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Star fund manager Neil Woodford has increased his stake in stem cell therapy group ReNeuron (LON:RENE) through backing a hefty fund raise at a premium to the share price.
ReNeuron is raising £68.4mln of which Woodford Investment Management is putting up almost half.
Woodford, one of the UK's best known money managers, was a star performer at Invesco before branching out on his own.
He is a major backer of UK biotechs and the launch earlier this year of Patient Capital, a trust focused on small caps and start-ups, pulled in hundreds of millions in new money.
Olav Hellebø, ReNeuron’s chief executive, said it was the largest funding by a cell therapy group anywhere this year, underlining its position in the burgeoning stem cell therapy arena.
Woodford Investment Management’s stake will rise to 35.5% from 26.63% with its new shares, though has been granted a waiver from having to make a mandatory offer.
Woodford paid 5p for the shares, a small premium to the closing price yesterday.
The funds will be sufficient to pay for ReNeuron’s existing therapeutic programmes through to 2019 and also early development of a new exosome nanomedicine platform targeting cancer.
Stem cell treatments for strokes and retinitis pigmentosa are now fully funded to the commercial stage.
Hellebø said he was delighted with the amount raised through the placing.
“The proceeds will enable us to rapidly exploit the potential of our CTX, hRPC and exosome nanomedicine therapeutic platforms, providing multiple opportunities to build value for our shareholders.
Results from the ongoing phase II clinical trial of its stroke treatment are due in the first half of next year with phase I data for critical limb ischaemia expected around the same time.
Regulatory approval was recently given for a phase I/II trial of its retinitis pigmentosa treatment with a phase II/II trial scheduled for 2017.
The exosome nanomedicine platform was also generating promising early pre-clinical data, Hellebø said.
There was a loss for the year to March of £8.91mln (2014: £7.07mln).
Shares surged 20% to 5.86p on the news, reflecting the heavyweight backing.
Michael Hunt, ReNeuron’s chief financial officer, told Proactive that a positive hit in any of the programmes going through trials would add significant value from where the company stands now.
The placing would allow it to concentrate on taking its programmes through their trials and possible commercialisation without the distraction of funding worries.
Shares rose 0.97p to 5.85p valuing the company at £104mln.