Cost cutting improves Renovo’s health

RENOVO, the Manchester-based medical research company, has seen half year losses fall, following its restructure earlier in the year.

The biopharmaceutical company, which is developing drugs to reduce scarring and improve wound healing, saw pre-tax losses fall to £7.3m (£6.07m after tax) from £8.7m (£6.96m) in 2009.

Revenues increased 26.8% to £5.2m in the half year to the end of March (2009: £4.1m).

In September Renovo announced a major restructure which saw it axe 50 staff – a third of its workforce – and focus its resources on the clinical development of its late stage product portfolio; Juvista, Adaprev and Prevascar.

At the time it also ended talks regarding an unsolicited approach for the firm, and reduced its board members from 13 to eight.

As a result of the company restructuring, administrative expenses fell during the period to £2.3m (2009: £3m). It reduced operating costs to £8.3m (2009: £12.6m) and had a net cash position of £58m (2009:73m).

Total research and development expenditure for the six month period was £10.8m (2009: £11.6m).

The company said its financial performance was broadly in line with management expectations.

It added that cash reserves on reporting of the first Juvista EU Phase 3 trial in the first half of 2011 are expected to be in line with previous guidance of at least £25m to 30m.

In March, Renovo amended a key licensing deal with long term partner Shire Pharmaceuticals, that allows it to market lead product Juvista in all territories other than the US, Mexico and Canada.

The original deal, struck with Shire in 2007, just gave Renovo the rights to Juvista within the EU. It is potentially worth hundreds of millions of pounds, but depends on regulatory clearance and the commercial success of the product.

The new agreement does not alter the original financial terms of the agreement, except that Shire has agreed a new $5m milestone payment to Renovo when Shire begins a clinical trial.

The company said the first pivotal EU Phase 3 trial of Juvista in scar revision surgery is fully recruited and is on track to report data in the first half of 2011.

Professor Mark Ferguson, chief executive of Renovo, said: “Renovo’s product pipeline has progressed well, in line with previous guidance.

“Our key focus continues to be the Phase 3 programme for Juvista and I am pleased that the first EU Phase 3 trial is fully recruited and on track to report in the first half of 2011.

“Prevascar has commenced, on schedule, a new proof of concept trial in volunteers originating from the African Ancestral Group, whilst the Adaprev clinical trial is recruiting patients undergoing surgical repair of injured tendons in the hand at ten UK sites.”