ platform and following Dr Pell's presentation at the 2^nd iPSC derived Cell Therapy Summit in December, there is growing interest in the platform in its own right. ReNeuron's iPSCs were developed from the Group's conditionally immortalised CTX stem cell line. This immortalisation characteristic is retained by the iPSCs (conditionally immortalised iPSCs or CI-iPSCs), allowing subsequent cell lines to be rapidly developed that benefit from their highly stable and reproducible expansion. Investigation into the utility of CI-iPSCs continues with two groups at University College London (UCL), firstly investigating the potential use of CI-iPSCs to generate CAR-T / CAR-NK cells and secondly with a separate group at UCL investigating the ability to differentiate into Schwann cells for potential use in peripheral nerve damage repair.

In July, ReNeuron negotiated and signed the CTX Technology Transfer Supplemental Terms Agreement with Fosun Pharma, underscoring Fosun Pharma's continued commitment to the CTX stroke disability programme. In addition to the £320k upfront payment received in January 2022 for services delivered in FY23, ReNeuron has received approximately a further £100k for supply of initial CTX working cell bank vials and additional ReNeuron resources and project related costs; with further milestone payments expected in accordance with defined project milestones. Under the Technology Transfer agreement there is potential for the Group to receive up to £5 million over the medium to long term, with further potential milestone payments of up to £74 million linked to the main license agreement signed in 2019.

In 2022, Dr Corteling was a guest speaker at two international conferences where he presented, for the first time, the full breadth of the Group's CustomEX™ exosome platform. Consisting of four distinct neural producer stem cell lines (cortical, striatal, hippocampal and mesencephalic), three non-neural stem cell lines (liver, retinal and pancreatic), and its conditionally immortalised induced pluripotent stem cell line (CI-iPSCs) which can be used to produce further exosome producer cell lines depending on the target required.

Outlook

As of today, ReNeuron has seven proprietary, conditionally immortalised exosome producer stem cell lines. We believe that our catalogue of proprietary stem cells, from neural and non‑neural tissue, differentiates us from competitors in the field and leads to a greater chance of success for optimised delivery of a payload to a particular target. The Company has years of experience and knowledge in the manufacture of consistent stem cell banks to good manufacturing practice (GMP), including two investigation new drugs (INDs), and is continuing to work with third parties to develop improvements in downstream processing and analytics. 

In summary, over the next 3-6 months the Company will continue to develop its exosome platform, generating in vivo data exemplifying the cellular and tissue targeting capabilities of exosomes produced from its multiple conditionally immortalised producer cell lines and the subsequent functional delivery of therapeutic payloads. Favourable in vivo data will allow the Group to differentiate its exosome platform and progress ongoing partnering and licensing discussions. The Board has identified a number of potential sources of revenue and non-dilutive funding in order to maintain the business as a going concern and is confident it will be able to conclude third party transactions and/or issue new equity as required. Such transactions will further strengthen and differentiate our exosomes platform, highlighting our potential leadership in the field.

Finally, I would like to thank past and present members of the Board, Management team and staff for their continued commitment and hard work throughout what has been a tough and challenging year. I would especially like to thank Catherine Isted for her contribution as CFO and latterly as CEO and to wish her well in the future. 

I look forward to an exciting and rewarding year ahead and would like to thank the shareholders for their continued support.

Iain Ross

Executive Chairman

FINANCIAL REVIEW

During the financial year costs continued to be closely controlled with spend primarily directed towards progressing the CustomEX^TM proprietary exosome platform. In January 2023, the Company undertook a restructuring of the business with headcount reducing by 40% and the variable costs of the business lowered.

The full benefit of these cost savings will not be seen until the next financial year, but the decision made in January 2022 to shift away from clinical development programmes to the exosome platform has enabled a reduction in costs of £4.0 million compared to the year ended 31 March 2022. As a result, the total comprehensive loss for the year reduced to £5.4 million (2022: £9.7 million).

At 31 March 2023, the Group had cash, cash equivalents and bank deposits of £7.2 million with the latest base case forecast showing a cash runway to July 2024. This base case forecast includes assumed further revenues/funding. Without such revenues/funding, the forecast indicates a cash runway until February 2024. Details on the Directors' assessment on going concern is provided in note 3 to the condensed financial statements.

Revenue and Other Operating Income

In the year to 31 March 2023, revenues, which relate to research and collaboration activities and royalty income, were £530,000 (2022: £403,000).

Operating expenses

Total operating expenses reduced in the year to £7.6 million (2022: £11.6 million).

As noted above, this reduction in costs follows the strategic decision made in January 2022 to halt clinical development and instead focus resources on the exosome platform. Research and development costs in the year reduced to £4.5 million (2022: £8.1 million), primarily reflecting the refocussing of activities as described above, together with other cost reductions. General and administrative expenses also reduced in the year to £3.2 million (2022: £3.6 million).

Finance income/expense

Finance income represents income received from the Group's cash and investments and gains from foreign exchange.

Finance income was £478,000 in the period (2022: £195,000), the increase on the prior year being explained by an increase in both interest receivable and foreign exchange gains. In the year, finance expense solely comprises lease interest of £20,000 (2022: £25,000).

Taxation

Taxation for the year at £1.2 million primarily comprises an R&D tax credit (2022: £1.4 million). The amount of the R&D tax credit for the year has reduced as a result of the lower research and development spend in the period.

Cash flow

Net cash used in operating activities in the year increased to £7.5 million (2022: £7.4 million). Cash used was higher than the loss for the period explained by changes in working capital and capital investment made to support exosome platform development.

The Group had cash, cash equivalents and bank deposits totalling £7.2 million as of 31 March 2023 (31 March 2022: £14.5 million).

Statement of financial position

Non-current assets - Property, plant and equipment have increased as we invest in our exosome technology platform.

Current assets - Corporation tax receivable of £1.2 million comprises the amount due from R&D tax credits for the full year ended 31 March 2023 (2022: £1.4 million). This debtor is lower than 2022 due to the reduction in research and development expenditure.

Current liabilities - Trade and other payables at £4.2 million have reduced (2022: £6.9 million). This reduction primarily reflects changes in the level of accruals (mainly across the legacy clinical trials).

John Hawkins

Chief Financial Officer