Proactive Investors: Regeneus clinches major animal health partner as dog treatment develops

Tuesday, 3 November 2015

Regeneus (ASX:RGS) has partnered with a global Top-5 animal health company to commercialise a proprietary canine stem cell therapy targeting a US$500 million per annum market.

The partnership will further develop Regeneus' off-the-shelf CryoShot Canine product, an allogeneic stem cell therapy for dogs with osteoarthritis (OA) and musculoskeletal conditions that has undergone extensive successful field trials in Australia.

Under the terms of the agreement, the animal health partner will jointly fund a pre-pivotal study assessing CryoShot as a treatment for canine osteoarthritis in consideration for an exclusive option to develop and commercialise CryoShot.

Osteoarthritis is the dominant musculoskeletal condition in dogs and is associated with pain and degeneration of joint tissues.

The companion animal pain market has been estimated to value US$260 million per annum in the U.S. alone, while the global pain market is worth around US$500 million per annum.

The study begins today and will assess pain and dysfunction in 80 arthritic, client-owned dogs. Dogs will be treated with CryoShot Canine via intra-articular injection, or a control and will be assessed by validated questionnaires and force-plate analysis.

The results of the trial, anticipated in Q3 2016, will be used to finalise the design of a pivotal U.S. Food and Drug Administration trial with good manufacturing practice (GMP) grade product.

Upon completion of the study, Regeneus' animal health partner will have a period in which to exercise an option to enter into an exclusive licence over CryoShot technology.

Under the terms of the licence, Regeneus will receive an upfront licence fee and be entitled to other development 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.
About CryoShot Canine

CryoShot Canine is an appropriate treatment therapy for osteoarthritis, tendon and ligament injuries and as an adjunct to musculoskeletal surgeries in the canine market.

The main uses of CryoShot have been as an intra-articular injection for osteoarthritis, as an adjunct to joint surgery and as an intra-lesional injection for tendinopathy.

The stem cells used in CryoShot are obtained from the excess fatty tissue from donor animals. Donor fat is often collected at the time that the animal is sterilised.

This tissue would otherwise have been discarded. The tissue is collected aseptically, before being processed and cultured to isolate and increase the regenerative cells (including stem cells) before being cryogenically frozen and stored in liquid nitrogen.

Early results for CryoShot have been very positive based on description of pain documented by owners of animals who have been treated with the product.

Owners have noticed dramatic effects on the reduction of pain in their animals.

This appears both in how owners describe pain, and also how that pain interferes with normal daily functions like walking, running and stairs.

Most of this effect happens within the first ten days, but improvement continues past the two month mark.
Portfolio-wide milestones

Traction for CryoShot follows quickly on a string of important development and financing milestones for Regeneus across its portfolio of products.

Last month, the company safely treated the first patient in a clinical trial of its personalised cancer immunotherapy product RGSH4K.

The study safety oversight committee identified no safety concern, with the data covering a dosing period of 2 vaccinations, administered 3 weeks apart.

RGSH4K is produced from a patient's own cancer cells and an immunostimulant that is designed to activate the immune system against the cancer cells to initiate a body-wide response.

Regeneus has the exclusive worldwide rights to develop and commercialise the vaccine technology for human and veterinary applications.

Regeneus has also treated the first patient under first-in-human trials of its allogeneic off-the-shelf stem cell therapy for knee osteoarthritis, Progenza.

Progenza is produced from mesenchymal stem cells derived from the adipose (fat) tissue of a healthy donor who has been extensively screened.

The company's proprietary and scalable manufacturing process is capable of producing millions of therapeutic doses from one donor.

In March, Regeneus successfully completed a preclinical study at a U.S.-based facility that showed no Progenza-related safety or toxicity issues, even at doses well in excess of the intended human dose.

Research for this work has recently been supported by a A$3.4 million research and development tax incentive refund from the Australian government.
Analysis

The latest CryoShot partnership represents a major step toward commercialisation of the product considering the calibre of the development team and the potential for sales and distribution in the massive U.S. animal health market.

CryoShot's initial development and testing milestones bode well for the more advanced work currently underway, having indicated efficiency in pain relief in a convenient, off-the-shelf delivery method.

The upcoming trial results represent a potential share price catalyst for Regeneus as they will be used to finalise the design of a pivotal FDA trial.

Potential access to the US$260-million-per-annum U.S. market via this step opens a major marketing opportunity for CryoShot.

Commercialisation of CryoShot would establish it as one of the first allogeneic off-the-shelf stem cell therapies available for the treatment of canine osteoarthritis.

Shares in Regeneus have strengthened 27% since the start of the month to A$0.14.

Other potential price catalysts for Regeneus shares in FY2016 include commercial partnerships in Japan, a safety report on Progenza and continued progress in RGSH4K trialling.

Safe treatment of the first patient in RGSH4K was an important milestone since the cancer treatment represents a therapy option that does not have many of the side effects of standard chemotherapy.

Commercial potential of RGSH4K has been emphasised by industry predictions that cancer vaccines and other emerging immunotherapies would be worth US$35 billion by 2023.

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