BioWorld International Correspondent

LONDON - Shares in the UK's only quoted stem cell company, ReNeuron Holdings plc, fell 14 percent to 7.5 pence Friday after it announced its lead compound, ReN1869, failed in two Phase II trials.

ReNeuron CEO Martin Edwards told BioWorld International, "It is a disappointment. We're a little company and don't have many products. ReN1869 was the thing that was most advanced."

ReN1869, a neuron compound for treating pain, was in-licensed from Novo Nordisk as part of ReNeuron's strategy to mitigate risks involved in commercializing stem cells through building a pipeline of other products.

"On the positive side, we were not going to make much money [from ReN1869] because of the terms of the license from Novo," Edwards said.

ReN1869 was tested in 34 patients with diabetic neuropathy and 90 patients with painful rheumatoid arthritis. In both there were no statistically significant differences between ReN1869 and placebo.

"I can't say definitely ReN1869 has no future, because we have to refer it to the co-development steering committee, but it is hard to think it would go forward," Edwards said.

However, Edwards was able to report more cheery news on the stem cell front. After struggling for most of last year because of problems with the stability of its human stem cell lines, second-generation lines have been established.

"We had a really difficult time, but now we have got it to work," Edwards said. "We have stable cells that survive quite well in the brain."

He added, "We're behind where we thought we'd be, but other stem cell companies are struggling in the same way. This is not a great claim that we are in the lead, but that we're not behind anyone else."

Guildford-based ReNeuron also has commenced GMP banking of its lead murine stem cell line, under development for Huntington's disease. It is putting together a preclinical toxicology package it hopes will be acceptable to the FDA and the UK Medicines Control Agency. However, Edwards recognized that, alongside the technical difficulties, there are significant regulatory hurdles to overcome.

Also, the company has only enough cash to last until the end of 2003. With such a low share price, Edwards said there is no question of a rights issue. He said that "a way will be found" to secure the company's future and suggested ReNeuron could be an attractive merger partner for U.S. stem cell companies seeking to avoid the regulatory restrictions in the U.S.