ReNeuron : Interim Statement 2023

RENEURON GROUP PLC

INTERIM REPORT

for the six months ended 30 September 2023

Creating a valuable and differentiated drug delivery platform

Contents

	Page
Financial and Operational Highlights	1
Executive Chairman's Statement	2
Financial Review	3
Unaudited Consolidated Statement of Comprehensive Income	5
Unaudited Consolidated Statement of Financial Position	6
Unaudited Consolidated Statement of Changes in Equity	7
Unaudited Consolidated Statement of Cash Flows	8
Notes to the Interim Financial Statements	9

Financial and Operational Highlights

Financial Highlights

• Revenue for the period of £157,000 related to income from partner funded development activities and royalty income (H1 2022: £438,000)
• Loss for the period of £2.8 million (H1 2022: loss of £3.2 million); cost savings arising from the restructuring offset by reduced revenue and the previous year's foreign exchange gains now reversed to a small loss
• Reduced operating costs incurred in the period of £3.5 million (H1 2022: £4.7 million) primarily explained by a reduction in clinical trial related costs and savings made in general and administration spend
• Reduced net cash used in operating activities of £2.1 million (H1 2022: £4.3 million). This reduction being explained by the reduced costs and the receipt of the R&D tax credit for FY 2023 in the period (in the previous year the R&D tax credit was received in the second half of the year)
• Cash, cash equivalents and bank deposits at 30 September 2023 of £5.1 million (31 March 2023: £7.2 million)

Operational Highlights

• During the period, the Company has been focussing on generating in vivo data to validate the CustomEXTM platform. In September we announced that the Company had successfully generated data demonstrating distinct organ and cellular targeting capabilities of its exosomes
• On 8 November, the Group presented the data that formed the basis of that announcement, namely:
  o confirmation in vitro and in vivo that exosome targeting is dependent on cell source and selection of a specific exosome population results in the improved delivery of therapeutic payloads when compared to a conventional HEK293 exosome approach;
  o a specific CustomEX™ exosome targets the lymph nodes (immune system) proportionately more than other exosome types;
  o a specific CustomEX™ exosome selectively targets the tubules within the kidney; o a specific CustomEX™ exosome targets the lung following systemic administration;
  o confirmation that therapeutic payloads can be successfully delivered in vivo using the CustomEX™ platform following systemic administration; and
  o no evidence of immune response or toxicity with any of the exosome candidates, opening up the possible use of CustomEX™ for repeat administration unlike viral vectors.
• These data highlight the significant improvement in targeting and delivery of payloads that can be achieved through the careful selection of specific exosomes from different cell sources. ReNeuron's CustomEXTM platform, is a compelling platform that offers this ability to select the exosome cell type for a partner's need and the payload/target cell of their choice, while offering a scalable and repeatable manufacturing process due to its patented conditional immortalisation technology. This technology was enabled through the Group's earlier work in producing GMP stem cells approved by the FDA and MHRA for the clinic from which the Group's exosomes are now produced.

1

STRATEGIC REPORT

ReNeuron Group plc

Interim results for the six months ended 30 September 2023

2

STRATEGIC REPORT

Executive Chairman's Statement

"Since restructuring the business in January of this year, the ReNeuron team has been focused on generating the critical in vivo data that exemplifies the cellular and tissue targeting capabilities of CustomEXTM, our exosome drug delivery platform. I am very excited about the recent in vivo data presented at Cell 2023 in London that highlights the significant advantages of CustomEXTM and differentiates this drug delivery platform from that of our competitors. In CustomEXTM we are developing a leading-edge platform for the targeted delivery of modern-day therapies."

In a very uncertain world, the financial markets remain extremely volatile. Specifically, in the biotech sector many companies have found themselves coming under increasing financial pressure and as a result we have seen a number of biotech company liquidations. ReNeuron faces similar challenges in the current financial climate but the Board remains positive regarding the future viability of the business.

The Group ended the period to 30 September 2023 with cash, cash equivalents and bank deposits of £5.1 million with the cash runway being extended into the start of calendar Q2 2024. The Board is working diligently to ensure the continued integrity of this business and is exploring options to allow us to remain financially viable and to achieve our goal of further developing the CustomEX™ exosome delivery platform and to become a "partner to the industry".

Nine months ago, we set out to generate critical in vivo data to support our CustomEX™ exosome delivery platform and from an R&D perspective it has been a very successful period as evidenced by the data presented at the Cell 2023 conference in London. We have delivered on what we set out to achieve and produced some interesting and unexpected results. On reviewing the data, one potential large pharma collaborator stated "Your research is indeed ground-breaking,and it's clear that a lot of thought and effort has gone into it. We hold your work in high regard and believe in its potential".

I believe that in CustomEX™ we are on our way to developing a leading-edge platform for the targeted delivery of modern-day therapies and, provided we continue to have our shareholders support, we can deliver on the promise of creating a highly valuable delivery platform and, consequently, a highly valued business entity.

I would like to thank our team in Pencoed supported by our third-party collaborators and advisers as we remain committed to progressing the development of this platform, establishing meaningful partnerships and funding the business appropriately.

Outlook

The outlook for ReNeuron remains positive provided we can retain our highly dedicated team of scientists and further develop and verify the CustomEX™ exosome delivery platform and conclude validating industry partnerships. We aim to do this by a variety of means including potentially raising more equity financing and/or securing a financing facility and/or entering into M&A discussions; none of which have been ruled out at the time of writing.

Iain Ross

Executive Chairman

ReNeuron Group plc

Financial Review

Following the restructure in January 2023, costs continued to be closely controlled with spend primarily directed towards progressing the Group's proprietary exosome platform. Total operating expenses of £3.5 million for the six months (H1 2022: £4.7 million) are nearly 30% lower than the same period last year. As a result, the total comprehensive loss for the period reduced to £2.8 million (H1 2022: £3.2 million).

At 30 September 2023, the Group had cash, cash equivalents and bank deposits of £5.1 million with the Group's latest internal projections (assuming no new revenues or funding) showing a cash runway to April 2024, ahead of which point further revenues and/or a capital injection will be required.

Details on the Directors' assessment on going concern is provided in note 3 to the interim financial statements.

	Six months	Six month	Year
	ended	ended	ended
	30 September	30 September	31 March
FINANCIAL HIGHLIGHTS (£'000)	2023	2022	2023
Cash, cash equivalents & bank deposits	5,075	10,464	7,153
Net cash used in operating activities	2,101	4,323	7,484
Revenue	157	438	530
Operating expenses	3,457	4,712	7,645
Finance income	91	466	478
Total comprehensive loss	2,841	3,176	5,408

Revenue and Other Operating Income

In the six months to 30 September 2023, recognised revenues, which related to partner funded development activities were £106,000 (H1 2022: £393,000). Income related to royalty income, was £51,000 (H1 2022: £45,000).

Operating expenses

Total operating expenses reduced in the period to £3.5 million (H1 2022: £4.7 million).

This reduction in costs followed the restructuring in January 2023. Research and development (R&D) expenditure reduced to £2.2 million (H1 2022: £3.0 million) with general and administrative expenses declining in the period to £1.3 million (H1 2022: £1.7 million).

Finance income/expense

Finance income represented income received from the Group's cash and investments and gains from foreign exchange, with losses from foreign exchange shown in finance expense.

Finance income was £91,000 in the period (H1 2022: £466,000). The prior period included foreign exchange gains of £429,000, whereas in the current period there was a foreign exchange loss of £11,000, included in finance expense, which also includes lease interest of £8,000 (H1 2022: £10,000).

The Group holds cash and investments in foreign currencies to hedge against operational spend in those currencies. The strengthening of sterling during the period resulted in a decrease in valuation of the Group's foreign currency balances.

Taxation

The taxation credit for the period of £0.4 million primarily comprised an R&D tax credit (H1 2022: £0.6 million). The amount of the R&D tax credit reduced in line with the reduction in research and development spend.

3

STRATEGIC REPORT

ReNeuron Group plc

Interim results for the six months ended 30 September 2023

4

STRATEGIC REPORT

Financial Review

continued

Cash flow

Net cash used in operating activities in the period reduced to £2.1 million (H1 2022: £4.3 million). This reduction in cash used reflected the reduction in costs and the receipt of the £1.2 million R&D tax credit during the first half of the year (in the prior year the R&D tax credit of £1.5 million was received in the second half of the year).

The Group had cash, cash equivalents and bank deposits totalling £5.1 million as of 30 September 2023 (31 March 2023: £7.2 million).

Statement of financial position

The Company invested in property, plant and equipment in the prior year and no capital investment was required in the six months to 30 September 2023. As such the non-current assets reduced in the period reflecting the depreciation of the existing assets.

Current assets include a corporation tax receivable of £0.4 million comprising the amount due from R&D tax credits for the current period (30 September 2022: £2.0 million). This debtor was lower than 2022 due to the earlier receipt of the tax credit for the year ended 31 March 2023 and the reduction in research and development expenditure impacting the current period tax credit.

Current liabilities primarily comprise trade and other payables at £3.7 million which were £2.5 million lower than the same period last year (30 September 2022: £6.2 million) and £0.5 million lower than at the year-end (31 March 2023: £4.2 million).

Non-current liabilities represented the lease liability relating to the Company's premises. The lease liability reduced by £0.1 million during the period.

John Hawkins

Chief Financial Officer

ReNeuron Group plc

Unaudited Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2023

		Six months	Six months
		ended	ended	Year ended
		30 September	30 September	31 March
		2023	2022	2023
	Note	£'000	£'000	£'000
Revenue	4	157	438	530
Research and development costs		(2,177)	(2,986)	(4,463)
General and administrative costs		(1,280)	(1,726)	(3,182)
Operating loss		(3,300)	(4,274)	(7,115)
Finance income	6	91	466	478
Finance expense	7	(19)	(10)	(20)
Loss before income taxes		(3,228)	(3,818)	(6,657)
Taxation	8	387	642	1,249
Loss and total comprehensive loss for the period		(2,841)	(3,176)	(5,408)
Loss and total comprehensive loss attributable to
equity owners of the company		(2,841)	(3,176)	(5,408)
Basic and diluted loss per ordinary share	9	(5.0p)	(5.6p)	(9.5p)

5

INTERIM FINANCIAL STATEMENTS

ReNeuron Group plc

Interim results for the six months ended 30 September 2023

6

INTERIM FINANCIAL STATEMENTS

Unaudited Consolidated Statement of Financial Position

as at 30 September 2023

		30 September	30 September	31 March
		2023	2022	2023
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		258	354	338
Right-of-use asset	10	234	331	283
Intangible assets		186	186	186
		678	871	807
Current assets
Trade and other receivables		317	456	500
Corporation tax receivable		353	2,036	1,185
Investments - bank deposits		-	1,000	1,000
Cash and cash equivalents		5,075	9,464	6,153
		5,745	12,956	8,838
Total assets		6,423	13,827	9,645
Equity
Equity attributable to owners of the company
Share capital	11	572	571	572
Share premium account	11	113,925	113,925	113,925
Capital redemption reserve		40,294	40,294	40,294
Merger reserve		2,223	2,223	2,223
Accumulated losses		(154,593)	(149,931)	(151,957)
Total equity		2,421	7,082	5,057
Liabilities
Current Liabilities
Trade and other payables		3,657	6,249	4,167
Lease liabilities		156	151	153
		3,813	6,400	4,320
Non-current liabilities
Lease liabilities		189	345	268
		189	345	268
Total liabilities		4,002	6,745	4,588
Total equity and liabilities		6,423	13,827	9,645

ReNeuron Group plc

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 September 2023

		Share	Capital
	Share	premium	redemption	Merger	Accumulated	Total
	capital	account	reserve	reserve	losses	equity
	£'000	£'000	£'000	£'000	£'000	£'000
As at 1 April 2022	571	113,925	40,294	2,223	(147,125)	9,888
Credit on share-based
payment	-	-	-	-	370	370
Loss and total
comprehensive
loss for the period	-	-	-	-	(3,176)	(3,176)
As at 30 September 2022	571	113,925	40,294	2,223	(149,931)	7,082
Exercise of employee
share options	1	-	-	-	-	1
Credit on share-based
payment	-	-	-	-	206	206
Loss and total
comprehensive
loss for the period	-	-	-	-	(2,232)	(2,232)
As at 31 March 2023	572	113,925	40,294	2,223	(151,957)	5,057
Credit on share-based
payment	-	-	-	-	205	205
Loss and total
comprehensive
loss for the period	-	-	-	-	(2,841)	(2,841)
As at 30 September 2023	572	113,925	40,294	2,223	(154,593)	2,421

7

INTERIM FINANCIAL STATEMENTS

ReNeuron Group plc

Interim results for the six months ended 30 September 2023

8

INTERIM FINANCIAL STATEMENTS

Unaudited Consolidated Statement of Cash Flows

for the six months ended 30 September 2023

		Six months	Six months
		ended	ended	Year ended
		30 September	30 September	31 March
		2023	2022	2023
	Note	£'000	£'000	£'000
Cash flows from operating activities
Cash used in operations	12	(3,312)	(4,310)	(8,920)
Overseas taxes paid		(16)	(3)	(5)
Income tax credit received		1,235	-	1,461
Interest paid		(8)	(10)	(20)
Net cash used in operating activities		(2,101)	(4,323)	(7,484)
Cash flows from investing activities
Capital expenditure		-	(156)	(220)
Bank deposit matured		1,000	4,000	4,000
Interest received		110	32	131
Net cash generated by investing activities		1,110	3,876	3,911
Cash flows from financing activities
Proceeds from the issue of ordinary shares		-	-	1
Principal element of lease payments		(76)	(66)	(148)
Net cash used in financing activities		(76)	(66)	(147)
Net decrease in cash and cash equivalents	13	(1,067)	(513)	(3,720)
Effect of foreign exchange rates		(11)	429	325
Cash and cash equivalents at the start of period		6,153	9,548	9,548
Cash and cash equivalents at the end of period	14	5,075	9,464	6,153

ReNeuron Group plc