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ReNeuron shares up 30% after it strikes deal worth up to £80mln with Chinese pharma

Fosun Pharma is licensing the rights to the company’s CTX and hRPC cell therapy programmes
human cells
ReNeuron is a specialist in cell-based therapies being developed to treat stroke and an eye disease that causes blindness

Shares in ReNeuron Group PLC (LON:RENE) rose 30% after it inked a deal potentially worth up to £80mln in success-based payments with an arm of one of China's leading drug companies.

Fosun Pharma is licensing the rights to the company’s CTX and hRPC cell therapy programmes in the People’s Republic for an initial £6mln.

WATCH: ReNeuron Group agrees £80mln cell therapy licensing deal for China

The UK innovator, which is developing treatments for stroke and disease that causes blindness, will receive the same sum again in what is described as “near-term operational milestones”.

Also on offer is £8mln linked to future regulatory landmarks, while post-launch it will receive 5% of net profits from products using ReNeuron technology, taking it to the £80mln total.

Investors will also have noted the tiered royalties on sales of between 12% and 14%.

“This agreement furthers our core strategy to build shareholder value through the clinical development and commercialisation of our cell therapy programmes,” said ReNeuron chief executive Olav Hellebø.

“China represents a significant market opportunity for our products and we look forward to working with Fosun Pharma to ultimately bring these treatments to the many patients in China who may benefit from them."

The news was well received by the market with the shares marked up 50.6p at 221.3p, valuing the business at £70mln.

Broker upbeat

N+1 Singer called the deal a “commercial breakthrough”, adding that the estimated size of the Chinese stem cell market was around £5bn (US$6.4bn) “and developing rapidly”.

It pointed out that “several hundred clinical trials currently underway, propelled by government initiatives and private funding”.

“In our view, Fosun Pharma (a large, reputable company dual-listed in Shanghai and Hong Kong) is an ideal development and commercialisation partner for ReNeuron’s CTX (stroke) and hRPC (ophthalmic disorders) programmes in China,” N+1 said in a note to clients.

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