ReNeuron : Annual Report 2023

RENEURON GROUP PLC ANNUAL REPORT

for the year ended 31 March 2023

Creating a valuable and differentiated drug delivery platform

Contents

Strategic Report	Page
Financial and Operational Highlights	2	01
Executive Chairman's Statement	3
Technology Overview	6
Financial Review	14
Directors' Duties	16
Sustainability	18
Risks and Uncertainties	19
Governance
Board of Directors	23
Senior Management	26
Directors' Report for the year ended 31 March 2023	28
Corporate Governance	31
Audit Committee Report	37
Directors' Remuneration Report	39
Financial Statements
Independent Auditors' Report to the Members of ReNeuron Limited	44
Group Statement of Comprehensive Income for the year ended 31 March 2023	51
Group and Company Statements of Financial Position as at 31 March 2023	52
Group and Company Statements of Changes in Equity for the year ended 31 March 2023	53
Group and Company Statements of Cash Flows for the year ended 31 March 2023	54
Notes to the Financial Statements for the year ended 31 March 2023	55
Other information
Advisers	77
Shareholder Information	78
Glossary of Scientific Terms	79

ReNeuron Group plc

Annual Report and Accounts 2023

02

STRATEGIC REPORT

Financial and Operational Highlights

Financial Highlights

• Revenue for the year of £0.5 million (2022: £0.4 million) from partner funded development activities and royalty income.
• Cash, cash equivalents and bank deposits at 31 March 2023 of £7.2 million (31 March 2022: £14.5 million) with cash runway extended to 2024.
• Reduced operating costs in the year of £7.6 million (2022: £11.6 million) primarily due to reduction in clinical trial related costs. Full benefit of the January 2023 restructuring will be realised in FY24.
• Loss for the year of £5.4 million (2022: loss of £9.7 million), driven by lower costs and increased revenue.

Operational Highlights

• The Company's R&D team established CustomEX™, the first scalable, consistent, targeted and customisable stem cell-derived exosome drug delivery platform.
• Proof-of-conceptstudies established 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.
• In vivo studies to generate data to further validate the cellular and tissue targeting capabilities and subsequent functional delivery of therapeutic payloads using the CustomEXTM platform are ongoing.
• ReNeuron negotiated and signed the CTX Technology Transfer Supplemental Terms Agreement with Fosun Pharma (1 July 2022), underscoring Fosun Pharma's continued commitment to the CTX stroke disability programme.
• Senior leadership team changes: Appointment of Iain Ross as Executive Chairman, John Hawkins joined the Board as Chief Financial Officer, Dr. Randolph Corteling assumed the role of Chief Scientific Officer and Suzanne Hancock was appointed as Chief Operations Officer and Simon Dew as Chief Business Officer. Catherine Isted stepped down as Chief Executive Officer.
• Professor Stefano Pluchino assumed the role of Chair of the new Scientific Advisory Board (SAB) that has 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.
• Restructuring of the business with an internal operational re-alignment in line with the business needs resulting in a reduction of headcount of 40% and a lowering of the variable costs of the business.

Executive Chairman, Iain Ross, commented: "During the last year the Company has undergone a complete transition including an organisational restructuring; a change in management and a strategic re-alignment, to create sustainable value for shareholders with the emphasis on the development, partnering and potential licensing of CustomEXTM, our proprietary drug delivery platform. During the year under review the underlying cost base has been reduced and resources re-aligned to meet the immediate needs of the business. I remain very excited about the Company's potential as we are on course to generate validating data which would allow us to complete partnering and license deals in the coming year which will transform the Company."

ReNeuron Group plc

Executive Chairman's Statement

Dear Shareholders,

Our immediate strategic focus remains primarily on our CustomEXTM Exosome Technology Platform, producing exosomes with unique tissue targeting capabilities to deliver a payload of choice to a preferred cell type. Our mission is, in collaboration with academic and industry partners, to develop novel exosome therapeutics for diseases with significant unmet needs.

CustomEXTM provides a unique delivery mechanism for a variety of payloads including nucleic acids, proteins, and gene editing technologies. We use our conditionally immortalised induced pluripotent stem cell (CI-iPSC) platform to make allogeneic tissue cells of choice, which have the potential to produce exosomes with tissue specific targeting ability. Both platforms are supported by an extensive and proprietary intellectual property portfolio.

Our overall strategic goal is to exploit the global drug delivery market opportunity by providing exosomes as a vector to facilitate the delivery of therapeutics. It is estimated that the supply of viral and non-viral vectors is worth c. $2.1 billion1 today increasing up to $3.9 billion1 by 2026 and there is considerable academic and industry interest in the development of next-generation delivery vectors such as exosomes. Over the past few years, peer companies have raised $403 million2 in support of exosome-based activities and secured exosome related license agreements with potential revenues in excess of $3 billion2. We believe our stem-cell derived exosomes can potentially overcome issues such as tissue specificity, crossing the blood-brain barrier and unwanted immune activation, which have hampered first-generation drug delivery platforms. So, through the combination of our two proprietary platforms we are competitively well positioned to exploit this growing market opportunity.

Financial highlights

In January 2023, the Company undertook a restructuring of the business, reducing headcount by 40% and lowering variable costs of the business, with the latest forecasted cash runway now extending into mid-calendar year 2024. The full benefit of the cost savings from this restructuring will not be seen until financial year 2024. Revenue for the year was £0.5 million (2022: £0.4 million) related to income from partner funded development activities and royalty income. We also saw reduced operating costs of £7.6 million (2022: £11.6 million) primarily due to a reduction in clinical trial related costs following the strategic review in January 2022. This reduction was partly offset by additional investment made in the exosome technology platform.

Net cash used in operating activities was £7.5 million (2022: £7.4 million). Cash used was higher than the loss for the year which is explained by changes in working capital and capital investment made to support exosome platform development. Cash, cash equivalents and bank deposits at 31 March 2023 were £7.2 million (31 March 2022: £14.5 million). Loss for the year was £5.4 million (2022: loss of £9.7 million), the reduction being driven by lower costs and increased revenue as noted above.

Corporate and organisational development

There have been several senior leadership team changes over the last 12 months. In September 2022, the Company announced that John Hawkins had been promoted to Chief Financial Officer and joined the ReNeuron Board, Dr. Randolph Corteling assumed the role of Chief Scientific Officer, Suzanne Hancock was appointed as Chief Operations Officer and Simon Dew, an experienced business development professional with significant track record of dealmaking in the exosome filed, would be joining the Company as Chief Business Officer.

In December 2022, Catherine Isted stepped down as Chief Executive Officer and Iain Ross was appointed as Executive Chairman. Subsequently the Company undertook a restructuring of the business with an internal operational re-alignment in line with the business needs resulting in a reduction of headcount of 40% and a lowering of the variable costs of the business.

• Liberum estimates; Viral vector supply - Oxford Biomedica estimates of global viral sector supply (outsourced); LNP vector supply - Allied Market Research; 360 Research Reports

2 Liberum estimates

03

STRATEGIC REPORT

ReNeuron Group plc

Annual Report and Accounts 2023

04

STRATEGIC REPORT

Executive Chairman's Statement

continued

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-conceptin vitro studies are ongoing to validate the benefits observed in vitro of the CustomEXTM 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 2nd 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. The project to transfer both the CTX Drug Product and Working Cell Bank manufacturing processes and quality control testing know-how to Fosun Pharma has continued to make good progress. 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.

ReNeuron Group plc