ReNeuron Annual Report 2018

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FY2018 Annual Report · ReNeuron

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ReNeuron Group plc
Annual Report and
Accounts 2018

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ReNeuron 2018 Annual Report

INTRODUCTION

Welcome to our 2018 annual report

Our vision is
to deliver life-changing
therapies to patients

We are an AIM – listed therapy
development company focusing on the
treatment of stroke disability, inherited
retinal diseases, and cancer.

Our multiple assets are in varying stages
of development with our most advanced
programme about to begin a Phase IIb
clinical trial in the US.

Read more about our products in ‘Group at a glance’ on pages 4 to 5

Read more about the purpose of the different clinical trials in ‘Our development process’ on pages 16 to 17

Contents

INTRODUCTION

A year of progress

Group at a glance

Chairman’s statement

STRATEGIC REPORT

Our progress

Our business model

Our competitive advantages

Our marketplace

Our development process

Chief Executive Officer’s review of performance

Financial review

Risks and uncertainties

GOVERNANCE

Board of Directors

Senior management

Directors’ report

Corporate governance

Audit Committee report

Directors’ remuneration report

FINANCIAL STATEMENTS

Independent auditor’s report

Group statement of comprehensive income

Group and Parent Company statements of financial position

Group and Parent Company statements of changes in equity

Group and Parent Company statements of cash flows

Notes to the financial statements

ANNUAL GENERAL MEETING

Notice of annual general meeting

Explanatory notes to the business of the
annual general meeting

Appendix I

Appendix II

OTHER INFORMATION

Advisers

Shareholder information

Glossary of scientific terms

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2

ReNeuron 2018 Annual Report

INTRODUCTION

A year of progress
towards changing
patients’ lives

Exosome
nanomedicine
platform:

Positive pre-clinical data with
our ExoPr0 exosome therapy
candidate demonstrates
potential of ExoPr0 to target
multiple diseases.

Initial clinical trial
application planned for
2019 in oncology.

Corporate:

US office established in Boston,
reflecting the Company’s increasing
clinical activity in the US.

Increased business development activity
in the period due to third party interest in
Group’s core therapeutic programmes.

Active discussions ongoing with a
number of commercial third parties.

Increased collaborative work in the
period to exploit technology
platforms beyond core
therapeutic programmes.

hRPC stem cell
therapy candidate for
retinal diseases:

Four patient cohorts treated in ongoing
US Phase I/II clinical trial in retinitis
pigmentosa (RP).

Phase I/II study to be expanded to target
patients with less-impaired vision.

Top line Phase I/II data now expected
in mid-2019.

Phase II study planned in cone-rod
dystrophy patients, to run in
parallel with planned Phase IIb
study in RP.

CTX stem cell
therapy candidate for
stroke disability:

Long-term data from Phase II clinical trial
presented, showing sustained improvements
in motor function and reduced levels of
disability and dependence.

IND application approved by FDA to
commence a Phase IIb, placebo-controlled
clinical trial in the US.

Patient recruitment expected to
commence shortly, leading to top-line
data at the end of 2019.

Financial highlights

Loss for the period of

£17.6 million
(2017: loss of £15.6 million)

Cash used in operating activities

£14.9 million
(2017: £12.6 million)

Cash, cash equivalents and bank

deposits at 31 March 2018 of

£37.4 million
(31 March 2017: £53.1 million)

1 for 100
Share Capital Reorganisation
completed in the period

Three further government grants awarded in
the period and post-period end, providing
funding towards £5.0 million of collaborative
work programmes across the Group’s therapeutic
development programmes.

Post-period end

• Further positive pre-clinical data demonstrates

that ExoPr0 exosome therapy candidate
significantly reduces tumour volume in a
variety of in vivo models of cancer.

• Exclusivity agreement signed with US-based
specialty pharmaceutical company regarding
potential out-licensing of hRPC technology
platform and therapeutic programmes.

Read more about our progress in the last 12 months
in ‘Our progress’ on pages 8 to 11

For scientific terms see the glossary

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ReNeuron 2018 Annual Report44
4

ReNeuron 2018 Annual Report

INTRODUCTION

Group at a glance

Our stem cell-based therapies...

...will change the lives of patients suffering from...

CTX Cells

hRPCs

CTX-derived
exosomes

Stroke disability

Retinitis
pigmentosa (RP)
and cone rod
dystrophy (CRD)

Cancer

• Immortalised neural stem

• Retinal progenitor

• These are nano-sized

cell line.

• What this means –

these cells have the ability
to differentiate into a
repertoire of specific nerve
and nerve support cells.

these cells have the ability
to differentiate into all of
the nerve cells and nerve
support cells of the retina.

• Our cell therapy is directly
injected into the brain
near to the area damaged
by the stroke.

• Our cell therapy is

implanted into the retina.

packages of information
released by CTX cells.

• ExoPr0 is our first

CTX-derived exosome
therapeutic candidate
which targets cancer.

• Our studies have

identified the potential of
ExoPr0 as both a novel
therapeutic candidate and
as a drug delivery vehicle.

Around 800,000 strokes happen
in the US each year1.

Stroke mortality rate has
decreased by 33% since 19962.

That means more people are
suffering from stroke disability.

So more people than ever might
be able to benefit from our
potentially life-changing therapy
to reduce their disability, and
dependence on others.

• These are both groups of

inherited, degenerative eye
diseases that result in the loss
of peripheral vision (in RP)
or central vision (in CRD)3,4.

• In both cases, the end result

is blindness.

• 1 in 3,000 to 4,000 people

are affected by RP3.

• 1 in 30,000 to 40,000 people

are affected by CRD4.

360,000 people in the UK
are diagnosed with cancer
each year5.

Our population is ageing...6.

So the number of people living
with cancer in the UK is expected
to increase to 4 million in 2030
(from 2.5 million in 2015)5.

• Our therapy could potentially
benefit patients suffering from
these rare diseases.

So more people than ever might
be able to benefit from our
potentially life-changing therapy.

1 Centers for Disease Control and Prevention
2 National Institutes of Health

3 RP Fighting Blindness
4 US National Library of Medicine

5 Macmillan
6 Cancer Research UK

For scientific terms see the glossary

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ReNeuron 2018 Annual Report6

ReNeuron 2018 Annual Report

STRATEGIC REPORT

Strategic
Report

Chairman’s statement

I am pleased to introduce the Group’s results for the year
ended 31 March 2018.

The Group’s programmes have progressed well during the
period, the most significant milestone being the approval
by the FDA of our IND submission to commence a Phase IIb
clinical trial in the US with our CTX cell therapy candidate for
stroke disability. Preparations for first patient dosing in this
study continue apace, and we look forward to reporting data
from the study late next year.

Elsewhere, we continued to progress patient dosing during
the period in the ongoing US Phase I/II study of our hRPC
cell therapy candidate for the blindness-causing inherited
retinal disease, retinitis pigmentosa (RP). Top-line data from
this study is expected in mid-2019. We have also continued
to generate and present very promising early pre-clinical
data with ExoPr0, our first CTX-derived exosome therapeutic
candidate, targeting cancer.

It is gratifying to observe that the progress we have made with
our therapeutic programmes has attracted the interest of a
number of commercial third parties and this has increased
the level of our business development activities. The recent
announcement of an exclusivity agreement with a US specialty
pharmaceutical company relating to our hRPC retinal stem
cell technology and therapeutic programmes underlines the
strength of this third-party interest. We look forward to being
able to sign a definitive agreement in the near term. We see
such business development deals, if secured, as third-party
validation of our technology as well as a significant source of
non-dilutive funding for the Company.

The Group’s financial results for the year ended 31 March 2018
reflect the continued tight management of our financial
resources, even as we increase the intensity of our clinical
development activities in the US. Further, we have continued
to evidence our ability to secure non-dilutive grant funding
across our development programmes by the award of three
new grants over the past year, providing funding towards
collaborative programmes of work totalling £5.0 million.

The Group applies appropriate corporate governance
standards throughout its operations, overseen by an
experienced Board. With specific regard to the recently
revised AIM Rule 26, the Board intends that the Group will
apply the Quoted Companies Alliance (QCA) Corporate
Governance Code.

During the period, Dr Paul Harper stepped down from the
Board as a Non-executive Director. We thank Paul for the
important contribution he has made to the Company’s success
over his long tenure on the Board and wish him all the best in
his future endeavours.

Also during the period, we welcomed Dr Claudia D’Augusta
as a new Non-executive Director of the Company.
Dr D’Augusta also chairs the Company’s Audit Committee
and brings over 20 years’ experience in Europe and US
corporate finance, in particular in the cell therapy sector.

ReNeuron continues to make solid progress in executing its
strategy to deliver value across its therapeutic programmes
through the generation of compelling clinical data in
significant disease conditions. We look forward to reporting
further progress in the year ahead. The Board and I would
like to extend our thanks to our employees for their ongoing
commitment and hard work during the year. I would also like
to thank all of our shareholders for their continued support.

On page 76 of this report is the Notice of the 2018
Annual General Meeting (AGM) to be held at 10 a.m. on
12 September 2018. A short explanation of the resolutions to
be proposed at the AGM is set out on page 79. The Directors
recommend that you vote in favour of the resolutions to be
proposed at the AGM, as they intend to do in respect of their
own beneficial holdings of Ordinary shares.

John Berriman
Non-executive Chairman
19 July 2018

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ReNeuron 2018 Annual Report

STRATEGIC REPORT

Our progress towards changing
patients’ lives

CTX cells for stroke disability

Pre-clinical data

Clinical trials: Phase I study

Clinical trials: Phase II study

Clinical trials: Phase II continued

Progress in the last 12 months

• A well-established rodent

model of stroke was used to
study the effects of our CTX
cell therapy.

• The CTX cells were directly
injected into the brain.

• Our results were particularly
positive given that restricted
blood supply to the brain,
following a stroke, results in
nerve cell death.

• The effects of our CTX

cell therapy included the
formation of...

1. new blood vessels.

2. new nerve cells.

3. new connections between

nerve cells.

PROGRESS TIMELINE

• In this study, we included
11 stable, disabled stroke
patients who were between 6
months and 5 years post-stroke.

• In this study, we included

23 disabled, stable stroke

patients, who were between 2

and 13 months post stroke.

• This study was a single centre,

open-label, ascending dose trial
to assess safety.

• The CTX cells were directly

injected into the putamen (an
area of the brain), and patients
were followed up for over 2 years
post-implantation.

• It was determined that these CTX
cell injections at the doses tested
were safe and well tolerated.

• This study was a single arm,
open-label trial using the

highest dose tested in Phase I.

This trial was ‘single arm’ because

all the patients were administered

the same dose.

• CTX cells (20 million cells)

were directly injected into

the putamen, and patients

were followed up for

12 months post-implantation.

•

No cell-related safety issues
were identified.

• The Modified Rankin Scale

(or mRS, a globally used measure

of functional disability and

dependence in stroke sufferers)

was used as a secondary

end-point for this study.

100

)

S
R
m

(

e
a
c
S
n
k
n
a
R
d
e
ﬁ
d
o
M

After 12 months

Modified Rankin Scale (mRS)

s
s
e
r
g
o
r
p
t
n
e
i
t
a
P

0 No symptoms at all

1 No significant disability

despite symptoms

2 Slight disability; unable
to carry out all previous
activities, but able to look
after own affairs without
assistance

3 Moderate disability;
requiring some help,
but able to walk without
assistance

4 Moderately severe

disability; unable to walk
and attend to own bodily
needs without assistance

5 Severe disability;

bedridden, incontinent and
requiring constant nursing
care and attention

Source: ClinicalTrials.gov: NCT02117635

• In the last 12 months we

found that the mRS response
rate was maintained out to
12 months post-implantation.

• As shown by the figure on

the left, 7 out of 20 (35%) of
patients still demonstrated
a clinically meaningful
improvement at 12 months
post-implantation and an
even higher response rate
was observed in patients with
residual arm movement.

• In December, the FDA

approved our Investigational
New Drug application which
allows us to commence
a Phase IIb study in the
US. The study, designated
PISCES III, is a randomised,
placebo-controlled clinical trial
in 110 patients. The mRS has
been chosen as the primary
end-point for this study.

Discovery

Pre-clinical

Phase I

Phase IIa

Phase IIb

Phase III

Market approval

CTX

Stroke disability

Read more about future therapy
development in ‘Our development
process’ on pages 16 to 17

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10

ReNeuron 2018 Annual Report

STRATEGIC REPORT

1111

Our progress towards changing
patients’ lives continued

hRPCs for retinal degeneration therapy

CTX-derived exosomes for cancer therapy

Pre-clinical data

Initial Phase I element of a combined Phase I/II study

Pre-clinical data

Progress in the last 12 months

• A rodent model of retinal

• This study was a single centre,

• Patients received a single,

degeneration was used to study
the effects of our hRPC therapy.
These hRPCs were injected
subretinally (just beneath the
photoreceptor layer of the retina).

open-label, dose escalation trial
to assess the safety of hRPCs in
patients with established retinitis
pigmentosa.

• Three different doses of hRPCs

• The results from this study

were tested.

subretinal injection of one dose
and were followed up for 1 year.

• It was determined that subretinal
injections of hRPCs at the three
doses tested were safe and
well tolerated.

demonstrated that these cells
can treat retinal degeneration.
They are able to...

1. preserve retinal structure

and function.

2. differentiate into components

of the retina.

Progress in the last 12 months

• We successfully developed

a cryopreserved formulation of
our hRPC cell therapy.

• We have now progressed into
the Phase II element of the
combined Phase I/II study.

• This will enable cells to be

frozen for shipping/storage and
be easily thawed at the point of
clinical use.

In vitro studies
• Our in vitro studies found
promising data regarding
the anti-cancer capabilities of
CTX-derived exosomes.

• The exosomes were able

to inhibit the proliferation,
migration and invasion-potential
of a glioblastoma cell line.

In vivo studies (rodent models)
• In these in vivo studies, we

used a mouse model whereby
human cancer cells are injected
in the animal and allowed to
develop a tumour over time .

• Our studies have found that
our exosome therapeutic
candidate inhibits tumour
growth in mouse models of
glioblastoma and lung cancer.

• As a monotherapy, the efficacy
of our exosome therapy was
similar to that of paclitaxel, the
current standard of care, in a
mouse model of lung cancer.

• Additionally, when combined
with the current standard of
care therapy, ExoPr0 had an
additive effect and further
enhanced the reduction in
tumour volume.

• We presented data about

the improved manufacturing
process of exosomes. The new
analytical methods developed
improve the quality and
consistency of exosomes
produced at large scale.

• We also produced two sets
of successful pre-clinical
data related to our exosome
therapy:

1. In vitro studies found that
exosomes can inhibit the
proliferation (through
cell death and/or cell
senescence) in liver, ovarian
and breast cancer cell lines.

2. In vivo studies also found
that exosomes can be
targeted to specific organs
and tissues by either local
or systemic administration
and they can also cross the
blood brain barrier.

PROGRESS TIMELINE

Discovery

Pre-clinical

Phase I

Phase IIa

Phase IIb

Phase III

Market approval

hRPC-RP

Retinitis pigmentosa

hRPC-CRD

Cone-rod dystrophy

Exosomes (CTX-derived)

Cancer

Read more about future therapy
development in ‘Our development
process’ on pages 16 to 17

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ReNeuron 2018 Annual Report

STRATEGIC REPORT

Our business model

Our competitive advantages

Key
resources

Value
chain

Develop best-in-class
cell-based therapies
for life-changing
high-value products.

Gain clinical validation
for our therapeutic
programmes, via robust
clinical trials in well
regulated territories.

Realise value
for our technologies
and therapeutic
programmes, via direct
sales or substantial
licence deals.

Our relationships
hRPCs
We are developing good relationships
with inherited retinal disease specialists,
who administer the hRPC therapy to
study participants.

CTX-derived exosomes
We are developing strong relationships
with academic and clinical key opinion
leaders in the area of oncology
and beyond.

This will support the clinical
development to advance this potential
therapy to patients with inherited
retinal disease.

We also have relationships with
commercial organisations who we will
be collaborating with as we broaden
our therapeutic pipeline.

CTX cells
As part of the clinical trials for the
CTX cell therapy for stroke disability,
we develop strong relationships with
the sites and neurosurgeons who
administer the therapy.

This will support our value proposition
in the long run, once our therapy has
been reviewed and approved, because
we will have already developed a
relationship with a number of the
sites and neurosurgeons who will be
administering the therapy to patients.

we
are

positioned for success

With our proprietary technology...
• CTX drug product is a proprietary allogeneic cell therapy
produced by our well-established, scalable manufacturing
process. (Allogeneic: recipient(s) of cells is different to cell donor).

• The same proprietary CTX cell line is used to produce our

exosome product.

• A different, highly efficient, patented process is used to produce

hRPCs on a large scale.

With our flexible
cryopreservation process...
• Our CTX cells and hRPCs can be cryopreserved, which

provides flexibility in terms of scheduling patient treatment.

• This makes our product similar to conventional

‘off-the-shelf’ pharmaceuticals/biologics.

• Following the approval of our therapies, we will target

markets around the world (including China and Japan).
Our cryopreservation process would allow us to
develop the therapies in the US or Europe and then
transport them globally.

With our efficient
development pipeline...
• Our therapy development pipeline spans the pre-clinical

and clinical development process.

• The exosomes we are harnessing for cancer therapy development

are a by-product of our CTX cells and this has two important
implications:

1. they have already been shown to be safe in patients;
2. they are Good Manufacturing Process compliant.

• The Phase I element of our hRPC clinical trial demonstrated that
the delivery of these cells is safe and well-tolerated in retinitis
pigmentosa patients. This will allow us to expand this therapeutic
approach into patients with other retinal disorders.

For scientific terms see the glossary

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IntellectualWe use proprietary technology to produce our life-changing therapies.HumanOur researchers and academic collaborators have industry-leading knowledge and this drives the therapy-development process. FinancialFunds raised by the issue of shares supported by grants from national government effectively advance the development of our latest therapies.PhysicalOur contract manufacturing organisations are instrumental in the therapy production process. In 2016 we moved into a new facility in Pencoed, South Wales. When complete and fully licensed, this building will house one of the world’s most advanced commercial cell therapy manufacturing facilities. We will have a vertically integrated capability from research to commercial supply. 14
14

ReNeuron 2018 Annual Report

STRATEGIC REPORT

Our marketplace
How do our therapies
address the market need?

CTX cells for stroke disability

Where we fit in

hRPCs for retinitis pigmentosa (RP)
and cone rod dystrophy (CRD)

Where we fit in

Market characteristics

A study in Sweden
demonstrated the cost
of stroke disability to the
health system. As shown
in the graph below, this
cost is dependent on the
patient’s mRS score.

Current stroke
therapy is only
available within
hours post stroke.

)
0
0
0
(
$
r
y
/
e
r
a
c
t
n
e
i
t
a
P

120

110

100

mRS 5

mRS 4

mRS 3

mRS 0–2

Level of disability

Source: Company data; adapted from Lekander et al 2017, 42,114 patients from 2007-2012,

costs from Sweden translated into $

Our CTX cell therapy aims
to treat patients months
after their stroke.

The Phase II clinical trials
for our CTX cell therapy
demonstrated that it can
reduce a patient’s global
disability post stroke as
assessed by mRS.

In our Phase IIb study,
we are seeking a one point
or more improvement
in mRS scoring, at six
months post surgery, in
CTX-treated patients that
are mRS score of 4 and 3
at baseline.

The graph on the left
shows the results from a
2017 Swedish study which
demonstrated that patient
care cost is proportionate
to their level of stroke
disability (as measured by
the mRS). Our Phase IIb
study will target patients
with a mRS score of 4 and
3 and will be looking for an
improvement of one or
more points.

There is
currently no
general cure for the
RP group of diseases
and sufferers remain
reliant on both health
and social care
services.

Given
that this
condition is
inherited it can
affect every part of the
patient’s life; from their
career to decisions
around starting
a family.

Market
potential for our
RP therapy is $0.5
– $1.6 billion3
worldwide.

As with all forms
of blindness, the
quality of the patient’s
life is significantly
diminished.

Exosomes for cancer

Market characteristics

Current RP
treatment requires
immunosuppressants.
This is costly and
impacts on the quality
of the patient’s life.

1 Centers for Disease Control and Prevention
2 Stroke Association
3 Analysts’ estimates: Stifel March 2018,

N+1 Singer April 2017, Edison May 2017.

4 Aggarwal and Sullivan

For scientific terms see the glossary

Our research suggests
that hRPC therapy may
be able to slow the
progression of RP through
its ability to differentiate into
components of the retina
and its ability to maintain
existing photoreceptors.

Our hRPC therapy
doesn’t require
immunosuppressants.
This is because of the
allogeneic nature of
the hRPC product which
makes it unlikely to cause
an immune response.

Our research suggests
that exosome therapy
may be used as both
a monotherapy or in
combination with standard
of care chemotherapeutics
in a range of indications
such as lung, breast and
brain cancer.

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The spend on cancer is significant in both the UK and the US.In England, the NHS spends £5.81 billion each year on cancer care (for 2011/2012 fiscal year)4.In the US, cancer spend is projected to be $157 billion by 20204. Stroke disability significantly affects a patient’s quality of life, and the treatment and care of these patients is a burden on health and social care as well as family and caregivers.In the US, $34 billion is spent each year on stroke disability (this includes health care services, medications and lost productivity)1.In the UK, the NHS spends £3.4 billion each year on stroke disability and the social care spend is £5.2 billion annually2.

ReNeuron 2018 Annual Report

STRATEGIC REPORT

1717

Our process for developing
life-changing therapies

Pre-clinical trials
Pre-clinical studies (in vitro and in vivo) are conducted to assess feasibility, efficacy
and safety of any potential drug product prior to it being tested in humans.

Our CTX-
derived
exosomes (for
cancer therapy) have
had pre-clinical
success.

Current pipeline

Pre-clinical

Phase I

Phase IIa

Phase IIb

Phase III

Clinical trials

Phase I
We assess the safety of a biologically active
substance in a small select group of patients.

Phase IIa
We evaluate the efficacy and safety of our
therapy in selected populations of patients.

Phase IIb
We then evaluate the efficacy and safety of our therapy
in patients in a more controlled and rigorous trial.

Our
hRPCs (for
retinitis pigmentosa
therapy) have recently
been shown to be safe and
well tolerated, and have moved
into Phase II element to evaluate
efficacy as well as safety. This
will also allow hRPC therapy to
be tested in a Phase II trial
in other retinal diseases,
such as cone rod
dystrophy.

Our CTX
cell therapy (for
stroke disability) has
had both Phase I and
Phase II success and it
has recently moved
into Phase IIb
development.

Phase III
Once our therapy has been shown to be both efficacious and safe
(in Phase I and Phase II) we carry out a large-scale clinical trial.

Review and approval
Once a therapy has been deemed safe and effective, it is submitted for approval
to regulatory bodies. These bodies review the available evidence and approve it
if the benefits appear to outweigh the risks.

CTX Cells for stroke disability

hRPCs for retinitis pigmentosa (RP)

hRPCs for cone rod dystrophy (CRD)

CTX-derived exosomes for cancer

What does this mean for future development?

CTX Cells

hRPCs

CTX-derived
exosomes

The start of Phase IIb clinical trials
for our stroke disability therapy will
mean that:

The start of the Phase II element of
our clinical trial for our RP therapy will
mean that:

1. It can be tested in a larger,

placebo-controlled clinical trial
(110 patients).

2. If successful, we would

progress to a confirmatory
Phase III trial as part of the
requirement to move this
potentially groundbreaking
therapy to market.

For scientific terms see the glossary

1. It can be tested for efficacy
outcomes in established RP
patients (as well as undergoing
further safety assessments).

2. We can expand our assessment
of efficacy into RP patients with
reduced disease progression.

3. If successful, this will enable us to
progress into a Phase IIb clinical
trial in RP and potentially other
retinal diseases such as CRD.

Further positive pre-clinical data
will mean that:

1. We can confirm efficacy and

potential utility in other indications.

2. We will establish safety and

optimal dosing for a first-in-man
clinical trial.

3. We can submit a clinical
trial application for an
oncology indication.

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1818

STRATEGIC REPORT

Chief Executive Officer’s
review of performance

Therapeutic programmes
CTX for stroke disability
In December 2017, the FDA approved our IND application
to commence a Phase IIb study in the US with our CTX cell
therapy candidate for stroke disability. The study, designated
PISCES III, is a randomised, placebo-controlled clinical trial
in 110 patients. The primary end-point of the study will be a
comparison of the proportion of patients in the treated and
placebo arms showing a clinically important improvement on
the modified Rankin Scale (mRS) at six months post-treatment
compared with baseline. The mRS is a clinician-reported
global measure of disability or dependence upon others
in carrying out activities of daily living and is recognised by
regulatory authorities as an acceptable end-point in late-stage
clinical trials in stroke disability. As previously reported,
we expect the PISCES III study to be one of two pivotal
studies required to support a marketing authorisation for
the therapy in this indication.

Since the regulatory approval, we have continued our
preparations to commence the PISCES III study. As previously
reported, we have taken the decision to increase the number
of clinical sites in the PISCES III study from 25 to 40 in order
to ensure that patient recruitment targets in the study are
met. To date, approximately one half of these sites have been
approved for participation in the study. Subject to completion
of ongoing local and central ethics approvals, we expect to
commence patient recruitment in the PISCES III study shortly,
leading to top-line data from the study at the end of 2019.

Shortly after obtaining regulatory approval to commence
the PISCES III study, in January 2018, we announced the
presentation of positive long-term data from the Phase II
clinical trial (PISCES II) of our CTX cell therapy candidate
for stroke disability at the American Heart Association
International Stroke Conference 2018. The data presented
at the conference indicate that our CTX therapy has the
potential to produce meaningful and sustained improvements
in the level of disability or dependence as well as motor
function in disabled stroke patients.

hRPC for retinal diseases
During the period under review, we completed the
dosing of four cohorts of three patients each in the ongoing
US Phase I/II clinical trial of our hRPC cell therapy candidate
for retinitis pigmentosa. This study, which is being undertaken
at Massachusetts Eye and Ear Infirmary in Boston, is an
open-label, dose escalation study to evaluate the safety,
tolerability and preliminary efficacy of our hRPC stem cell
therapy candidate in patients with advanced RP.

Commenting on the results, Olav Hellebø,
Chief Executive Officer, said:

“During the period, our therapeutic development
programmes have continued to progress well.
The regulatory approval from FDA to commence
a Phase IIb clinical trial in the US with our CTX cell
therapy candidate for stroke disability was a significant
milestone for ReNeuron and we look forward to dosing
the first patient in this study. Dosing has progressed
during the period in our ongoing US Phase I/II study
with our hRPC cell therapy candidate for retinitis
pigmentosa and we have continued to generate and
present most encouraging pre-clinical data with our
ExoPr0 exosome therapy candidate in oncology.

We now have a physical presence in Boston, US,
one of the world’s leading biotechnology hubs, with
our new US office reflecting ReNeuron’s increasing
clinical activity in this territory. Further, our cell-based
technologies and therapeutic programmes have
attracted the interest of a number of commercial third
parties, leading, initially, to the recent announcement
of an exclusivity agreement with a US specialty
pharmaceutical company regarding our hRPC retinal
stem cell technology and therapeutic programmes.
We hope to be able to conclude a definitive agreement
with this company later this year.

Our cash position remains robust and we are positioned
to deliver significant clinical milestones across our
therapeutic programmes during each of the next
three years.”

As previously reported, we expect the hRPC therapy to be
most effective in RP patients with a sufficiently intact retina to
enable good engraftment of the hRPC cells and subsequent
generation of functional photoreceptors. We are therefore
extending the study in order to expand the safety database in
patients with less-impaired vision than those treated thus far.
This is the patient group we will be targeting in a subsequent,
controlled Phase IIb clinical trial in RP.

The expanded Phase I/II study will also allow us to optimise
the formulation and dosing of the hRPC therapy prior to
commencement of the subsequent study. To this end, we
are currently working on a revised formulation to optimise
sub-retinal injection and subsequent disbursement of the
hRPC drug product, ahead of dosing of the remaining
patients in the ongoing Phase I/II study. Based on the above,
we expect short-term read-outs from the ongoing Phase I/II
clinical trial later than originally planned, in mid-2019, with the
Phase IIb study commencing shortly thereafter.

We intend to seek approval to commence a Phase II clinical
trial with our hRPC cell therapy candidate in patients with
cone-rod dystrophy (CRD) to begin shortly after the start of
Phase IIb testing of this candidate in RP. CRD is a group of
rare eye disorders associated with a loss of cone cells in the
retina resulting in deterioration of central visual acuity and
colour vision.

Exosome nanomedicine platform
During the period, pre-clinical development work has
continued with ExoPr0, our first CTX-derived exosome
therapeutic candidate. Exosomes are nanoparticles secreted
from cells including our proprietary CTX stem cell line.

Exosomes play a key role in cell-to-cell signalling and early
research with ExoPr0 has demonstrated its potential as both a
novel therapeutic candidate and as a drug delivery vehicle.

Data were presented during the period showing a significant
reduction in proliferation of a number of tumour-derived
cell lines when treated with ExoPr0, indicating that ExoPr0
may have a significant effect in regulating cell growth and
apoptosis in cancer. Further biodistribution data were
presented during the period showing that ExoPr0 can be
targeted to specific organs and tissues by either local or
systemic administration and, most importantly, can penetrate
the blood brain barrier. These findings suggest that there is
significant potential to develop ExoPr0 for the treatment of
multiple diseases, including solid tumours.

We and our collaborators also presented robust
methodologies to characterise our CTX-derived exosomes
to ensure consistency and control during manufacture as
well as purification strategies to address the upstream cell
culture processes needed to generate our exosomes and
the downstream purification methods that can be applied to
remove protein and DNA-based impurities from the exosomes
at a commercially relevant scale.

We continue to build the pre-clinical data package for our
ExoPr0 exosome therapy candidate and we have commenced
discussions with regulatory authorities regarding the
potential regulatory pathway to the clinic for ExoPr0.
Subject to continued success with ongoing pre-clinical
development work, we hope to be able to commence
clinical development with ExoPr0 during 2019, as previously
indicated, targeting a solid tumour cancer indication.

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ReNeuron 2018 Annual Report2020

STRATEGIC REPORT

Chief Executive Officer’s
review of performance continued

Financial review

Other activities
During the period, we established an office in Boston,
one of the US’s most vibrant academic and commercial
biotechnology hubs. This office will house our US-based
clinical and medical staff and reflects our current and future
focus on clinical development activities in the US across our
therapeutic programmes. To this end, we were pleased to
announce the appointment of Dr Rick Beckman as Chief
Medical Officer shortly after the period end, in April 2018.
Rick brings to ReNeuron more than 25 years of executive and
consultancy experience in drug and device development and
will be based at our Boston office.

Our technologies and therapeutic programmes have
increasingly attracted the interest of commercial third
parties as they have progressed through pre-clinical and
clinical development. As a result, we have increased our
business development activities during the period, and
subsequently, leading to the recent announcement of the
exclusivity agreement relating to our hRPC retinal platform and
programmes, referred to in the post-period end developments
section below.

We are also in active discussions with a number of third parties
relating to our other platform technologies and programmes,
with a view to potential collaboration and/or out-licensing deals
in due course. These potential deals, if successfully concluded,
will provide strong third party validation to our technologies
and programmes as well as a source of significant non-dilutive
funding to the Company.

Finally, we are increasing the scope of our collaborative work
with academic and commercial partners with the aim of
exploiting the potential of our technology platforms beyond
our core in-house therapeutic programmes. An example of this
was the publication, in February 2018, of new positive data with
our CTX cell therapy candidate in a pre-clinical model of nerve
injury, which demonstrated comparable nerve regeneration
compared to standard of care treatment and a stronger
muscle function response. The model, using our CTX cells as a
component of artificial nerve tissue, was developed as part of a
grant-funded collaboration with University College London and
Sartorius Stedim Biotech.

Post-period end developments
In May 2018, we presented data demonstrating for the first
time that our ExoPr0 exosome therapy candidate induces
apoptosis (cell death) and/or senescence (arresting of cell
growth) in a number of cancer cell lines. The data also showed
for the first time that ExoPr0 significantly reduces tumour
volume in a variety of in vivo xenograft models of cancer. These
results, albeit early-stage, are particularly encouraging as they
demonstrate the potential of ExoPr0 as a monotherapy with a
comparable efficacy profile to the standard of care in a relevant
cancer model. Further, when combined with the current
standard of care therapy, ExoPr0 induces an additive reduction

of tumour volume, indicating distinct mechanisms by which
ExoPr0 exerts its therapeutic effect as well as its potential utility
as a combination therapy.

We have recently announced the signing of an exclusivity
agreement with a US-based specialty pharmaceutical company
relating to the potential out-licensing of our hRPC technology
and therapeutic programmes. In exchange for granting a
three-month exclusivity period, ReNeuron will receive a
non-refundable $2.5 million payment from the US-based
company. A further $2.5 million is payable to ReNeuron subject
to completion of certain due diligence activities during the
exclusivity period. We aim to sign a definitive agreement with
the third party concerned later this year, subject to agreement
of final commercial terms.

Summary and outlook
During the period, our therapeutic development programmes
have continued to progress well. The regulatory approval from
FDA to commence a Phase IIb clinical trial in the US with our
CTX cell therapy candidate for stroke disability was a significant
milestone for ReNeuron and we look forward to dosing the first
patient in this study. Dosing has progressed during the period
in our ongoing US Phase I/II study with our hRPC cell therapy
candidate for retinitis pigmentosa and we have continued to
generate and present most encouraging pre-clinical data with
our ExoPr0 exosome therapy candidate in oncology.

We now have a physical presence in Boston, US, one of
the world’s leading biotechnology hubs, where our new
US office reflects ReNeuron’s increasing clinical activity in this
territory. Further, our cell-based technologies and therapeutic
programmes have attracted the interest of a number of
commercial third parties, leading, initially, to the recent
announcement of an exclusivity agreement with a US specialty
pharmaceutical company regarding our hRPC retinal stem cell
technology and therapeutic programmes. We hope to be able
to conclude a definitive agreement with this company later
this year.

Our cash position remains robust and we are positioned to
deliver significant clinical milestones across our therapeutic
programmes during each of the next three years.

Olav Hellebø
Chief Executive Officer
19 July 2018

As a result of the above, the total comprehensive loss for the
year increased to £17.6 million (2017: £15.6 million).

Cash used in operating activities was £14.9 million (2017:
£12.6 million), largely reflecting the operating costs incurred
during the period, net of tax credits received. The Group
had cash, cash equivalents and bank deposits totalling
£37.4 million at the year-end (2017: £53.1 million). The
Directors expect that the Group’s current financial resources
will be sufficient to support operations for a least the next
12 months from the date of these accounts.

In January 2018, shareholders approved a Share Capital
Reorganisation whereby all shareholders on the register as at
6.00 p.m. on 23 January 2017 received one new consolidated
Ordinary Share of 1 pence each for every 100 existing Ordinary
Shares of 1 pence each held as at that date. Following
subsequent admission of the new consolidated Ordinary
Shares, the Company now has 31,646,186 Ordinary Shares in
issue, all with voting rights.

During the period and subsequent to the period end, we, along
with our academic and commercial collaborators, have been
awarded three separate government grants, further evidencing
our continued success in sourcing non-dilutive funding for our
development programmes. The first of these is a grant from
Innovate UK to provide funding towards a £2.3 million work
programme to further advance our next generation commercial
cell therapy manufacturing capabilities. The grant will fund
key process development activities relating to up-scaled
commercial manufacture of our cell therapy candidates. The
second grant was awarded under the Welsh Government’s
SMARTExpertise scheme and will help fund a £1.2m
collaborative programme of work to advance our emerging
exosome therapy platform. The third grant was awarded
under Innovate UK’s Medicines and Manufacturing Round 1:
Challenge Fund and will co-fund a £1.5 million collaborative
programme of work to generate further cell banks of our
hRPC cell therapy candidate as well as the development of
product release assays for late-stage clinical development and
subsequent commercialisation of the therapy.

Michael Hunt ACA
Chief Financial Officer
19 July 2018

Revenues in the year amounted to £43k (2017: £46k),
being royalties from non-therapeutic licensing activities.
Grant income of £0.85 million (2017: £0.85 million) was also
recognised in other income.

Research and development costs remained constant at
£16.7 million (2017: £16.7 million) and accounted for 82%
of net operating expenses (2017: 80%). However, the prior
year cost includes a £1.6 million impairment of intangible
assets indicating that the underlying costs have increased
by £1.6 million (11%) from £15.1 million to £16.7 million.
This increase is primarily due to the increased level of
clinical trial activity and associated cell manufacturing and
process development costs across the Group’s therapeutic
programmes.

General and administrative expenses have increased by
£0.5 million to £4.6 million (2017: £4.1 million). This increase is
primarily due to costs associated with an increase in business
development and contracting activities.

Finance income represents income received from the Group’s
cash and investments and gains from foreign exchange with
losses from foreign exchange shown in finance expenses.
Finance income was £0.3 million in the period (2017:
£1.7 million). In 2017, finance income included foreign exchange
gains of £1.2 million. In 2018, the movement in exchange rates
has led to a foreign exchange loss of £0.9 million. The Group
holds cash and investments in foreign currencies in order to
hedge against operational spend and the strengthening of
sterling against the US dollar during the period has resulted in a
relative devaluation of the Group’s foreign currency deposits.

The total tax credit for the period was £3.35 million, relating
to an accrual for a research and development tax credit
for the period of £3.0 million (2017: £2.59 million) plus an
additional £0.35 million received relating to 2017. The increase
in the accrual on the previous year reflects the increase in
applicable costs.

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ReNeuron 2018 Annual Report2222

STRATEGIC REPORT

Risks and uncertainties

Risk

Potential impact

Mitigation action/control

Clinical and regulatory risk

There are significant inherent risks
in developing stem cell therapies
for commercialisation due to the
long and complex development
process. Any therapy which we
wish to offer commercially to
the public must be put through
extensive research, pre-clinical
and clinical development all of
which takes several years and is
extremely costly. The regulatory
process is both complex and multi-
jurisdictional.

Intellectual property risk

Intellectual property protection
remains fundamental to the Group’s
strategy of developing novel drug
candidates. The Group’s ability
to stop others making a drug,
using it or selling the invention
or proprietary rights by obtaining
and maintaining protection is
critical to our success. The Group
manages a portfolio of patents and
patent applications which underpin
its research and development
programmes.

Manufacturing and supply risk

The Group’s ability to successfully
scale up production processes to
viable clinical trial or commercial
levels is vital to the commercial
viability of any product.

Clinical potential impact
The Group may fail to develop a drug candidate
successfully because we cannot demonstrate in clinical
trials that it is safe and efficacious.

Delays in achieving regulatory approval may impose
substantial costs on the business.

If a product is approved, the regulators may impose
additional requirements, for example, restrictions
on the therapy’s indicated uses or the levels of
reimbursement receivable. Once approved, the
product and its manufacture will continue to be
reviewed by the regulators and may be withdrawn
or restricted.

Regulatory potential impact
Reduction of an income stream through regulation
could adversely affect the commercial viability of a
drug product.

Withdrawal of a drug product by a particular
regulatory agency would prevent sale in that particular
territory and may be followed by regulators in
other territories.

The Group’s internal development expertise
and knowledge in its targeted clinical areas will
enable it to develop therapeutic products in a
manner which will substantially mitigate, but
which cannot eliminate this risk in the future.

The Group looks to employ suitably qualified
and experienced staff. It also consults, where
necessary, with regulatory advisers and
regulatory approval bodies to ensure that
regulatory requirements are met.

Additionally, the Group seeks to foster a
culture where quality is a key priority. Both it
and its clinical and manufacturing partners
comply with Good Clinical Practice and Good
Manufacturing Practice and employs rigorous
processes in its research and development of
therapeutic products.

The Group uses experienced and reputable
clinical research organisations in its
clinical trials.

There is a risk that intellectual property may
become invalid or expire before, or soon after,
commercialisation of a drug product and the Group
may be blocked by other companies’ patents and
intellectual property.

The Group invests significantly in maintaining
and protecting this intellectual property
through the use of expert lawyers and patent
agents to reduce the risks over the validity and
enforceability of our patents.

The protection of the Group’s intellectual
property is a significant consideration
throughout the Group’s contracting activity.

Manufacturing potential impact
Inability to sell a drug product on a commercially
viable scale.

Product manufacture is subject to continual regulatory
control and products must be manufactured in
accordance with Good Manufacturing Practice. Any
changes to the approved process may require further
regulatory approval.

Availability of raw materials is extremely important to
ensure that manufacturing campaigns are performed
on schedule.

Supply potential impact
Substantial cost increases and delays in production
which could adversely impact on the Group’s financial
results and cash liquidity.

The Group utilises reputable contract
manufacturing organisations, experienced
in meeting the requirements of Good
Manufacturing Practice.

The Group maintains contractual relationships
with key manufacturers and suppliers to ensure
availability of supply and sufficient notice of
disruption.

Additionally, the Group seeks to avoid reliance
upon any single supplier or manufacturer and
it is seeking to develop its own manufacturing
facility at its premises in Wales.

Risk

Financial risk

The financial risks faced by the
Group include foreign currency
risk, liquidity risk and risk
associated with cash held on
deposit with financial institutions.

Potential impact

Mitigation action/control

The above may adversely affect the Group’s financial
results and cash liquidity.

Cyber risk

There is risk that third parties
may seek to disrupt the Group’s
business, or perpetrate acts of
fraud using digital media.

Loss of IT systems for a significant period may result
in delays in the development and commercialisation
of drug product. Fraud may result in financial loss.

Site and system disruption risk

Unexpected events could disrupt
the business by affecting its
key facility, critical equipment,
IT systems or a number of
employees.

Loss of IT systems for a significant period or key
employees may result in delays in the development
and commercialisation of drug product.

Staff turnover risk

The Group is dependent upon its
ability to attract and retain highly
qualified and skilled staff.

Loss of key staff could delay the development and
commercialisation of drug product.

The Board reviews and agrees policies
for managing each of these risks. The
Group’s main objectives in using financial
instruments are the maximisation of
returns from funds held on deposit,
balanced with the need to safeguard the
assets of the business. The Group does
not enter into forward currency contracts.
The Group holds currency in US Dollars
and Euros to cover short and medium-
term expenses in those currencies.

The Group is focused on maintaining a
robust and secure IT environment that
protects its corporate data and systems.
IT systems are continuously monitored
and employees are trained to be aware of
cyber security and the associated risks.

The Group has developed a business
continuity plan to ensure that it can
respond effectively to identified risks.
All critical equipment will have active
service contracts in place.

Business continuity insurance is in place.

The Group offers attractive employment
packages, including share incentive
plans, and actively encourages employee
engagement in the business. Employees
also have significant opportunities for
learning and development as well as
promotion opportunities borne out of the
Group’s staff appraisal and succession
planning processes.

In addition, and in common with other small biotechnology companies, the Group is subject to a number of other risks and
uncertainties, which include:

• the early stage of development of the business;

• availability and terms of capital needed to sustain operations, and failure to secure partnerships that will fund late-stage trials

and commercial exploitation;

• competition from other companies and market acceptance of its products; and

• its reliance on consultants, contractors and personnel at third-party research institutions.

26141 1 August 2018 1:08 PM Proof 15

ReNeuron 2018 Annual ReportGOVERNANCE

Governance

26141 1 August 2018 1:08 PM Proof 15

2626

Board of Directors

GOVERNANCE

A R N

A N

John Berriman
Non-executive Chairman

Olav Hellebø
Chief Executive Officer

Michael Hunt ACA
Chief Financial Officer

Simon Cartmell OBE
Non-executive Director

Dr Tim Corn
Non-executive Director

Dr Claudia D’Augusta
Non-executive Director

Professor
Sir Chris Evans OBE
Non-executive Director

Dr Mike Owen
Non-executive Director

Appointed
John Berriman was appointed
to the Board in July 2011
and became Chairman in
March 2015.

External appointments
He is currently also chairman
of Confo Therapeutics
NV, Autifony Therapeutics
Ltd and Depixus SAS,
and a Deputy Chairman
(non-executive) of Autolus
Therapeutics Ltd.

Experience and skills
He is past chairman of
Heptares Therapeutics
Ltd (sold to Sosei in
February 2015) and Algeta
ASA (sold to Bayer AG in
2014) and was a director
of Micromet Inc. until its
sale to Amgen in 2012.
Previously he was a director
of Abingworth Management,
an international healthcare
venture capital firm.

Appointed
Olav Hellebø was appointed
to the Board in September
2014.

Experience and skills
Prior to ReNeuron, he held
the role of CEO at Clavis
Pharma ASA, a Norwegian,
oncology-focused, listed
biotechnology company.
At Clavis, he built a
multi-national leadership
team, taking the company’s
lead programme through
Phase III clinical development
as well as completing
substantial fundraising and
out-licensing transactions for
the business. Prior to Clavis,
he headed up the global
biologics franchise at UCB
Pharma and was head of the
UK commercial operations
of Novartis.

Key: Committees

Audit

Remuneration

N Nominations and Corporate Governance

N Committee Chair

Appointed
Simon Cartmell OBE was
appointed to the Board
in July 2011.

External appointments
He is an experienced
non-executive director
currently chairing three
early-stage medical device
businesses, largely in his role
as Operating Partner for IP
Group plc, an established
UK Venture Capital firm.

Experience and skills
As CEO of ApaTech Ltd,
he built a world leader in
orthobiologics and led its
sale to Baxter International
Inc in March 2010. Prior
to ApaTech he was CEO of
Celltech Pharmaceuticals and
a director of Celltech Group
plc before which he was chief
operating officer of Vanguard
Medica plc. His early career
was spent at Glaxo plc in
multiple senior UK and global
commercial strategy, product
development, supply chain,
marketing, sales and business
development roles.

Appointed
Michael Hunt joined
ReNeuron in 2001. Between
2005 and 2014 he served
as its CEO, leading the
business through its early
development to its current
position as one of the global,
clinical-stage leaders in the
regenerative medicine field.
He was appointed as Chief
Financial Officer in 2014.

External appointments
He is a founding member
and co-chair of the European
section of the US-based
Alliance for Regenerative
Medicine (ARM) and is a main
board member of ARM. He
sits on the UK BioIndustry
Association’s Cell & Gene
Therapy Advisory Committee
and its Finance and Tax
Advisory Committee and is a
member of the Cell & Gene
Therapy Catapult’s Advisory
Panel.

Experience and skills
Prior to ReNeuron, he spent
six years at Biocompatibles
International plc (sold to
BTG plc) where he held a
number of senior financial
and general management
positions. His early industrial
career was spent at Bunzl plc.
He qualified as a chartered
accountant with Ernst &
Young.

Appointed
Dr Tim Corn was appointed
to the Board in June 2012.

External appointments
He serves as non-executive
director on the Board of
Neurocentrx Pharma Ltd,
as Chairman of the Board
of Trustees of The Neuro
Foundation and as Chief
Medical Officer of Izana
Bioscience.

Experience and skills
He was formerly Chief
Medical Officer at EUSA
Pharma International,
a division of Jazz
Pharmaceuticals, at
EUSA Pharma Inc and at
Zeneus Pharma, as well as
Non-executive Director at
Circassia Pharmaceuticals plc
and HRA Pharma.

He has held senior medical,
clinical and regulatory
positions in both big and
small pharma as well as in the
UK regulatory agency and
has played a key role in more
than 20 regulatory approvals
in the USA and Europe for
products in the fields of
neurology and oncology.

Fellowships
He is a Fellow of both the
Faculty of Pharmaceutical
Medicine and the Royal
College of Psychiatrists.

Appointed
Dr Claudia D’Augusta was
appointed to the Board in
September 2017.

Appointed
Professor Sir Chris Evans OBE
was appointed to the Board
in August 2013.

Appointed
Dr Mike Owen was
appointed to the Board in
December 2015.

External appointments
She is the CFO of TiGenix NV,
a leading international cell
therapy company listed on
both Euronext Brussels and,
more recently, on NASDAQ
following a successful US IPO
in 2016.

External appointments
As founder and chairman of
Excalibur Group and founder
of Arthurian Life Sciences, he
is a highly successful scientist
and entrepreneur with
numerous prestigious awards
and medals for his work.

External appointments
He currently serves as a
director of Zealand Pharma,
Ossianix Inc, Avacta plc,
GammaDelta Therapeutics
and Glythera Ltd and is a
member of the scientific
advisory board at Avacta.

Experience and skills
She has over 20 years’
experience in corporate
finance, capital markets and
M&A. Before joining TiGenix
in 2004, Dr D’Augusta was
finance director of Aquanima
(Santander Group). Previous
experience includes roles in
corporate finance and M&A
at Deloitte & Touche in Milan
and Apax Partners in Madrid.
Dr D’Augusta holds a degree
in Economics and a Ph.D. in
Business Administration
from the University of
Bocconi, Italy.

He is also the founder
of Chiroscience, Celsis,
Biovex, Merlin, Vectura and
Piramed. Arix Bioscience
was founded in January
2016 by Sir Chris. Arix is an
international company and
will back opportunities across
the spectrum of medical
sciences and healthcare.

Experience and skills
He has built over 50 medical
companies from scratch,
many from his own ideas
and inventions, and floated
20 new medical businesses
on stock markets in six
different countries. He has
created companies worth
over $7 billion employing
over 4,000 scientists, built
hundreds of complex medical
laboratories and facilities
around the world and
positively impacted many
millions of lives with his work.
He has also raised $2 billion
for cancer research projects.

Experience and skills
His career in biotech, the
pharmaceutical industry
and academia spans almost
40 years. He was formerly
senior vice president for
biopharmaceuticals research
at GlaxoSmithKline and was
also a founder and chief
scientific officer of Kymab
Ltd, an antibody-based
biotech company. He has
also previously served as a
director for BLINK Biomedical
SAS. For many years he held
a research position at the
Imperial Cancer Research
Fund (now CR-UK) and he
has previously served on the
scientific advisory board of
the CRT Pioneer Fund LP.

He is also a member of the
European Molecular Biology
Organisation.

Fellowships
He is a fellow of the Academy
of Medical Sciences.

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ReNeuron 2018 Annual Report28

Senior management

GOVERNANCE

Sharon Grimster
VP Development & General
Manager, Wales

Appointed
Sharon Grimster joined
ReNeuron in 2013 and
was appointed as VP
Development & General
Manager, Wales in April 2015

Experience and skills
She has significant
experience in pharmaceutical
development and she has
a particular expertise in
biologics manufacturing.
Prior to working at ReNeuron,
she held senior team roles
at F-star and Antisoma,
where she was responsible
for a range of development
functions, including project
management, regulatory
affairs, manufacturing, quality
and business operations. She
started her pharmaceutical
career at Celltech,
where she led teams in
project management,
manufacturing and research.

Dr Richard Beckman
Chief Medical Officer

Dr Randolph Corteling
Head of Research

Appointed
Dr Richard Beckman was
appointed Chief Medical
Officer in April 2018.

Experience and skills
Prior to joining ReNeuron,
Dr Beckman was the Chief
Medical Officer of several
innovative biotech and
device firms, including
Clearside, Ophthotech and
Neurotech. Prior to that, he
had leadership roles at Alcon,
Lux Bio, Becton Dickinson
and Allergan.

Dr Beckman received his
MD from the University of
Michigan, completed a
residency in ophthalmology
at Henry Ford Hospital,
and a glaucoma fellowship
at the Mass. Eye and Ear
Infirmary/Harvard University.
Prior to joining the industry,
he practised in academic
medicine for three years at
Cornell University Medical
College and was in private
practice for ten years.

Appointed
Dr Randolph Corteling was
appointed Head of Research
in April 2015 having been
a senior member of the
research team since 2007.

Experience and skills
Prior to joining ReNeuron,
Dr Corteling started his
scientific career as a Research
Associate at Novartis, before
undertaking a PhD in Medical
and Surgical Sciences at The
University of Nottingham.
He then spent three years
in Canada as a Heart and
Stroke Foundation Fellow
before joining ReNeuron in
2007. During his career Dr
Corteling has developed a
number of new discoveries
along with a thorough
understanding of cell and
stem cell biology, with
a particular interest and
expertise in the role of
extracellular vesicles and
exosomes.

Fellowships
After his PhD, he spent three
years as a Heart and Stroke
Foundation postdoctoral
fellow at the University of
Calgary, Canada.

Dr John Sinden
Chief Scientific Officer

Shaun Stapleton
Head of Regulatory Affairs

Olav Hellebø
Chief Executive Officer

Michael Hunt ACA
Chief Financial Officer

See page 26 for biography

Co-founder
Dr John Sinden is a scientific
co-founder of ReNeuron
and from 1998 to 2015 was
an Executive Director of the
ReNeuron companies.

Experience and skills
Prior to founding ReNeuron
and becoming its first
employee, he was Reader in
Neurobiology of Behaviour
at King’s College London.
He graduated in Psychology
from the University of Sydney
and completed a PhD in
Neuroscience from the
Université Pierre et Marie
Curie at the Collège de
France. He subsequently held
postdoctoral appointments
at Oxford University and the
Institute of Psychiatry prior to
joining the permanent staff of
the Institute in 1987. He holds
honorary professorships at
University College London
School of Pharmacy and the
University of Exeter Medical
School and has over 140
scientific publications and
book chapters.

Fellowships
He holds fellowships of the
Royal Society of Medicine
and the Royal Society
of Biology.

Appointed
Shaun Stapleton was
appointed Head of
Regulatory Affairs in
June 2015.

Experience and skills
Shaun Stapleton joined
ReNeuron from RRG (a
Voisin Consulting Life
Sciences company), where
he was a director and vice
president of regulatory
science. He supported
clients on a number of global
development and registration
projects, including advanced
therapies and orphan
drugs. Having graduated in
Biochemistry from Imperial
College London, he began
his career in research with
the Imperial Cancer Research
Fund, before moving
into the pharmaceutical
industry. He held positions
of increasing responsibility
in regulatory affairs at
Sterling Winthrop, Eli Lilly
and Boehringer Ingelheim
before becoming senior
director of regulatory affairs
at Ipsen, where he managed
regulatory input into
development programmes
globally, securing new
product approvals in the US,
the EU and internationally
in the neurology,
endocrinology and oncology
therapeutic areas.

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ReNeuron 2018 Annual ReportGOVERNANCE

3030

Directors’ report

for the year ended 31 March 2018

The Directors present their report and the audited
consolidated financial statements of the Company for the
year ended 31 March 2018.

Presentation of financial statements
The Group accounts include the financial statements of
the Company and its subsidiary undertakings made up to
31 March 2018.

Results and dividends
The results for the year are given in the Group statement of
comprehensive income set out on page 52. The Directors
do not recommend the payment of a dividend (2017: £nil).

Research and development
During the year the Group incurred research and development
costs of £16,657,000 (2017: £16,648,000) all charged to the
statement of comprehensive income.

Directors
The Directors who held office during the year and up to the
signing of the financial statements, unless otherwise stated,
are listed below:

John Berriman, Non-executive Chairman
Olav Hellebø, Chief Executive Officer
Michael Hunt, Chief Financial Officer
Simon Cartmell OBE, Non-executive Director
Dr Tim Corn, Non-executive Director
Dr Claudia D’Augusta, Non-executive Director (appointed
6 September 2017)
Professor Sir Chris Evans OBE, Non-executive Director
Dr Paul Harper, Non-executive Director (resigned
6 September 2017)
Dr Mike Owen, Non-executive Director

Qualifying third party indemnity
Certain Directors benefited from qualifying third party
indemnity provisions in place during the year and at the date
of this report.

Capital structure
At 31 March 2018, the Company has 31,646,186 1p ordinary
shares (2017: 3,164,618,541 1p ordinary shares). During the
year a share capital reorganisation took place resulting in
a 1 for 100 consolidation of share capital. The share capital
reorganisation resulted in the creation of 3,164,618,600
New Deferred Shares of 0.99p which were purchased by
the Company and cancelled. Accordingly, a transfer
occurred of £31,330,000 from share capital to the capital
redemption reserve.

Going concern
The Group is expected to incur significant further costs as it
continues to develop its therapies and technologies through
clinical development. The operation of the Group is currently
being financed from funds that have been raised from share
placings and grants.

The Directors expect that the Group’s current financial
resources will be sufficient to support operations for at least
the next 12 months from the date of these accounts. The
Directors are currently considering a number of options for
further funding and believe that sufficient funding will be
available beyond current cash resources in order to continue
with the Group’s ongoing clinical programmes. Consequently,
the going concern basis has been adopted in the preparation
of these financial statements.

Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulation.

Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance
with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Parent Company
financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the Directors must not approve
the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Parent Company and of the profit or loss of the Group and
Parent Company for that period. In preparing the financial
statements, the Directors are required to:

• select suitable accounting policies and then apply

them consistently;

• state whether applicable IFRSs as adopted by the

European Union have been followed for the Group financial
statements and IFRSs as adopted by the European Union
have been followed for the Company financial statements,
subject to any material departures disclosed and explained
in the financial statements;

• make judgements and accounting estimates that are

reasonable and prudent; and

• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and
Parent Company will continue in business.

The Directors are also responsible for safeguarding the
assets of the Group and Parent Company and hence for
taking reasonable steps for the prevention and detection of
fraud and other irregularities. The Directors are responsible
for keeping adequate accounting records that are sufficient
to show and explain the Group and Parent Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group and Parent Company and
enable them to ensure that the financial statements comply
with the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.

The Directors are responsible for the maintenance and
integrity of the Parent Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.

Directors’ confirmations
In the case of each Director in office at the date the Directors’
report is approved:

• so far as the Director is aware, there is no relevant audit
information of which the Group and Parent Company’s
auditors are unaware; and

• they have taken all the steps that they ought to have

taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the Group and Parent Company’s auditors are aware of
that information.

Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated
their willingness to continue in office and a resolution
concerning their re-appointment will be proposed at the
Annual General Meeting.

Annual General Meeting
The Annual General Meeting of the Company will be held at
the offices of Covington & Burling LLP, 265 Strand, London
WC2R 1BH on 12 September 2018 at 10:00 a.m. The Notice
of the Annual General Meeting is enclosed on page 76 of
this document.

By order of the Board

Michael Hunt
Director
19 July 2018

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ReNeuron 2018 Annual Report3232

GOVERNANCE

Corporate governance

This report provides general information on the Group’s
adoption of corporate governance principles. As an
AIM-listed company, ReNeuron intends to adopt as far
as possible the principles of the Quoted Companies
Alliance Corporate Governance Code (the “QCA Code”).
The QCA Code identifies ten principles to be followed
in order for companies to deliver growth in long-term
shareholder value, encompassing an efficient, effective and
dynamic management framework accompanied by good
communication to promote confidence and trust.

The sections below set out the ways in which the Group
applies the ten principles of the QCA Code in support of the
Group’s medium to long-term success. The Investor Centre
(Corporate Governance Section) on the Group’s website
also contains an index setting out the locations of relevant
disclosures on the website and/or in the Group’s Annual
Report pertaining to the Group’s application of the QCA Code.

1. Establish a strategy and business model which

promote long-term value for shareholders

The strategy and business operations of the Group are set out
in the Strategic Report on pages 7 to 23.

The Group has adopted a portfolio approach to its strategic
assets and is not dependent on one particular platform
technology, having developed therapeutic programmes
around its CTX neural and hRPC retinal stem cell assets,
as well as its CTX-derived exosome nanomedicine platform.
The Directors believe that this approach helps to mitigate
the risk of failure in any one particular programme.

The Group operates in an inherently high risk and heavily
regulated sector and this is reflected in the principal risks
and uncertainties set out on pages 22 and 23. In executing
the Group’s strategy and operational plans, management will
typically confront a range of day-to-day challenges associated
with these key risks and uncertainties, and will seek to deploy
the identified mitigation steps to manage these risks as they
manifest themselves.

2. Seek to understand and meet shareholder

needs and expectations

The Group seeks to maintain a regular dialogue with
both existing and potential new shareholders in order to
communicate the Group’s strategy and progress and to
understand the needs and expectations of shareholders.

The Group’s strategy and business model, and amendments
thereto, are developed by the Chief Executive Officer and
his senior management team, and approved by the Board.
The management team, led by the Chief Executive Officer, is
responsible for implementing the strategy and managing the
business at an operational level.

Beyond the Annual General Meeting, the Chief Executive
Officer, Chief Financial Officer and, where appropriate, other
members of the senior management team meet regularly
with investors and analysts to provide them with updates on
the Group’s business and to obtain feedback regarding the
market’s expectations of the Group.

The Group’s overall strategic objective is to develop best-in-
class cell-based therapies in its areas of therapeutic focus.

The Group has a balanced portfolio of cell-based platform
technologies and therapeutic programmes targeting
significant, unmet or poorly met areas of medical need.
The Group deploys its financial and other resources towards
gaining clinical validation for its therapeutic programmes,
via well-designed clinical trials in well-regulated territories.
Ultimately, the Directors believe that this approach will deliver
significant long-term value for shareholders if the resulting
clinical trial data are compelling.

At the appropriate stage of development, the Group may
choose to realise monetary value in a therapeutic programme
via high-value out-licensing deals with pharmaceutical or
biotechnology companies with interests in the relevant
therapeutic field and/or geographical territories. Alternatively,
and if resources permit, the Group may choose to advance a
therapeutic candidate through late-stage clinical development
unpartnered in order to retain the full value of the programme
within the Group.

The Group’s investor relations activities encompass dialogue
with both institutional and private investors. The Company is
a regular presenter at private investor events, providing an
opportunity for those investors to meet with representatives
from the Group in a more informal setting.

3. Take into account wider stakeholder and

social responsibilities and their implications for
long-term success

The Group is aware of its corporate social responsibilities and
the need to maintain effective working relationships across
a range of stakeholder groups. These include the Group’s
employees, partners, suppliers, regulatory authorities and
the patients involved in the Group’s clinical development
activities. The Group’s operations and working methodologies
take account of the need to balance the needs of all of these
stakeholder groups while maintaining focus on the Board’s
primary responsibility to promote the success of the Group for
the benefit of its members as a whole. The Group endeavours
to take account of feedback received from stakeholders,
making amendments to working arrangements and operational
plans where appropriate and where such amendments are
consistent with the Group’s longer term strategy.

The Group takes due account of any impact that its activities
may have on the environment and seeks to minimise this
impact wherever possible. Through the various procedures
and systems it operates, the Group ensures full compliance
with health and safety and environmental legislation relevant
to its activities.

4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation

The Board is responsible for the systems of risk management
and internal control and for reviewing their effectiveness. The
internal controls are designed to manage rather than eliminate
risk and provide reasonable but not absolute assurance
against material misstatement or loss. Through the activities
of the Audit Committee, the effectiveness of these internal
controls is reviewed annually.

A summary of the principal risks and uncertainties facing the
Group, as well as mitigating actions, are set out on pages 22
and 23.

A comprehensive budgeting process is completed once a
year and is reviewed and approved by the Board. The Group’s
results, compared with the budget, are reported to the Board
on a bi-monthly basis.

The Group maintains appropriate insurance cover in respect
of actions taken against the Directors because of their roles,
as well as against material loss or claims against the Group.
The insured values and type of cover are comprehensively
reviewed on a periodic basis.

The senior management team meet at least twice monthly
to consider new risks and opportunities presented to the
Group, making recommendations to the Board and/or Audit
Committee as appropriate.

5. Maintain the Board as a well-functioning,

balanced team led by the Chair

As at 31 March 2018, the Board comprised six Non-executive
Directors, and two Executive Directors. During the year
Dr Paul Harper retired from the Board and was replaced by
Dr Claudia D’Augusta.

All of the Directors are subject to election by shareholders at
the first Annual General Meeting after their appointment to
the Board and will continue to seek re-election at least once
every three years.

Directors’ biographies are set out on pages 26 and 27.

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ReNeuron 2018 Annual Report3434

GOVERNANCE

Corporate governance continued

The Board is responsible to the shareholders for the proper
management of the Group and meets at least six times a
year to set the overall direction and strategy of the Group, to
review scientific, operational and financial performance and to
advise on management appointments. All key operational and
investment decisions are subject to Board approval.

Eight formal Board meetings were held in the year ended
31 March 2018.

A summary of Board and Committee meetings attended in the year ended 31 March 2018 is set out below:

Board meetings

Director

Attended

Eligible

Nominations & Corporate
Governance Committee
Eligible
Attended

Audit Committee

Remuneration Committee

Attended

Eligible

Attended

Eligible

J Berriman

O Hellebø

M Hunt

S Cartmell

T Corn

C D’Augustai

C Evans

P Harperii

M Owen

i Dr D’Augusta was appointed as a Director on 6 September 2017

ii Dr Harper resigned as a Director on 6 September 2017

The Board considers there to be sufficient independence on
the Board. The QCA Code suggests that a board should have
at least two independent Non-executive Directors. All of the
Non-executive Directors who currently sit on the Board of
the Company are regarded as independent under the QCA
Code’s guidance for determining such independence.

Professor Sir Chris Evans sits on the board of Arix Bioscience
plc who, by virtue of their ownership of Arthurian Life Sciences
Limited, have an interest in 9.5% of the share capital of the
Company. This is beneath the 10% threshold the UK Corporate
Governance Code suggests when determining independence.

for the Board’s Non-executive Directors is deemed to be
proportionate and was subject to a shareholder consultation
process prior to its implementation.

6. Ensure that between them, the Directors

have the necessary up-to-date experience,
skills and capabilities

The Board considers that all of the Non-executive Directors
are of sufficient competence and calibre to add strength and
objectivity to the Board, and bring considerable experience
in scientific, operational and financial development of
biopharmaceutical products and companies.

Non-executive Directors receive their fees in the form of
a basic cash fee and an equity-based fee which takes the
form of nominal price share options under the Company’s
Non-executive Share Option Scheme. To avoid any incentive
effect that may influence the Non-executive Directors’
independence, these share options vest over three years
on a straight-line basis and are not subject to performance
conditions. The option grants concerned are not deemed
to be significant, either for any individual Non-executive
Director or in aggregate. The current remuneration structure

The Directors’ biographies are set out on pages 26 and 27.
The Board regularly reviews the composition of the Board to
ensure that it has the necessary breadth and depth of skills to
support the ongoing development of the Group.

The Chairman, in conjunction with the Company Secretary,
ensures that the Directors’ knowledge is kept up to date on
key issues and developments pertaining to the Group, its
operational environment and to the Directors’ responsibilities
as members of the Board. During the course of the year,

Directors received updates from the Company Secretary
and various external advisers on a number of corporate
governance matters.

Directors’ service contracts or appointment letters make
provision for a Director to seek personal advice in furtherance
of his or her duties and responsibilities, normally via the
Company Secretary.

7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement

The Board has a process for evaluation of its own
performance, that of its committees and individual Directors,
including the Chairman. This process is conducted biennially
and last took place in March 2017, with no substantive issues
arising. The Board utilises the services of an independent
third party organisation to manage the evaluation process,
analyse the results and report back to the Board for
subsequent follow-up. Evaluation criteria include Controls and
Procedures, Strategic Aims, Entrepreneurial Leadership and
Communications and Relationships.

The Board may utilise the results of the evaluation process
when considering the adequacy of the composition of the
Board and for succession planning.

8. Promote a corporate culture that is based on

ethical values and behaviours

The Board seeks to maintain the highest standards of integrity
and probity in the conduct of the Group’s operations.
These values are enshrined in the written policies and
working practices adopted by all employees in the Group.
An open culture is encouraged within the Group, with regular
communications to staff regarding progress and staff feedback
regularly sought. The Executive Committee regularly monitors
the Group’s cultural environment and seeks to address any
concerns than may arise, escalating these to Board level as
necessary.

The Group is committed to providing a safe environment
for its staff and all other parties for which the Group has a
legal or moral responsibility in this area. The Group operates
a Health and Safety Committee which meets monthly to
monitor, review and make decisions concerning health
and safety matters. The Group’s health and safety policies
and procedures are enshrined in the Group’s documented
quality systems, which encompass all aspects of the Group’s
day-to-day operations.

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ReNeuron 2018 Annual Report36
36

Corporate governance continued

9. Maintain governance structures and processes

that are fit for purpose and support good
decision-making by the Board

The Board has overall responsibility for promoting the success
of the Group. The Executive Directors have day-to-day
responsibility for the operational management of the Group’s
activities. The Non-executive Directors are responsible for
bringing independent and objective judgement to Board
decisions.

There is a clear separation of the roles of Chief Executive
Officer and Non-executive Chairman. The Chairman is
responsible for overseeing the running of the Board, ensuring
that no individual or group dominates the Board’s decision-
making and ensuring the Non-executive Directors are properly
briefed on matters. The Chairman has overall responsibility
for corporate governance matters in the Group and chairs the
Nominations and Corporate Governance Committee. The
Chief Executive Officer has the responsibility for implementing
the strategy of the Board and managing the day-to-day
business activities of the Group. The Company Secretary is
responsible for ensuring that Board procedures are followed
and applicable rules and regulations are complied with.

The Board has established an Audit Committee,
Remuneration Committee and Nominations and Corporate
Governance Committee with formally delegated duties
and responsibilities. Dr Claudia D’Augusta chairs the Audit
Committee, Simon Cartmell OBE chairs the Remuneration
Committee and John Berriman chairs the Nominations and
Corporate Governance Committee.

The Audit Committee normally meets twice a year and
has responsibility for, amongst other things, planning and
reviewing the annual report and accounts and interim
statements involving, where appropriate, the external
auditors. The Committee also approves external auditors’ fees
and ensures the auditors’ independence as well as focusing on
compliance with legal requirements and accounting standards.
It is also responsible for ensuring that an effective system of
internal control is maintained. The ultimate responsibility for
reviewing and approving the annual financial statements and
interim statements remains with the Board.

The Audit Committee Report is set out on page 38.

The Remuneration Committee, which meets as required,
but at least once a year, has responsibility for making
recommendations to the Board on the compensation of senior
executives and determining, within agreed terms of reference,
the specific remuneration packages for each of the Executive
Directors. It also supervises the Company’s share incentive
schemes and sets performance conditions for share options
granted under the schemes.

During the year ended 31 March 2018, the Remuneration
Committee met five times. The Committee reviewed
and approved:

the degree of achievement of objectives for the year
ended 31 March 2017 and consequent bonus awards and
other adjustments to remuneration for Executive Directors
and senior management;

ii)

the corporate and personal objectives for the Group and
Executive Directors for the year ended 31 March 2018;

iii) the award of stock options to Directors, senior

management and staff under the Group’s share incentive
schemes and the treatment of existing share option
awards to staff made redundant during the year;

iv)

the remuneration package for Dr D’Augusta (appointed as
a Non-executive Director during the year); and

v) certain travel and accommodation expenses for Executive
Directors and senior management relating to the Group’s
relocation to the Pencoed, South Wales site.

The Directors’ Remuneration Report is set out on pages
39 to 45. The Directors believe that this, together with the
above summary of the work of the Remuneration Committee,
constitutes sufficient disclosure to meet the QCA Code’s
requirement for a Remuneration Committee Report.
Consequently, a separate Remuneration Committee Report
is not presented.

The Nominations and Corporate Governance Committee,
which meets as required, but at least once a year, has
responsibility for reviewing the size and composition of
the Board, the appointment of replacement or additional
Directors, the monitoring of compliance with applicable laws,
regulations and corporate governance guidance and making
appropriate recommendations to the Board.

During the year ended 31 March 2018, the Nominations and
Corporate Governance Committee met five times.
The Committee reviewed and approved:

the report of findings from the Board evaluation exercise
undertaken in March 2017;

ii) certain revisions to the Committee’s terms of reference;

iii) Non-executive Director appointment continuation letters

for Mr Berriman and Mr Cartmell;

iv)

the Group’s anti-bribery and document retention policies;

the resignation of Dr Harper, and the appointment of
Dr D’Augusta, as Non-executive Directors of the
Company, the latter appointment having been conducted
in line with the Group’s recruitment policies and involving
a formal search process conducted by an external
recruitment consultancy;

vi) various amendments to the Group’s Corporate

Governance Memorandum; and

vii) selection of the QCA Code as the corporate governance
code to apply to the Group under revised AIM Rule 26.

The terms of reference of the above Committees are set out in
the Company’s Corporate Governance Memorandum, which
is regularly updated and can be found in the Investor Centre
(Corporate Governance Section) on the Group’s website.
The Corporate Governance Memorandum also contains a
schedule of matters specifically reserved for Board decision
or approval and sets out the Company’s share dealing code
and its public interest disclosure (‘whistle-blowing’) policy and
procedures.

10. Communicate how the Group is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Group places a high priority on regular communications
with its various stakeholder groups and aims to ensure that
all communications concerning the Group’s activities are clear,
fair and accurate. The Group’s website is regularly updated
and users can register to be alerted when announcements
or details of presentations and events are posted onto
the website.

Historical annual reports and other governance-related
material can be found on the Group’s website in the relevant
sections in the Investor Centre section of the site.

The results of voting on all resolutions in future general
meetings will be posted to the Group’s website, including
any actions to be taken as a result of resolutions for which
votes against have been received from at least 20 per cent
of independent shareholders.

By order of the Board

John Berriman
Non-executive Chairman
19 July 2018

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ReNeuron 2018 Annual ReportGOVERNANCE3838

GOVERNANCE

Audit Committee report

Directors’ remuneration report

for the year ended 31 March 2018

As Chair of the Audit Committee, I am pleased to present the
Committee’s report for the year ended 31 March 2018.

The Audit Committee is a subcommittee of the Board and is
responsible for ensuring effective governance over financial
reporting and internal controls. The Committee represents
the interests of the shareholders in relation to the integrity of
information and the effectiveness of audit processes in place.

The Audit Committee consists of three Non-executive Directors.
It is chaired by me and its other members are John Berriman
and Simon Cartmell OBE. I am an independent Director and
have relevant financial experience. Audit Committee meetings
are also attended, by invitation, by the Chief Financial Officer,
Financial Controller and, where appropriate, other members of
the Board. Representatives of the external auditor also attend
by invitation and meet with the Audit Committee at least twice
a year, with time allowed for discussion without any members of
the executive team being present, to allow the external auditor
to raise any issues of concern.

The Audit Committee acts independently of management
to ensure that the interests of shareholders are protected in
relation to the financial reporting and internal controls.

The principal duties of the Committee are to:

• monitor the integrity of the Group’s financial reporting

including the review of significant financial reporting issues
and judgements;

• review and challenge whether appropriate accounting

policies have been adopted, in particular for significant
or unusual transactions where different approaches
are possible;

• where requested by the Board, review the content
of the Annual Report and Accounts and advise the
Board on whether, taken as a whole, it is fair, balanced,
understandable and provides the information for
shareholders to assess the Group’s performance, business
model and strategy;

• keep under review the adequacy and effectiveness of

the internal financial controls and internal control and risk
management systems;

• review and challenge, if appropriate, any significant

related-party transactions;

• oversee the external audit process including monitoring

the external auditor’s independence, objectivity,
effectiveness and performance;

• review the Group’s systems and controls for detecting

fraud and preventing bribery; and

• monitor and review the Group’s whistleblowing

arrangements.

The Audit Committee has primary responsibility for the
relationship between the Group and the external auditor.
This includes:

• considering and recommending to the Board, to be put to

shareholders for approval at the Annual General Meeting, in
relation to the appointment, re-appointment and removal of
the Group’s external auditors.

• considering the auditor’s independence, objectivity,

qualifications and effectiveness;

• reviewing the audit plan presented by the auditor and

considering the risks identified therein;

• reviewing the auditors’ findings reports on the Group’s

Annual Report and Accounts; and

• approving the level of fees paid to the auditors for audit and

non-audit services.

During the year ended 31 March 2018, the Audit Committee
met twice. The Committee reviewed and approved the
financial statements for the year ended 31 March 2017, the
interim results for the six months to 30 September 2017 and
the external auditor’s plan and fee for the 2018 external audit.

The Audit Committee has satisfied itself that the external
auditor is independent The Audit Committee has concluded
that the external audit process was effective, that the scope
of the audit was appropriate and that significant judgements
have been robustly challenged. No significant issues have
been reported by the auditor.

The Audit Committee does not believe it necessary at this
time to propose re-tendering of the audit contract.

A resolution for the re-appointment of
PricewaterhouseCoopers LLP as the statutory auditor will be
proposed at the forthcoming Annual General Meeting.

No formal recommendations other than the approval of the
Interim Statement and Annual Report and Accounts have
been made to the Board by the Audit Committee and no
external reports have been commissioned on financial control
processes during the year ended 31 March 2018.

By order of the Board

Dr Claudia D’Augusta
Chair – Audit Committee
19 July 2018

This report sets out the remuneration policy operated by
the Company in respect of the Executive and Non-executive
Directors, as of the date of this report. No Director is involved
in discussions relating to their own remuneration.

Remuneration policy for Executive Directors
The Remuneration Committee sets the remuneration policy
that aims to align Executive Director remuneration with
shareholders’ interests and to attract and retain the best talent
for the benefit of the Group. The Committee has sought
independent advice when setting the remuneration policy.
Executive Directors are appointed under service contracts
with notice periods not exceeding 12 months. The basic
contractual working week is 37.5 hours but contracts stipulate
that Executive Directors are required to work whatever
hours are necessary in order for them to fulfil their executive
responsibilities.

Remuneration for Executive Directors is composed of the
following elements:

Basic salary
Basic salaries are reviewed annually and revised salaries take
effect from the start of the financial year. The review process
is managed by the Remuneration Committee with reference
to market salary data and the Executive’s performance during
the year.

Bonuses
Annual bonuses are based on achievement of Group strategic
and operational objectives, and personal performance
objectives. The maximum annual bonus that may be payable
in cash is set at 50% of base salary for the Executive Directors.
Up to a further 50% of base salary may be awarded subject to
the achievement of further stretching objectives, and payable
in nominal price share options under the Company’s deferred
Share-based Bonus Plan.

Longer Term Incentives
In order to further incentivise Executive Directors and align
their interests with shareholders, the Company operates a
Long Term Incentive Plan under which nominal price share
options may be granted from time to time. The quantum of
these awards will relate to the Executive Director’s base salary
and will vest subject to the performance conditions detailed in
the notes to the tables on pages 44 to 45 of this report.

Executive Directors are expected to build a direct stake in
the Company’s shares over time, either through the purchase
of shares in the market from time to time and/or through the
future exercise of share options.

The Company has the ability to grant share options under its
Share Option schemes subject to a cap of up to 10% of total
issued share capital in any ten-year period.

Pension
The Group operates a defined contribution pension scheme
which is available to all employees. The Company contribution
in respect of Executive Directors is currently set at 10% of base
salary. The Executive Director may choose to take some or all
of this benefit as a cash alternative, subject to the Company
remaining cash neutral after relevant payroll taxes.

Other benefits
Other benefits provided are life assurance, private medical
insurance and professional subscriptions, where relevant to
the duties of the Executive Director, and a car allowance of
£10,000 per annum to each Executive Director (disclosed as
part of Salaries and fees in the remuneration table below).
During the year, the Company paid a living allowance of
£42,000 to the Chief Executive Officer pertaining to the
relocation of the Group to the Pencoed, South Wales site
(also disclosed as part of Salaries and fees in the remuneration
table below).

Non-executive Directors’ remuneration
The remuneration of the Non-executive Directors is
determined by the Remuneration Committee with regard
to market comparatives. In setting the remuneration policy
for Non-executive Directors, the Committee has sought
independent advice and, where appropriate, has consulted
with certain of its shareholders. Non-executive Directors are
appointed for an initial three-year term via an appointment
letter from the Company, with a three months’ notice period.
The appointment term is renewable for further three-year
terms after the initial term has expired. Appointment letters
stipulate that the Non-executive Director is expected to
commit sufficient time to the role to meet the Company’s
expectations.

Non-executive Directors receive their fees in the form of
a basic cash fee and an equity-based fee which takes the
form of nominal price share options under the Company’s
Non-executive Share Option Scheme. To avoid any incentive
effect that may influence the Non-executive Director’s
independence, these share options will vest over three
years on a straight-line basis and are not subject to
performance conditions.

Non-executive Directors do not receive any pension, bonus
or other benefits from the Company. The remuneration of the
Non-executive Directors is reviewed by the Board annually.

26141 1 August 2018 1:08 PM Proof 15

ReNeuron 2018 Annual Report40
40

Directors’ remuneration report continued

for the year ended 31 March 2018

Directors’ emoluments
The Directors received the following remuneration during the year:

John Berriman
Olav Hellebø
Michael Hunt
Simon Cartmell OBE
Dr Tim Corn
Dr Claudia D’Augusta
Professor Sir Chris Evans OBE
Dr Paul Harper
Dr Mike Owen
Total

Salaries
and fees
£’000
53
345
214
38
25
21
26
20
26
768

Bonuses
£’000
–
66
64
–
–
–
–
–
–
130

Benefits
in kind
£’000
–
2
2
–
–
–
–
–
–
4

2018
Pension
contributions
£’000
–
27
19
–
–
–
–
–
–
46

2018
Total
£’000
53
413
280
38
25
21
26
20
26
902

2017
Pension
contributions
£’000
–
29
20
–
–
–
–
–
–
49

2017
Total
£’000
52
401
281
38
30
–
26
34
26
888

Bonuses disclosed above represent a cash element paid as a percentage of base salary ranging from 23% to 31% based on
achievement of corporate and personal performance objectives in the financial year ended 31 March 2018.

The Executive Directors elected to take some of their pension benefit as a cash alternative.

The Non-executive Directors also received an equity-based fee in the year which took the form of nominal price share options
under the Company’s Non-executive Share Option Scheme. The estimated gain on these options at the time of grant was
£3,500 (2017: £6,000) to each of the Non-executive Directors.

Directors’ emoluments include amounts payable to third parties in respect of fees as described in note 28 of the financial
statements.

The Directors, who held office at the end of the year, held the following interests in the Ordinary shares of the Company.
Comparative figures have been amended to reflect the 1 for 100 share consolidation.

John Berriman
Olav Hellebø
Michael Hunt
Simon Cartmell OBE
Dr Tim Corn
Dr Claudia D’Augusta
Professor Sir Chris Evans OBE
Dr Mike Owen

Ordinary shares of 1p each
2017
Number
10,434
6,694
20,084
7,875
2,000
–
240,105
–

2018
Number
10,434
6,694
20,084
7,875
2,000
–
240,105
–

The Directors, who held office at the end of the year, held the following interests in options over shares of the Company.
The figures have been amended to reflect the 1 for 100 share consolidation.

John Berriman

At
1 April
2017
Number

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Note

Exercise period*

Options – unapproved

Olav Hellebø

Options – approved

Options – unapproved

Note

4,800

5,752

6,000

3,000

–

25,552

At
1 April
2017
Number

72,463

83,091

181,236

190,666

25,000

–

552,456

–

4,800

5,752

6,000

£3.75

September 2014 – September 2021

£2.87

September 2015 – September 2022

£3.60

September 2016 – September 2023

£3.45

September 2017 – September 2024

3,000

£1.00

August 2016 – July 2026

5,000

£1.00

October 2017 – September 2027

5,000

30,552

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Exercise period*

–

72,463

£1.00

September 2017 – September 2024

83,091

£1.00

September 2017 – September 2024

181,236

£1.00

October 2018 – October 2025

190,666

£1.00

25,000

£1.00

July 2019 – July 2026

July 2018 – July 2026

97,666

£1.00

October 2017 – September 2027

97,666

650,122

26141 1 August 2018 1:08 PM Proof 15

ReNeuron 2018 Annual ReportGOVERNANCE

4242

GOVERNANCE

Directors’ remuneration report continued

for the year ended 31 March 2018

Granted
during
the year
Number

At
31 March
2018
Number

Dr Tim Corn

Exercise
price

£10.61

£18.94

Exercise period*

August 2010 – August 2017

Options – unapproved

August 2010 – August 2017

Options – unapproved

–

3,478

£1.00

August 2011 – August 2019

10,355

£1.00

August 2013 – August 2020

14,583

£1.00

September 2014 – September 2021

31,818

£1.00

September 2015 – September 2022

6,945

£1.00

September 2016 – September 2023

32,638

£1.00

September 2016 – September 2023

17,153

£1.00

September 2017 – September 2024

23,471

£1.00

September 2017 – September 2024

70,909

£1.00

October 2018 – October 2025

82,916

£1.00

12,500

£1.00

July 2019 – July 2026

July 2018 – July 2026

At
1 April
2017
Number

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Note

Exercise period*

5,752

5,000

3,000

–

18,752

–

5,752

5,000

£2.87

September 2015 – September 2022

£3.60

September 2016 – September 2023

£3.45

September 2017 – September 2024

3,000

£1.00

August 2016 – July 2026

5,000

£1.00

October 2017 – September 2027

5,000

23,752

At
1 April
2017
Number

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Note

Exercise period*

Options – unapproved

–

5,000

£1.00

October 2017 – September 2027

5,000

At
1 April
2017
Number

Note

9,898

3,478

10,355

14,583

31,818

6,945

32,638

17,153

23,471

70,909

82,916

12,500

–

Lapsed
during
the year
Number

(9,898)

–

Michael Hunt

Options – unapproved

Options – approved

Options – unapproved

Options – approved

Options – unapproved

Options – approved

Options – unapproved

Simon Cartmell OBE

68,000

£1.00

October 2017 – September 2027

326,562

(19,796)

68,000

374,766

Professor Sir Chris Evans OBE

At
1 April
2017
Number

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Note

Exercise period*

Options – unapproved

4,800

5,752

6,000

3,000

–

25,552

–

5,000

4,800

5,752

6,000

£3.75

September 2014 – September 2021

£2.87

September 2015 – September 2022

£3.60

September 2016 – September 2023

£3.45

September 2017 – September 2024

3,000

£1.00

August 2016 – July 2026

Dr Mike Owen

5,000

£1.00

October 2017 – September 2027

30,552

Options – unapproved

Note

At
1 April
2017
Number

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Exercise period*

5,000

3,000

–

13,000

At
1 April
2017
Number

3,000

–

3,000

–

5,000

£3.60

September 2016 – September 2023

£3.45

September 2017 – September 2024

3,000

£1.00

August 2016 – July 2026

5,000

£1.00

October 2017 – September 2027

5,000

18,000

Lapsed
during
the year
Number

Granted
during
the year
Number

At
31 March
2018
Number

Exercise
price

Exercise period*

–

3,000

£1.00

August 2016 – July 2026

5,000

£1.00

October 2017 – September 2027

8,000

* The exercise periods indicate the earliest dates for which the options are exercisable subject to meeting the performance conditions disclosed below.

26141 1 August 2018 1:08 PM Proof 15

Options – unapproved

Dr Claudia D’Augusta

Options – unapproved

Note

ReNeuron 2018 Annual Report

44
44

Directors’ remuneration report continued

for the year ended 31 March 2018

Note 1:
These options were issued subject to a performance
condition, being the successful completion of an initial clinical
trial of a ReNeuron cell therapy. These options expired in
August 2017.

Note 2:
These options have been issued in accordance with the
Group’s Deferred Share-based Bonus Plan in respect of
corporate and personal objectives achieved in the financial
year ending 31 March 2009 and carry no further performance
conditions; at 31 March 2018 these options were exercisable.

Note 3:
These options were issued subject to the amended
performance conditions below. If all the performance
conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of
these options were exercisable.

i) The first patient is administered with a ReNeuron cell

therapy in a second clinical trial;

ii) The Total Shareholder Return (TSR) of the Company

meets or exceeds that of the AIM Healthcare Index in
any three-year period from date of grant of the option;

iii) The business must have operated within its internal
financial budgets throughout the period to vesting;

iv) The business must be a going concern (under the
accepted accounting definition) at the time of any
exercise of an option.

Note 4:
These options were issued subject to a performance
condition, being the first patient administered with a
ReNeuron cell therapy in a third clinical trial; at 31 March 2018
these options were exercisable.

Note 5:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance
conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of
these options were exercisable.

i) The first patient is administered with a ReNeuron cell

therapy in a third clinical trial;

ii) The Total Shareholder Return (TSR) of the Company

meets or exceeds that of the AIM Healthcare Index in
any three-year period from date of grant of the option;

iii) The business must have operated within its internal
financial budgets throughout the period to vesting;

iv) The business must be a going concern (under the
accepted accounting definition) at the time of any
exercise of an option.

Note 6:
These options were issued subject to a performance
condition, being the first patient administered with
a ReNeuron cell therapy in a fourth clinical trial; at
31 March 2018 these options were exercisable.

Note 7:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance
conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of
these options were exercisable.

i) The first patient is administered with a ReNeuron cell

therapy in a fourth clinical trial;

ii) The Total Shareholder Return (TSR) of the Company

meets or exceeds that of the AIM Healthcare Index in
any three-year period from date of grant of the option;

iii) The business must have operated within its internal
financial budgets throughout the period to vesting;

iv) The business must be a going concern (under the
accepted accounting definition) at the time of any
exercise of an option.

Note 8:
These options were issued subject to a performance
condition, being the first patient administered with a
ReNeuron cell therapy in a fifth clinical trial; at 31 March 2018
these options were exercisable.

Note 9:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance
conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of
these options were exercisable.

i) The first patient is administered with a ReNeuron cell

therapy in a fifth clinical trial;

ii) The Total Shareholder Return (TSR) of the Company

meets or exceeds that of the AIM Healthcare Index in
any three-year period from date of grant of the option;

iii) The business must have operated within its internal
financial budgets throughout the period to vesting;

iv) The business must be a going concern (under the
accepted accounting definition) at the time of any
exercise of an option.

Note 10:
These options were issued subject to a performance
condition, being the first patient administered with a
ReNeuron cell therapy in a sixth clinical trial; at 31 March 2018
these options were not exercisable.

Note 11:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance
conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 these
options were not exercisable.

i) The first patient is administered with a ReNeuron cell

therapy in a sixth clinical trial;

ii) The Total Shareholder Return (TSR) of the Company

meets or exceeds that of the AIM Healthcare Index in
any three-year period from date of grant of the option;

iii) The business must have operated within its internal
financial budgets throughout the period to vesting;

iv) The business must be a going concern (under the
accepted accounting definition) at the time of any
exercise of an option.

Note 12:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the performance
conditions set out below; at 31 March 2018 33.3% of these
options were exercisable.

33.3% vest when the first patient is administered with a
ReNeuron cell therapy in a sixth clinical trial;

ii) 33.3% vest on completion of the fourth clinical trial of a

ReNeuron cell therapy;

iii) 33.4% vest if the Total Shareholder Return (TSR) of the

Company meets or exceeds that of the AIM Healthcare
Index in any three-year period from date of grant of
the option.

Note 13:
These options were awarded in accordance with the Group’s
Long Term Incentive Plan and are subject to the performance
conditions set out below; at 31 March 2018 these options were
not exercisable.

33.3% vest when the first patient is administered with
a ReNeuron cell therapy in a seventh clinical trial;

ii) 33.3% vest on completion of the fifth clinical trial of a

ReNeuron cell therapy;

iii) 33.4% vest if the Total Shareholder Return (TSR) of the

Company meets or exceeds that of the AIM Healthcare
Index in any three-year period from date of grant of
the option.

Note 14:
These options have been issued in accordance with the
Group’s Deferred Share-based Bonus Plan in respect of
corporate and personal objectives achieved in the financial
year ending 31 March 2016 and carry no further performance
conditions; at 31 March 2018 these options were not
exercisable.

Note 15:
These options have been issued in accordance with the
Non-executive Share Option Scheme. These share options
vest over three years on a straight-line basis and are not
subject to performance conditions; at 31 March 2018 55.55%
of these options were exercisable.

Note 16:
These options have been issued in accordance with the
Non-executive Share Option Scheme. These share options
vest over three years on a straight-line basis and are not
subject to performance conditions; at 31 March 2018 16.66%
of these options were exercisable.

Note 17:
These options were issued subject to the performance
conditions set out below. At 31 March 2018, these options
were not exercisable.

33.3% vest when the first patient is administered with
a ReNeuron cell therapy in an eighth clinical trial.

ii) 33.3% vest on completion of the sixth clinical trial of a

ReNeuron cell therapy.

iii) 33.4% vest if the Total Shareholder Return (TSR) of the
Company meeting or exceeding that of the FTSE AIM
Healthcare Index in any three-year period from the date
of grant of the option.

By order of the Board

Simon Cartmell OBE
Chair – Remuneration Committee
19 July 2018

26141 1 August 2018 1:08 PM Proof 15

ReNeuron 2018 Annual ReportGOVERNANCEFINANCIAL STATEMENTS
FINANCIAL STATEMENTS

Financial
Statements

26141 1 August 2018 1:08 PM Proof 15

4848

FINANCIAL STATEMENTS
FINANCIAL STATEMENTS

Independent auditor’s report

to the members of ReNeuron Group plc

Report on the audit of the financial statements
Opinion
In our opinion, ReNeuron Group plc’s Group financial statements and Parent Company financial statements (the “financial
statements”):

• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2018 and of the Group’s

loss and the Group’s and the Parent Company’s cash flows for the year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union and, as regards the Parent Company’s

financial statements, as applied in accordance with the provisions of the Companies Act 2006; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts (the ‘Annual Report’), which comprise:
the Group and Parent Company statements of financial position as at 31 March 2018; the Group statement of comprehensive income,
the Group and Parent Company statements of cash flows, and the Group and Parent Company statements of changes in equity for
the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the auditors’ responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.

Our audit approach
Overview

Materiality

Audit scope

Key audit
matters

• Overall Group materiality: £1,048,000 (2017: £908,000), based on 5% of loss before tax.

• Overall Parent Company materiality: £800,000 (2017: £702,000), based on 1% of total assets.

• The UK audit team performed an audit of the complete financial information of the one operating entity
in the UK (ReNeuron Limited) as well as the Parent Company based in the UK (ReNeuron Group plc),
which comprise over 99% of the Group’s loss before tax and over 99% of the Group’s total assets.

• Accounting for research and development expenditure.

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there
was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified
by our audit.

Key audit matter

How our audit addressed the key audit matter

Accounting for research and development
expenditure
Research and development has increased in the year.

Due to the nature of the clinical trials and general
research it is often difficult to estimate the amount
of time a particular trial is going to take. ReNeuron
outsources most of its research and development to
third parties which restricts visibility and the ability to
monitor the progression of a piece of research, or a
trial’s stage of completion.

As a result it can be difficult for ReNeuron to
measure what costs have been incurred in relation
to a trial at a particular point in time and as such,
based on billings received, whether project
accruals and prepayments recorded are reasonably
estimated. Our audit risk is focused on whether
the relevant expenditure has been appropriately
included in the income statement and whether
prepayments and accruals are appropriately
calculated and recognised.

We performed the following procedures:

• We verified the status of projects through a meeting with the

Chief Medical Officer where the progress and status of each project
was discussed.

• We obtained management’s calculations that support the research
and development costs incurred during the year and verified the
mathematical formulae used.

• We obtained the contracts register and for a sample of contracts
agreed that management had recognised costs in line with the
underlying terms of the contract.

• We sampled invoices detailed in management’s calculations and tested

back to invoice and verified that the cost description in the invoice
matched costs included in management’s schedule.

• We obtained management’s calculation of the accrual and prepayment

position and verified the mathematical formulae.

• We sampled the accrual and prepayment position and tested back to
either contracts or invoice and verified the accuracy and existence of
the accrual or prepayment included in management’s schedule.

• We reviewed invoices received post 31 March 2018 to identify any costs

not included in management’s schedules.

We determined that there were no key audit matters applicable to the Parent Company to communicate in our report.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Parent Company, the accounting processes and
controls, and the industry in which they operate.

ReNeuron Group plc is listed on the Alternative Investment Market (AIM) of the London Stock Exchange and its principal activities
are research and clinical development of cell-based therapeutics.

The Group’s accounting process is structured around a local finance function based in the United Kingdom. There are three active
entities in the Group; ReNeuron Group plc (which raises the equity to support the principal activity of the Group), ReNeuron
Limited (which records the majority of Group activity) and ReNeuron Inc. (which incurs the costs of supervising the Group’s clinical
trials in the United States of America and recharges these back to ReNeuron Limited). There are two dormant entities in the Group;
ReNeuron (UK) Limited and ReNeuron Holdings Limited.

For each active entity we determined whether we required an audit of their complete financial information (“full scope”) or whether
specified procedures addressing specific risk characteristics of particular financial statement line items would be sufficient.

It was assessed that ReNeuron Group plc and ReNeuron Limited required full scope audit procedures whilst ReNeuron Inc., which
contributes less than 1% of the loss before tax and 1% of Group total assets, and contained no financial statement items that
comprised more than 15% of the Group total did not.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate, on the financial statements as a whole.

26141 1 August 2018 1:08 PM Proof 15

ReNeuron 2018 Annual Report50
50

Independent auditor’s report continued

to the members of ReNeuron Group plc

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Parent Company financial statements

Overall materiality

£1,048,000 (2017: £908,000).

£800,000 (2017: £702,000).

How we determined it

5% of loss before tax.

1% of total assets.

Rationale for
benchmark applied

Based on the benchmarks used in the Annual
Report, loss before tax is the most relevant
measure in assessing the performance of
the Group, and is a generally accepted
auditing benchmark.

We believe that total assets is the most
appropriate measure since this entity is a holding
company, and is a generally accepted auditing
benchmark. This has been restricted to c. 60% of
the benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was £800,000 and £958,000. Certain components were audited to a local
statutory audit materiality that was also less than our overall Group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £50,000
(Group audit) (2017: £45,000) and £40,000 (Parent Company audit) (2017: £35,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s and Parent Company’s ability to continue to adopt the going concern basis of accounting for a
period of at least 12 months from the date when the financial statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and
Parent Company’s ability to continue as a going concern.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to
report certain opinions and matters as described below.

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 March 2018 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the course of
the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.

Use of this report
This report, including the opinions, has been prepared for and only for the Parent Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• the Parent Company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.
Other voluntary reporting
Directors’ remuneration
The Parent Company voluntarily prepares a Directors’ remuneration report in accordance with the provisions of the Companies Act
2006. The Directors requested that we audit part of the Directors’ remuneration report specified by the Companies Act 2006 to be
audited as if the parent company was a quoted company.

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.

Jason Clarke BSc ACA (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cardiff
19 July 2018

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTSFINANCIAL STATEMENTS
52
52

Group statement of
comprehensive income

for the year ended 31 March 2018

Group and Parent Company
statements of financial position

for the year ended 31 March 2018

Revenue: royalty income
Other income: grants
Research and development costs
General and administrative costs
Operating loss
Finance income
Finance expense
Loss before income tax
Income tax credit
Loss and total comprehensive loss for the year
Loss and total comprehensive loss attributable to equity owners of the Company
Basic and diluted loss per Ordinary share

Note
5

6
6

7
8

2018
£’000
43
854
(16,657)
(4,616)
(20,376)
320
(911)
(20,967)
3,352
(17,615)
(17,615)
(55.7p)

2017
£’000
46
854
(16,648)
(4,139)
(19,887)
1,722
–
(18,165)
2,592
(15,573)
(15,573)
(49.2p)

Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiaries

Current assets
Trade and other receivables
Income tax receivable
Investments – bank deposits
Cash and cash equivalents

Total assets
Equity
Equity attributable to owners of the Company
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Accumulated losses
At 1 April
Loss for the year attributable to the owners
Other changes in accumulated losses
At 31 March
Total equity
Liabilities
Current liabilities
Trade and other payables

Total liabilities
Total equity and liabilities

Group

2018
£’000

2017
£’000

Company

2018
£’000

2017
£’000

Note

14
15
16

18
19

726
186
–
912

1,285
3,010
9,500
27,911
41,706
42,618

316
97,704
40,294
2,223

(87,380)
(17,615)
1,127
(103,868)
36,669

5,949
5,949
5,949
42,618

724
–
–
724

1,060
4,015
24,936
28,125
58,136
58,860

31,646
97,704
8,964
2,223

(72,879)
(15,573)
1,072
(87,380)
53,157

5,703
5,703
5,703
58,860

–
–
103,225
103,225

73
–
9,500
25,026
34,599
137,824

316
97,704
40,294
1,858

(6,037)
(2,928)
1,127
(7,838)
132,334

5,490
5,490
5,490
137,824

–
–
91,337
91,337

133
–
24,936
23,219
48,288
139,625

31,646
97,704
8,964
1,858

(6,899)
(210)
1,072
(6,037)
134,135

5,490
5,490
5,490
139,625

The financial statements on pages 52 to 75 were approved by the Board of Directors on 19 July 2018 and were signed on its
behalf by:

Michael Hunt
Director

Company registered number: 05474163

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54
54

Group and Parent Company
statements of changes in equity

Group and Parent Company
statements of cash flows

for the year ended 31 March 2018

Group
As at 1 April 2016
Credit on share-based payment
Loss and total comprehensive loss for the year
As at 31 March 2017
Effect of share consolidation
Credit on share-based payment
Loss and total comprehensive loss for the year
As at 31 March 2018

Company
As at 1 April 2016
Credit on share-based payment
Loss and total comprehensive loss for the year
As at 31 March 2017
Effect of share consolidation
Credit on share-based payment
Loss and total comprehensive loss for the year
As at 31 March 2018

Share
capital
£’000
31,646
–
–
31,646
(31,330)
–
–
316

Share
premium
account
£’000
97,704
–
–
97,704

–
–
97,704

Share
premium
account
£’000
97,704
–
–
97,704

–
–
97,704

Capital
redemption
reserve
£’000
8,964
–
–
8,964
31,330
–
–
40,294

Merger
reserve
£’000
2,223
–
–
2,223
–
–
–
2,223

Merger
reserve
£’000
1,858
–
–
1,858
–
–
–
1,858

Accumulated
losses
£’000
(72,879)
1,072
(15,573)
(87,380)
–
1,127
(17,615)
(103,868)

Accumulated
losses
£’000
(6,899)
1,072
(210)
(6,037)
–
1,127
(2,928)
(7,838)

Total
equity
£’000
67,658
1,072
(15,573)
53,157
–
1,127
(17,615)
36,669

Total
equity
£’000
133,273
1,072
(210)
134,135
–
1,127
(2,928)
132,334

Cash flows from operating activities
Cash (used in)/generated from operations
Income tax credit received
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Capital expenditure
Loans provided to subsidiaries
Interest received
Net cash generated from/(used in) in investing activities
Cash flows from financing activities
Bank deposit matured
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year

Note

Group

2018
£’000

(19,244)
4,357
(14,887)

(235)
–
383
148

14,525
14,525
(214)
28,125
27,911

2017
£’000

(13,976)
1,340
(12,636)

(532)
–
520
(12)

23,347
23,347
10,699
17,426
28,125

Company

2018
£’000

(1,450)
–
(1,450)

–
(11,648)
380
(11,268)

14,525
14,525
1,807
23,219
25,026

2017
£’000

255
–
255

–
(14,348)
511
(13,837)

23,347
23,347
9,765
13,454
23,219

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56
56

Notes to the financial statements

1. General information
ReNeuron Group plc (the “Company”) and its subsidiaries (together, the “Group”) research and develop therapies using
stem cells. The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its
registered office is Pencoed Business Park, Pencoed, Bridgend CF35 5HY. Its shares are listed on the Alternative Investment
Market (AIM) of the London Stock Exchange.

2. Accounting policies and basis of preparation
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all of the financial years presented for both the Group and the Company. The accounting
policies relate to the Group unless otherwise stated.

Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union, the interpretations of the International Financial Reporting Interpretations Committee (IFRIC)
and the Companies Act 2006 applicable to companies reporting under IFRS.

These financial statements have been prepared on a historical cost basis, as modified by the valuation of certain assets and
liabilities at fair value through profit or loss.

Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiary undertakings made up
to 31 March 2018.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the
date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the
extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable
net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the Group statement of comprehensive income.

Intercompany transactions and balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The Group elected not to apply IFRS 3 “Business Combinations” retrospectively to business combinations which took place
prior to 1 April 2006 that have been accounted for by the merger accounting method.

Significant accounting judgements, estimates and assumptions
There are no key areas that require management to make difficult, subjective or complex judgements about matters that are
inherently uncertain.

Foreign currency translation
The consolidated financial statements are presented in Pounds Sterling (£), which is the Company’s functional and
presentational currency. Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the Group statement of comprehensive income in the year in which they occur.

2. Accounting policies and basis of preparation continued
Revenue
Revenue represents income received from royalties arising from collaborations with third parties and is recognised when they
fall due to the Group.

Research and development expenditure
Capitalisation of expenditure on product development commences from the point at which technical feasibility and commercial
viability of the product can be demonstrated and the Group is satisfied that it is probable that future economic benefits will
result from the product once completed. No such costs have been capitalised to date, given the early stage of the Group’s
intellectual property.

Expenditure on research and development activities that do not meet the above criteria, including ongoing costs associated
with acquired intellectual property rights and intellectual property rights generated internally by the Group, is charged to the
Group statement of comprehensive income as incurred.

Pension benefits
The Group operates a defined contribution pension scheme. Contributions payable for the year are charged to the Group
statement of comprehensive income. Differences between contributions payable in the year and contributions actually paid are
shown as either accruals or prepayments in the Group and Parent Company statements of financial position. The Group has no
further payment obligations once the contributions have been paid.

Leases
Leasing arrangements which transfer to the Group substantially all the benefits and risks of ownership of assets are treated as
finance leases, as if the asset had been purchased outright. The assets are included within the relevant category of property,
plant and equipment and the capital elements of the leasing commitments are shown as obligations under finance leases.
Assets held under finance leases are depreciated over the lower of their useful life and the terms of the lease. The interest
element of the lease rental is included in the Group statement of comprehensive income.

All other leases are considered operating leases, the costs of which are charged to the Group statement of comprehensive
income on a straight-line basis over the lease term. Benefits such as rent-free periods, and amounts received or receivable as
incentives to take on operating leases, are spread on a straight-line basis over the lease term.

Government and other grants
Revenue grants are credited to other operating income within the Group statement of comprehensive income, assessed by the
level of expenditure incurred on the specific grant project, when it is reasonably certain that amounts will not need to be repaid.

Share-based payments
The Group operates a number of equity-settled share-based compensation plans. The fair value of share-based payments under
such schemes is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will
eventually vest and adjusted for the effect of market-based vesting conditions. Vesting periods are estimated to be two years for
options issued under the deferred bonus and four years for other schemes.

The fair value calculation of share-based payments requires several assumptions and estimates as disclosed in note 24. The
calculation uses the Black-Scholes model. At each balance sheet date, the Group reviews its estimate of the number of options
that are expected to vest and recognises any revision to original estimates in the Group statement of comprehensive income,
with a corresponding adjustment to equity.

For equity-settled share-based payments where employees of subsidiary undertakings are rewarded with shares issued by the
Parent Company, a capital contribution is recorded in the subsidiary, with a corresponding increase in the investment in the
Parent Company.

Warrants
Where warrants have been issued together with Ordinary shares, the proportion of the proceeds received that relates to the
warrants is credited to reserves.

Where warrants have been issued as recompense for services supplied, the fair value of warrants is charged to the Group
statement of comprehensive income over the period the services are received and a corresponding credit is made to reserves.

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58

Notes to the financial statements
continued

2. Accounting policies and basis of preparation continued
Intangible assets
Intangible assets relating to intellectual property rights acquired through licensing or assigning patents and know-how are
carried at historical cost less accumulated amortisation and any provision for impairment. Milestone payments associated with
these rights are capitalised when incurred. Where a finite useful life of the acquired intangible asset cannot be determined,
the asset is not subject to amortisation but is tested for impairment annually or more frequently whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. No amortisation other than historical impairment has
been charged to date as the products underpinned by the intellectual property rights are not yet available for commercial use.

Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended
use. Depreciation is calculated so as to write off the cost less their estimated residual values on a straight-line basis over the
expected useful economic lives of the assets concerned. The principal annual periods used for this purpose are:

Leasehold improvements
Plant and equipment
Computer equipment

Term of the lease
3–8 years
3–5 years

Investments in subsidiaries
Investments in subsidiaries are shown at cost less any provision for impairment. Any monies paid to subsidiaries are deemed to
be a capital contribution.

Current income tax
The credit for current income tax is based on the results for the year, adjusted for items which are non-assessable or disallowed.
It is calculated using tax rates that have been enacted or substantively enacted at the financial year end.

Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates and laws that have
been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised.

Bank deposits, cash and cash equivalents
Cash and cash equivalents in the Group and Parent Company statements of cash flows and the Group and Parent Company
statements of financial position include cash in hand and deposits held on call with banks with original maturities of three
months or less. Bank deposits with original maturities in excess of three months are classed as investments and measured at
amortised cost using the effective interest rate method. Bank deposits with maturities between four and twelve months are
disclosed within current assets and those with maturities greater than twelve months are disclosed within non-current assets.

Trade payables
Trade payables are recorded at fair value when goods or services have been received from a supplier.

Capital redemption reserve
Section 733 of the Companies Act 2006 provides that where shares of a company are redeemed or purchased wholly out of the
Company’s profits, or by a fresh issue, the amount by which the Company’s issued share capital is diminished on cancellation
of the shares shall be transferred to a reserve called the “capital redemption reserve”. It also provides that the reduction of the
Company’s share capital shall be treated as if the capital redemption reserve were paid-up capital of the Company.

2. Accounting policies and basis of preparation continued
Provisions
Provisions are recognised when the Group has an obligation as a result of past events, for which it is probable that an outflow
of resources will be required to settle the obligation and the amount can be reliably estimated.

Contractual milestone payments
The Group is expected to incur future contractual milestone payments linked to the future development of its therapeutic
programmes. These costs will be recognised as and when a contractual milestone is expected to be achieved.

Accounting developments
The following new standards, new interpretations and amendments to standards and interpretations are applicable for the first
time for the financial year ended 31 March 2018. None of them have any impact on the financial statements of the Group:

• Amendments to IAS 12 – “Income Taxes” on Recognition of Deferred Tax Assets for Unrealised Losses (effective

1 January 2017); and

• Amendment to IFRS 7 “Statement of Cash Flows” (effective 1 January 2017)

There are a number of new standards, interpretations and amendments to existing standards that are not yet effective and have
not been adopted early by the Group. The future introduction of these standards is not expected to have a material impact on
the financial statements of the Group.

• Amendments to IFRS 1 and IAS 28 arising from the Annual Improvements to IFRS 2014-2016 Cycle;

• IFRS 9 “Financial Instruments” (effective 1 January 2018);

• IFRS 15 “Revenue from Contracts with Customers” (effective 1 January 2018);

• Clarifications to IFRS 15 “Revenue from Contracts with Customers” (effective 1 January 2018);

• Amendments to IFRS 2 “Classification and Measurement of Share Based Payment Transactions” (effective 1 January 2018);

• IFRIC Interpretation 22 “Foreign Currency Translation and Advance Consideration” (effective 1 January 2018); and

• IFRIC Interpretation 23 ”Uncertainty over Income Tax Treatments” (effective 1 January 2019).

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60

Notes to the financial statements
continued

2. Accounting policies and basis of preparation continued
IFRS 16 “Leases” is effective for accounting periods commencing on or after 1 January 2019. The Group will apply the standard
for the first time for the year ending 31 March 2020. IFRS 16 represents a fundamental change in lease accounting for lessees,
because, with the exception of leases of less than 12 months duration and leases of low value assets, all leases are brought on
balance sheet. The impact of this, had the Group applied IFRS 16 for the year ended 31 March 2018, is as follows:

Right of use asset
Accruals
Lease creditor
Reduction in reserves

2018
£’000
745
130
(990)
(115)

The right of use asset represents the economic value of the Group’s enjoyment of the assets and is amortised over the life of the
lease. The lease creditor is the value of the minimum lease payment, discounted at the rate implicit in the lease. The adjustment
to accruals reflects the reversal of the existing treatment under IAS 17.

The estimated impact of the depreciation charge in respect of the right of use asset and the interest charge on the lease
creditor is as follows:

Depreciation charge
Interest charge

2018
£’000
94
37

3. Going concern
The Group is expected to incur significant further costs as it continues to develop its therapies and technologies through clinical
development. The operation of the Group is currently being financed from funds that have been raised from share placings and
grants.

The Directors expect that the Group’s current financial resources will be sufficient to support operations for at least the next
12 months from the date of these accounts. The Directors are currently considering a number of options for further funding and
believe that sufficient funding will be available beyond current cash resources in order to continue with the Group’s ongoing
clinical programmes. Consequently, the going concern basis has been adopted in the preparation of these financial statements.

4. Segment analysis
The Group has identified the Chief Executive Officer as the chief operating decision maker (CODM). The CODM manages the
business as one segment, the development of cell-based therapies, and activities and assets are predominantly based in the
UK. Since this is the only reporting segment, no further information is included. The information used internally by the CODM
is the same as that disclosed in the financial statements.

6. Operating expenses

Loss before income tax is stated after charging:
Research and development costs:
Employee benefits (note 10)
Depreciation of property, plant and equipment (note 14)
Impairment of intangible assets
Other expenses
Total research and development costs
General and administrative costs:
Employee benefits (note 10)
Legal and professional fees
Depreciation of property, plant and equipment (note 14)
Operating lease charges:
– land and buildings
Other expenses
Total general and administrative costs
Total research and development costs and general and administrative costs

Services provided by the Group’s auditors

Fees payable to the Group’s auditors:
– for the audit of the Parent Company and consolidated financial statements
– for the audit of the Company’s subsidiaries pursuant to legislation
– other audit work
– other non-audit work
Total

7. Finance income

Interest receivable on short-term and investment bank deposits
Foreign exchange gains
Total

During the year the Group obtained services from the Group’s auditors and its associates as detailed below:

2018
£’000

2017
£’000

4,795
154
–
11,708
16,657

2,071
949
78

176
1,342
4,616
21,273

2018
£’000

20
23
30
48
121

2018
£’000
320
–
320

2018
£’000
911

4,194
96
1,591
10,767
16,648

1,975
556
73

178
1,357
4,139
20,787

2017
£’000

20
22
3
–
45

2017
£’000
520
1,202
1,722

2017
£’000
–

5. Revenue
Revenue represents income received from royalties arising from collaborations with third parties. The Group’s revenue derives
wholly from assets in the UK. All revenue is derived from customers in the US.

8. Finance expenses

Foreign exchange losses

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62
62

Notes to the financial statements
continued

9. Directors’ emoluments
The Directors of the Company have authority and responsibility for planning, directing and controlling the activities of the
Group and they therefore comprise key management personnel as defined by IAS 24 ‘Related Party Disclosures’.

11. Income tax credit

Aggregate emoluments of Directors:
Salaries and other short-term employee benefits
Pension contributions

Share-based payments
Directors’ emoluments including share-based payments

2018
£’000

902
46
948
525
1,473

2017
£’000

888
49
937
557
1,494

Two Directors (2017: two) had retirement benefits accruing to them under defined contribution pension schemes in respect of
qualifying services.

None of the Directors exercised share options during the year nor in the previous year.

For detailed disclosure of Directors’ emoluments, including highest paid Director, please refer to the Directors’ Remuneration
Report on pages 39 to 45.

Directors’ emoluments include amounts payable to third parties as described in note 28.

2018
£’000
3,352

2017
£’000
2,592

UK research and development tax credit at 14.5% (2017: 14.5%)

No corporation tax liability arises on the results for the year due to the loss incurred.

As a loss-making small and medium-sized enterprise, the Group is entitled to research and development tax credits at 14.5%
(2017: 14.5%) on 230% (2017:230%) of qualifying expenditure for the year to 31 March 2018.

The tax credit compares with the loss for the year as follows:

Loss before income tax
Loss before income tax multiplied by the main rate of corporation tax of 19% (2017: 20%)
Effects of:
– difference between depreciation and capital allowances
– other short-term timing differences
– expenses not deductible for tax purposes
– losses not recognised
– adjustments in respect of prior year
Tax credit

2018
£’000
20,967
3,984

20
–
(220)
(774)
342
3,352

2017
£’000
18,165
3,633

100
100
(207)
(1,432)
398
2,592

10. Employee information
The monthly average number of persons (including executive Directors) employed by the Group during the year was:

No deferred tax asset has been recognised by the Group or Company as there are currently no foreseeable trading profits.

The potential deferred tax assets/(liabilities) of the Group are as follows:

By activity:
Research and development
Administration

Group

Staff costs:
Wages and salaries
Social security costs
Share-based payment charge
Other pension costs

2018
Number

2017
Number

52
10
62

2018
£’000

4,927
574
1,127
238
6,866

45
8
53

2017
£’000

4,423
503
1,072
171
6,169

The Company holds the employment contracts for the two Executive Directors (2017: two) but all employee costs relating to
these individuals are incurred by ReNeuron Limited.

The Group operates defined contribution pension schemes for UK employees and Directors. The assets of the schemes are
held in separate funds and are administered independently of the Group. The total pension cost during the year was £238,000
(2017: £171,000). There were no prepaid or accrued contributions to the scheme at the year-end (2017: £nil).

Tax effect of timing differences because of:
Accelerated capital allowances
Short-term timing differences not recognised
Losses carried forward

The potential deferred tax assets of the Company are as follows:

Tax effect of timing differences because of:
Losses carried forward

Amount not
recognised
2018
£’000

Amount not
recognised
2017
£’000

6
85
14,408
14,499

(30)
–
12,677
12,647

Amount not
recognised
2018
£’000

Amount not
recognised
2017
£’000

868

521

26141 1 August 2018 1:08 PM Proof 15

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64

Notes to the financial statements
continued

12. Loss for the financial year
As permitted by Section 408 of the Companies Act 2006 the Parent Company’s statement of comprehensive income for the
current year has not been presented in these financial statements. The Parent Company’s loss and total comprehensive loss
for the financial year was £2,928,000 (2017: £210,000).

15. Intangible assets

13. Basic and diluted loss per Ordinary share
The basic and diluted loss per share is calculated by dividing the loss for the financial year of £17,615,000 (2017: £15,573,000) by
31,646,186 shares (2017: 31,646,186 shares), being the weighted average number of 1 pence Ordinary shares in issue during the
year. Comparative figures have been adjusted to reflect the 1 to 100 share capital reorganisation which took place in January 2018.

Potential Ordinary shares are not treated as dilutive as the entity is loss making.

14. Property, plant and equipment

Group
Cost
At 1 April 2016
Additions
Disposals
At 31 March 2017
Accumulated depreciation
At 1 April 2016
Charge for the year
Disposals
At 31 March 2017
Net book amount
At 31 March 2017
Cost
At 1 April 2017
Additions
At 31 March 2018
Accumulated depreciation
At 1 April 2017
Charge for the year
At 31 March 2018
Net book amount
At 31 March 2018

Plant and
equipment
£’000

Computer
equipment
£’000

507
470
(22)
955

217
114
(22)
309

646

955
185
1,140

309
172
481

659

194
62
(6)
250

123
55
(6)
172

250
49
299

172
60
232

Total
£’000

701
532
(28)
1,205

340
169
(28)
481

724

1,205
234
1,439

481
232
713

726

The figures stated above include plant and equipment held under finance leases at cost of £3,000 (2017: £3,000), depreciation
of £2,000 (2017: £2,000) and net book value of £1,000 (2017: £1,000).

The Company had no property, plant or equipment at 31 March 2018 (2017: £nil).

Group
At 1 April 2017
Cost
Accumulated amortisation and impairment
Net book amount at 1 April 2017
Additions
Net book amount at 31 March 2018

The Company holds no intangible assets (2017: nil).

16. Investment in subsidiaries
Company

Net book amount
At the start of the year
Loans provided to subsidiaries
Capital contribution arising from share-based payments
Net book amount at 31 March

Intellectual
property
rights not
amortised
£’000

6,143
(6,143)
–
–
–

Licence
fees
£’000

1,884
(1,884)
–
186
186

Total
£’000

8,027
(8,027)
–
186
186

2018
£’000
91,337
11,648
240
103,225

2017
£’000
76,743
14,348
246
91,337

The Company has invested in ReNeuron Limited to allow it to carry on the trade of the Group. A capital contribution arises
where share-based payments are provided to employees of subsidiary undertakings settled with equity to be issued by the
Company.

Taking into account the market capitalisation of the Group, the prospect of its therapies and the investor appetite for this sector,
there has been no impairment to investments in subsidiaries in the year.

The Company’s investments comprise interests in Group undertakings, details of which are shown below:

Name of undertaking
Country of incorporation
Description of
shares held

ReNeuron Holdings Limited
England and Wales
£0.10
Ordinary
shares

ReNeuron Limited
England and Wales
£0.10
£0.001
Ordinary
Ordinary
shares
shares

ReNeuron (UK) Limited

ReNeuron, Inc.

England and Wales Delaware, USA

£0.10
Ordinary
shares

$0.001
Common
stock

Proportion of nominal value of
shares held by the Company

100%

ReNeuron Limited is the principal trading company in the Group. ReNeuron Inc. employs staff who supervise the Group’s clinical
trials in the USA. The other subsidiaries are dormant.

ReNeuron Limited, ReNeuron Holdings Limited and ReNeuron, Inc. are held directly by ReNeuron Group plc. ReNeuron (UK)
Limited is held directly by ReNeuron Holdings Limited. The registered office address for all the subsidiaries is Pencoed Business
Park, Pencoed, Bridgend CF35 5HY, with the exception of ReNeuron, Inc. whose registered office address is P.O. Box 1480,
Redondo Beach, CA 90278.

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66

Notes to the financial statements
continued

17. Trade and other receivables

Current
Other receivables
Prepayments and accrued income
Total trade and other receivables

Group

2018
£’000

330
955
1,285

2017
£’000

603
457
1,060

Company

2018
£’000

73
–
73

2017
£’000

133
–
133

21. Financial risk management continued
Liquidity and credit risk
The Group seeks to maximise the returns from funds held on deposit balanced with the need to safeguard the assets of
the business.

The agreed policy is to invest surplus cash in interest-bearing current/liquidity accounts and term deposits and to spread
the credit risk across a number of counterparties, the selection criteria being as follows:

• UK-based banks;

The classes within trade and other receivables do not include impaired assets.

• minimum credit rating with Fitch and/or Moody’s (long term A-/A3; short term F1/P-1); and

18. Investments – bank deposits

Bank deposits maturing:
Four to twelve months: current asset investments

19. Cash and cash equivalents

Cash at bank and in hand

20. Trade and other payables

Trade payables
Taxation and social security
Accruals
Amounts owed to Group undertakings
Total payables falling due within one year

Group

Company

2018
£’000
9,500

2017
£’000
24,936

2018
£’000
9,500

2017
£’000
24,936

Group

Company

2018
£’000
27,911

2017
£’000
28,125

2018
£’000
25,026

2017
£’000
23,219

Group

Company

2018
£’000
1,924
186
3,839
–
5,949

2017
£’000
1,817
137
3,749
–
5,703

2018
£’000
3
–
–
5,487
5,490

2017
£’000
3
–
–
5,487
5,490

Amounts owed by the Company to Group undertakings are not interest bearing and have no fixed repayment date.

21. Financial risk management
Capital management
The Group’s key objective in managing its capital is to safeguard its ability to continue as a going concern. In particular it
has sought and obtained equity funding alongside non-dilutive grant support and collaborations to pursue its programmes.
The Group strives to optimise the balance of cash spend between research and development and general and administrative
expenses and, in so doing, maximise progress for all pipeline products.

Risk
The financial risks faced by the Group include liquidity and credit risk, interest rate risk and foreign currency risk.

• familiar and respected names.

At 31 March 2018 and 31 March 2017 no current asset receivables were aged over three months. No receivables were impaired
or discounted.

Interest rate risk
A portion of the Group’s cash resources are placed on fixed deposit, with a maximum original term of 24 months, to secure fixed
and higher interest rates. The Directors do not currently consider it necessary to use derivative financial instruments to hedge
the Group’s exposure to fluctuations in interest rates.

Foreign currency risk
The Group holds part of its cash resources in US Dollars and Euros to cover payments committed in the immediate future. At
31 March 2018 cash and bank deposits of £15,424,000 (2017: £15,077,000) were held in these currencies. Creditors of the Group
include £347,000 (2017: £644,000) denominated in US Dollars and £443,000 (2017: £496,000) denominated in Euros. All of the
Group’s receivables are denominated in Pounds Sterling.

At 31 March 2018, if Pounds Sterling had weakened/strengthened by 5% against the US Dollar with all other variables held
constant, the recalculated post-tax loss for the year would have been £728,000 (2017: £560,000) higher/lower.

At 31 March 2018, if Pounds Sterling had weakened/strengthened by 5% against the Euro with all other variables held constant,
the recalculated post-tax loss for the year would have been £6,000 (2017: £120,000) higher/lower.

The Group has not entered into forward currency contracts.

Ageing profile of the Group’s financial liabilities
The Group’s financial liabilities consist of:

Finance leases – due in more than one year
Finance leases – due in one year or less
Trade and other payables

Group

2018
£’000
–
–
5,763
5,763

2017
£’000
1
1
5,564
5,566

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTSFINANCIAL STATEMENTS

68
68

Notes to the financial statements
continued

21. Financial risk management continued
Currency profile of the Group’s cash and cash equivalents

Currency
Pounds Sterling
US Dollars
Euros

Currency profile of the Group’s bank deposit investments

Currency
Pounds Sterling
US Dollars

Group

2018
£’000
12,487
14,867
557
27,911

Group

2018
£’000
9,500
–
9,500

2017
£’000
20,484
4,670
2,971
28,125

2017
£’000
17,500
7,436
24,936

Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts and the fair value of the Group’s financial
assets and liabilities at 31 March. Fair value is the amount at which a financial instrument could be exchanged in an arm’s length
transaction between informed and willing parties, other than a forced or liquidation sale, and excludes accrued interest.

Investments – bank deposits
Cash at bank and in hand
Receivables: current
Trade and other payables

22. Share capital

2018

2017

Book value
£’000
9,500
27,911
1,285
5,763

Fair value
£’000
9,500
27,911
1,285
5,763

Book value
£’000
24,936
28,125
1,060
(5,566)

Fair value
£’000
24,936
28,125
1,060
(5,566)

Authorised
Issued and fully paid
31,646,186 Ordinary shares of 1.0 pence each (2017: 3,164,618,541 of 1.0 pence each)

2018
£’000
Unlimited

2017
£’000
Unlimited

316

31,646

On 23 January 2018, the shareholders approved a one for 100 capital reorganisation, which resulted in the above reduction in
share capital and an equivalent increase in the Capital Redemption Reserve.

During the year to 31 March 2018, no Ordinary shares were issued as a result of the exercise of options awarded under the
Group’s share option schemes (2017: Nil).

23. Warrants
Warrant instrument with Novavest Growth Fund Limited
Novavest Growth Fund Limited has the right to subscribe for 58,239 ReNeuron Limited Ordinary shares at a price of
£17.16 per Ordinary share. Pursuant to a put/call agreement dated 6 November 2000, on exercise of such warrant, shares
acquired by Novavest in ReNeuron Limited will be exchanged for 582,390 Ordinary shares of ReNeuron (UK) Limited. The
Company intends in due course to enter into an agreement with Novavest whereby, if the warrant is exercised, the ReNeuron
Limited shares acquired by Novavest are exchanged directly for 5,823 (adjusted to reflect the 1 for 100 share consolidation)
Ordinary shares of the Company.

24. Share options
The Group operates share option schemes for Directors and employees of Group companies and specific consultants. Options
have been issued through a combination of an Inland Revenue-approved Enterprise Management Incentive (EMI) scheme and
unapproved schemes.

The awards of share options to Executive Directors and employees of the Group are made in accordance with the Group’s
Deferred Share-based Bonus Plan and Long Term Incentive Plan. Total options existing over 1.0 pence Ordinary shares in
companies in the Group as at 31 March 2018 are summarised below. Opening balances and comparative figures have been
adjusted to reflect the 1 for 100 share consolidation. At 31 March 2018, the total outstanding options represented 7.3% of the
total shares in issue.

Date of grant
August 2007
August 2007
August 2009
August 2009
August 2009
August 2010
August 2010
September 2011
September 2011
September 2012
September 2012
September 2013
September 2013
September 2014
September 2014
October 2015
October 2015
July 2016
July 2016
July 2016
July 2016
September 2017
September 2017
September 2017
Total

Number
of options at
1 April 2017
35,039
19,796
15,967
3,478
17,136
12,464
39,541
26,400
47,656
32,326
67,761
36,450
79,477
63,500
251,343
51,250
512,324
549,164
42,500
18,000
82,500
–
–
–
2,004,072

Granted
during
the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
384,000
114,000
30,000
528,000

Lapsed
during
the year
(35,039)
(19,796)
–
–
–
–
–
–
–
–
–
–
–
(2,250)
–
(6,500)
–
(81,500)
–
–
(15,500)
(55,668)
(5,500)
–
(221,753)

As at
31 March
2018
–
–
15,967
3,478
17,136
12,464
39,541
26,400
47,656
32,326
67,761
36,450
79,477
61,250
251,343
44,750
512,324
467,664
42,500
18,000
67,000
328,332
108,500
30,000
2,310,319

Note
1
1
2
3
4
5
4
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Date of

Date
from which
exercisable *
August 2010
August 2010
August 2012
August 2011
August 2012
August 2013
August 2013

Exercise
expiry †
price
August 2017
£10.60
August 2017
£18.94
August 2019
£4.22
August 2019
£1.00
August 2019
£1.00
August 2020
£3.85
£1.00
August 2020
£3.75 September 2014 September 2021
£1.00 September 2014 September 2021
£2.87 September 2015 September 2022
£1.00 September 2015 September 2022
£3.60 September 2016 September 2023
£1.00 September 2016 September 2023
£3.45 September 2017 September 2024
£1.00 September 2017 September 2024
October 2025
£1.00
October 2018
October 2025
£1.00
October 2018
July 2026
£1.00
July 2019
July 2026
£1.00
July 2018
July 2026
£1.00
August 2016
July 2026
£1.00
July 2019
July 2020 September 2027
£1.00
July 2020 September 2027
£1.00
October 2017 September 2027
£1.00

* The exercise periods indicate the earliest dates for which the options are exercisable subject to meeting the performance conditions disclosed overleaf.

† All options lapse in full if they are not exercised by the date of expiry.

Note 1:
These options were issued subject to a performance condition, being the successful completion of an initial clinical trial of
a ReNeuron cell therapy. These options expired in August 2017.

Note 2:
These options were issued subject to a performance condition, being the first patient administered with a ReNeuron cell
therapy in a second clinical trial; at 31 March 2018 these options were exercisable.

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTSFINANCIAL STATEMENTS

70
70

Notes to the financial statements
continued

24. Share options continued
Note 3:
These options have been issued in accordance with the Group’s Deferred Share-based Bonus Plan in respect of corporate
and personal objectives achieved in the financial year ending 31 March 2009 and carry no further performance conditions;
at 31 March 2018 these options were exercisable.

Note 4:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the performance
conditions below; at 31 March 2018 these options were exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a second clinical trial.

(ii) The total shareholder return (TSR) of the Company must exceed that of the FTSE All-Share Pharmaceutical and

Biotechnology Index in any given three-year period from date of grant. Where the TSR ranks between median and upper
quartile of the Index over the three-year period, the options will vest pro rata between 25% and 100%. Where the TSR ranks
below the median in the performance period, no options will vest.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 5:
These options were issued subject to the amended performance conditions below. If all the performance conditions bar
performance condition (ii) are met then 50% of the options become exercisable; at 31 March 2018 50% of these options were
exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a second clinical trial.

(ii) The total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any three-year

period from date of grant of the option.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 6:
These options were issued subject to a performance condition, being the first patient administered with a ReNeuron cell
therapy in a third clinical trial; at 31 March 2018 these options were exercisable.

Note 7:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of these options were exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a third clinical trial.

(ii) The total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any three-year

period from date of grant of the option.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 8:
These options were issued subject to a performance condition, being the first patient administered with a ReNeuron cell
therapy in a fourth clinical trial; at 31 March 2018 these options were exercisable.

24. Share options continued
Note 9:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of these options were exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a fourth clinical trial.

(ii) The total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any three-year

period from date of grant of the option.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 10:
These options were issued subject to a performance condition, being the first patient administered with a ReNeuron cell
therapy in a fifth clinical trial; at 31 March 2018 these options were exercisable.

Note 11:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 50% of these options were exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a fifth clinical trial.

(ii) The total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any three-year

period from date of grant of the option.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 12:
These options were issued subject to a performance condition, being the first patient administered with a ReNeuron cell
therapy in a sixth clinical trial; at 31 March 2018 these options were not exercisable.

Note 13:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the amended
performance conditions set out below. If all the performance conditions bar performance condition (ii) are met then 50%
of the options become exercisable; at 31 March 2018 these options were not exercisable.

(i) The first patient is administered with a ReNeuron cell therapy in a sixth clinical trial.

(ii) The total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any three-year

period from date of grant of the option.

(iii) The business must have operated within its internal financial budgets throughout the period to vesting.

(iv) The business must be a going concern (under the accepted accounting definition) at the time of any exercise of an option.

Note 14:
These options were issued subject to the performance conditions set out below; at 31 March 2018 50% of these options were
exercisable.

(i) 50% vest when the first patient is administered with a ReNeuron cell therapy in a sixth clinical trial.

(ii) 50% vest on completion of the fourth clinical trial of a ReNeuron cell therapy.

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTSFINANCIAL STATEMENTS72
72

Notes to the financial statements
continued

24. Share options continued
Note 15:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the performance
conditions set out below; at 31 March 2018 33.3% of these options were exercisable.

(i) 33.3% vest when the first patient is administered with a ReNeuron cell therapy in a sixth clinical trial.

(ii) 33.3% vest on completion of the fourth clinical trial of a ReNeuron cell therapy.

(iii) 33.4% vest if the total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any

three-year period from date of grant of the option.

Note 16:
These options were awarded in accordance with the Group’s Long Term Incentive Plan and are subject to the performance
conditions set out below; at 31 March 2018 these options were not exercisable.

(i) 33.3% vest when the first patient is administered with a ReNeuron cell therapy in a seventh clinical trial.

(ii) 33.3% vest on completion of the fifth clinical trial of a ReNeuron cell therapy.

(iii) 33.4% vest if the total shareholder return (TSR) of the Company meets or exceeds that of the AIM Healthcare Index in any

three-year period from date of grant of the option.

Note 17:
These options have been issued in accordance with the Group’s Deferred Share-based Bonus Plan in respect of corporate
and personal objectives achieved in the financial year ended 31 March 2016 and carry no further performance conditions;
at 31 March 2018 these options were not exercisable.

Note 18:
These options have been issued in accordance with the Non-executive Share Option Scheme. These share options vest over
three years on a straight-line basis and are not subject to performance conditions; at 31 March 2018 55.55% of these options
were exercisable.

Note 19:
These options were issued subject to the performance conditions set out below; at 31 March 2018 these options were not
exercisable.

(i) 50% vest when the first patient is administered with a ReNeuron cell therapy in a seventh clinical trial.

(ii) 50% vest on completion of the fifth clinical trial of a ReNeuron cell therapy.

Note 20:
These options were issued subject to the performance conditions set out below. At 31 March 2018, these options were not
exercisable.

(i) 33.3% vest when the first patient is administered with a ReNeuron cell therapy in an eighth clinical trial.

(ii) 33.3% vest on completion of the sixth clinical trial of a ReNeuron cell therapy.

(iii) 33.4% vest if the Total Shareholder Return (TSR) of the Company meets or exceeds that of the FTSE AIM Healthcare Index in

any three-year period from the date of grant of the option.

Note 21:
These options were issued subject to the performance conditions set out below. At 31 March 2018, these options were
not exercisable.

(i) 50% vest when the first patient is administered with a ReNeuron cell therapy in an eighth clinical trial.

(ii) 50% vest on completion of the sixth clinical trial of a ReNeuron cell therapy.

24. Share options continued
Note 22:
These options have been issued in accordance with the Non-executive Share Option Scheme. These share options vest over
three years on a straight-line basis and are not subject to performance conditions; at 31 March 2018 16.66% of these options
were exercisable.

Fair value charge
Fair value charges for share options have been prepared based on a Black-Scholes model with the following key assumptions:

Date of grant
September 2014
September 2014
October 2015
July 2016
September 2017

Exercise
price
£
3.45
1.00
1.00
1.00
1.00

Share price
at date
of grant
£
3.45
3.60
4.125
3.00
1.70

Risk-free
rate
%
2.54
2.54
1.74
0.80
1.34

Assumed
time to
exercise
Years
5
5
5
5
5

Assumed
volatility
%
61.3
61.3
58.3
58.4
50.4

Fair value
per option
£
1.85
2.74
3.37
2.25
1.01

The risk-free rate is taken from the average yields on government gilt edged stock. No dividends are assumed. The assumed
vesting period is four years. No lapses are assumed until they take place. Assumed volatility is based on historical experience
up to the date of the grant.

The weighted average exercise prices for options were as follows:

Outstanding at 1 April
Granted
Lapsed
Outstanding at 31 March
Exercisable at 31 March

2018

2017

Number
of options
‘000
2,004
528
(222)
2,310
454

Weighted
average
exercise price
£
1.58
1.00
4.14
1.20
1.69

Number
of options
‘000
1,431
694
(121)
2,004
244

Weighted
average
exercise price
£
2.06
1.00
3.97
1.58
4.73

The share price on 31 March 2018 was 86 pence (2017: £2.30 adjusted for the share capital reorganisation).

The pattern of exercise price and life is shown below:

2018

2017

Weighted
average
exercise
price
1.00
3.51
–

Number of
options
2,125,462
184,857
–
2,310,319

Weighted average
remaining life (years)
Expected Contractual
7.65
4.76
–

1.55
1.44
–

Weighted
average
exercise
price
£1.00
£3.50
£13.60

Weighted average
remaining life (years)
Expected Contractual
8.21
5.82
0.42

2.91
2.78
0.42

Number of
options
1,762,116
187,121
54,835
2,004,072

Range of exercise prices
£1.00
Up to £10.00
£10 to £20.00
Total

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTSFINANCIAL STATEMENTS
74
74

Notes to the financial statements
continued

25. Cash (used in)/generated from operations

Loss before income tax
Adjustments for:
Finance Income
Depreciation of property, plant and equipment

Impairment of intangible assets

Provisions movement
Share-based payment charges
Finance expense
Changes in working capital:
Receivables
Payables
Cash (used in)/generated from operations

Group

Company

Year ended
31 March
2018
£’000
(20,967)

Year ended
31 March
2017
£’000
(18,165)

Year ended
31 March
2018
£’000
(2,928)

Year ended
31 March
2017
£’000
(210)

(320)
232
–
–
1,127
911

(520)
169
1,591
(498)
1,072
–

(289)
62
(19,244)

372
2,003
(13,976)

(320)
–
–
–
887
911

–
–
(1,450)

(511)
–
–
–
826
–

103
47
255

26. Financial commitments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than one year
Later than one year and no later than five years
Later than five years
Total lease commitments

Group

2018
£’000
33
659
472
1,164

2017
£’000
13
506
656
1,175

The operating lease commitment is in respect of the lease of offices and laboratories in Pencoed. The ten-year lease was signed
by the Company with the Welsh Ministers on 11 February 2016 for the offices and laboratory space in new premises in Pencoed,
South Wales, with the initial rent being reduced over the first three years.

An agreement for lease entered into on 31 March 2014 remains in force but has subsequently been varied in supplemental
agreements. Pursuant to this agreement and supplemental agreements, on satisfactory completion of a GMP production facility,
a new lease will be entered into over c.25,700 sq ft for offices, laboratories and the GMP production facility at the premises in
Pencoed.

The Company had no other financial commitments at 31 March 2018 (2017: £nil).

The Group is expected to incur future contractual milestone payments linked to the future development of its therapeutic
programmes. These costs will be recognised when each contractual milestone has been achieved.

27. Contingent liabilities
The Group had no contingent liabilities as at 31 March 2018 (2017: £nil).

28. Related party disclosures
The following transactions were carried out with some of the Directors of the Company who are key management personnel
as defined by IAS 24 “Related Party Disclosures”.

Aesclepius Consulting Limited charged fees of £11,875 (2017: £19,000) in respect of services provided as a Non-executive
Director by Dr Tim Corn.

Arthurian Life Sciences Limited charged fees of £Nil (2017: £2,083) in respect of services provided as a Non-executive Director
by Professor Sir Chris Evans OBE.

Biomedicon Limited charged fees of £15,214 (2017: £21,500) in respect of services provided as a Non-executive Director by
Dr Paul Harper.

Parent Company and subsidiaries
The Parent Company is responsible for financing and setting Group strategy. ReNeuron Limited carries out the Group strategy,
employs all UK-based staff, excluding the Directors, and owns and manages all of the Group’s intellectual property. The
proceeds of the issue of shares by the Parent Company are passed when required to ReNeuron Limited as a loan. ReNeuron
Limited makes payments including the expenses of the Parent Company. ReNeuron Inc. employs US-based staff who supervise
the Group’s clinical trials in the USA. ReNeuron Limited finances the activities of ReNeuron Inc. via loans.

Company: transactions with subsidiaries

Purchases and staff:
Parent Company expenses paid by subsidiary
Transactions involving Parent Company shares:
Share options
Cash management:
Loans to subsidiary

Company

Year-end balance of loan to subsidiary

2018
£’000

2017
£’000

1,046

1,055

240

246

11,648

14,348

2018
£’000
93,969

2017
£’000
82,321

29. Events after the reporting period
On 11 July 2018, the Group announced the signing of an exclusivity agreement with a US-based specialty pharmaceutical
company relating to the potential out-licensing of the Group’s hRPC technology and therapeutic programmes. In exchange
for granting a three-month exclusivity period, the Group will receive a non-refundable $2.5 million payment from the US-based
company. A further $2.5 million is payable to ReNeuron subject to completion of certain due diligence activities during the
exclusivity period.

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76
76

AGM

Notice of annual general meeting

NOTICE IS HEREBY GIVEN that the annual general meeting of ReNeuron Group plc (incorporated and registered in England
and Wales with registered no. 5474163) (the “Company”) will be held at the offices of Covington & Burling LLP, 265 Strand,
London WC2R 1BH on 12 September 2018 at 10.00 a.m. to consider and, if thought fit, pass the following resolutions, of
which Resolutions 1 to 7 and 9 will be proposed as ordinary resolutions and Resolutions 8 and 10 will be proposed as special
resolutions.

Ordinary business
1. To receive and adopt the Company’s Annual Report and Accounts for the financial year ended 31 March 2018 and the

Directors’ Report, and the Independent Auditors’ Report on those accounts.

2. To reappoint as a Director Olav Hellebø, who is retiring by rotation in accordance with Article 122 of the Company’s articles

of association and who, being eligible, is offering himself for reappointment.

3. To reappoint as a Director Michael Hunt, who is retiring by rotation in accordance with Article 122 of the Company’s articles

of association and who, being eligible, is offering himself for reappointment.

4. To reappoint as a Director Dr Tim Corn, who is retiring by rotation in accordance with Article 122 of the Company’s articles

of association and who, being eligible, is offering himself for reappointment.

5. To reappoint Dr Claudia D’Augusta as a Director, who having been appointed by the Board since the last annual general

meeting of the Company, is retiring in accordance with Article 114 of the Company’s articles of association and who, being
eligible, is offering herself for reappointment.

6. To reappoint PricewaterhouseCoopers LLP as auditors of the Company from the conclusion of this annual general meeting
until the conclusion of the next annual general meeting of the Company at which accounts are laid and to authorise the
Directors to determine the remuneration of the auditors.

Special business
7. That the Directors of the Company be and are hereby generally and unconditionally authorised, pursuant to Section 551 of

the Companies Act 2006 (the “2006 Act”) to:

(a) allot Ordinary shares and to grant rights to subscribe for or to convert any security into Ordinary shares in the Company
(all of which shares and rights are hereafter referred to as “Relevant Securities”) representing up to £105,487 in nominal
value in aggregate of shares; and

(b) allot Relevant Securities (other than pursuant to paragraph (a) above) representing up to £105,487 in nominal value in

aggregate of shares in connection with a rights issue, open offer, scrip dividend, scheme or other pre-emptive offer
to holders of Ordinary shares where such issue, offer, dividend, scheme or other allotment is proportionate (as nearly
as may be) to the respective number of Ordinary shares held by them on a fixed record date (but subject to such
exclusions or other arrangements as the Directors may deem necessary or expedient to deal with legal or practical
problems under the laws of any overseas territory, the requirements of any regulatory body or any stock exchange in
any territory, in relation to fractional entitlements, or any other matter which the Directors consider merits any such
exclusion or other arrangements),

provided that in each case such authority shall expire (unless previously renewed, varied or revoked by the Company in
general meeting) 15 months after the date of the passing of this resolution or at the conclusion of the next annual general
meeting of the Company following the passing of this resolution, whichever occurs first, save that the Company may before
such expiry, variation or revocation make an offer or agreement which would or might require such Relevant Securities to be
allotted after such expiry, variation or revocation and the Directors may allot Relevant Securities pursuant to such an offer or
agreement as if the authority conferred hereby had not expired or been varied or revoked.

8. That the Directors are hereby empowered pursuant to Section 570 of the 2006 Act:

(a) subject to and conditionally upon the passing of Resolution 7 to allot equity securities (as defined by Section 560 of the
2006 Act) for cash pursuant to the authority conferred by Resolution 7 as if Section 561 of the 2006 Act did not apply to
such allotment; and

(b) to sell Ordinary shares if, immediately before such sale, such shares are held as treasury shares (within the meaning of

Section 724 of the 2006 Act) as if Section 561 of the 2006 Act did not apply to such sale,

provided that such powers:

(1) shall be limited to:

(i)

the allotment of equity securities (or sale of Ordinary shares) representing up to £105,487 in nominal value in
aggregate of shares pursuant to the authority conferred by paragraph (b) of Resolution 7; and

(ii) the allotment of equity securities (or sale of Ordinary shares), otherwise than pursuant to sub-paragraph (i)

above, representing up to £31,646 in nominal value in aggregate of shares (and including, for the avoidance
of doubt, in connection with the grant of options (or other rights to acquire Ordinary shares) in accordance
with the rules of the Company’s share option schemes (as varied from time to time) or otherwise to employees,
consultants and/or Directors of the Company and/or any of its subsidiaries); and

(2) shall expire 15 months after the passing of this resolution or at the conclusion of the next annual general meeting
of the Company following the passing of this resolution, whichever occurs first, but so that the Company may
before such expiry, revocation or variation make an offer or agreement which would or might require equity
securities to be allotted (or Ordinary shares to be sold) after such expiry, revocation or variation and the Directors
may allot equity securities (or sell Ordinary shares) in pursuance of such offer or agreement as if such powers had
not expired or been revoked or varied.

9. That the establishment of the ReNeuron Group plc US Incentive Stock Option Plan, the principal provisions of which are set
out in summary in Appendix I be and is hereby approved and the Directors be and are hereby authorised to do all acts and
all things necessary to establish and carry it into effect.

10. That with effect from the conclusion of the annual general meeting, the draft articles of association produced to the

annual general meeting and for the purpose of identification initialled by the Chairman, be adopted as the new articles of
association of the Company in substitution for, and to the exclusion of, the Company’s existing articles of association.

19 July 2018

By order of the Board

Michael Hunt
Company Secretary

Registered office
Pencoed Business Park
Pencoed
Bridgend
CF35 5HY
United Kingdom

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AGM

Notice of annual general meeting
continued

Explanatory notes to the business
of the annual general meeting

Notes
(1)

In this Notice “Ordinary shares” shall mean Ordinary shares in the capital of the Company, having a nominal value of
1.0 pence per share.

(2) A shareholder entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to attend, speak
and vote on a show of hands and on a poll instead of him or her. A proxy need not be a member of the Company. Where
a shareholder appoints more than one proxy, each proxy must be appointed in respect of different shares comprised in his
or her shareholding which must be identified on the Form of Proxy. Each such proxy will have the right to vote on a poll in
respect of the number of votes attaching to the number of shares in respect of which the proxy has been appointed. Where
more than one joint shareholder purports to appoint a proxy in respect of the same shares, only the appointment by the
most senior shareholder will be accepted as determined by the order in which their names appear in the Company’s register
of members. If you wish your proxy to speak at the meeting, you should appoint a proxy other than the Chairman of the
meeting and give your instructions to that proxy.

(3) A corporation which is a shareholder may appoint one or more corporate representatives who have one vote each on a

show of hands and otherwise may exercise on behalf of the shareholder all of its powers as a shareholder provided that they
do not do so in different ways in respect of the same shares.

(4) To be effective, an instrument appointing a proxy and any authority under which it is executed (or a notarially certified copy
of such authority) must be deposited at the offices of Computershare Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY, by no later than 10.00 a.m. on 10 September 2018 except that should the meeting be adjourned, such
deposit may be made not later than 48 hours before the time of the adjourned meeting, provided that the Directors may in
their discretion determine that in calculating any such period no account shall be taken of any day that is not a working day.
A Form of Proxy is enclosed with this Notice. Shareholders who intend to appoint more than one proxy may photocopy the
Form of Proxy prior to completion. Alternatively, additional Forms of Proxy may be obtained by contacting Computershare
Investor Services PLC on 0370 707 1272. The Forms of Proxy should be returned in the same envelope and each should
indicate that it is one of more than one appointments being made. Completion and return of the Form of Proxy will not
preclude shareholders from attending and voting in person at the meeting.

(5) A “Vote withheld” option has been included on the Form of Proxy. The legal effect of choosing the “Vote withheld” option on
any resolution is that the shareholder concerned will be treated as not having voted on the relevant resolution. The number
of votes in respect of which there are abstentions will, however, be counted and recorded, but disregarded in calculating the
number of votes for or against each resolution.

(6)

In accordance with Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only
those shareholders registered in the register of members of the Company as at the close of business on the day which is
two working days before the day of the meeting shall be entitled to attend or vote (whether in person or by proxy) at the
meeting in respect of the number of shares registered in their names at the relevant time. Changes after the relevant time
will be disregarded in determining the rights of any person to attend or vote at the meeting.

(7) A copy of the Company’s proposed US Incentive Stock Option Plan to be adopted pursuant to Resolution 9 will be available
for inspection free of charge during normal business hours on any business day at the Company’s registered office, Pencoed
Business Park, Pencoed, Bridgend, Wales CF35 5HY and at the offices of Covington & Burling LLP, 265 Strand, London
WC2R 1BH from the date of this Notice until the time of the annual general meeting and at the place of the annual general
meeting for at least 15 minutes prior to and during the annual general meeting.

(8) A copy of the new articles of association of the Company to be adopted pursuant to Resolution 10, marked up to show the

changes being proposed, will be available for inspection free of charge during normal business hours on any business day at
the Company’s registered office, Pencoed Business Park, Pencoed, Bridgend, Wales CF35 5HY and at the offices of Covington
& Burling LLP, 265 Strand, London WC2R 1BH from the date of this Notice until the time of the annual general meeting and at
the place of the annual general meeting for at least 15 minutes prior to and during the annual general meeting.

Resolution 1
The Company’s Annual Report and Accounts for the financial year ended on 31 March 2018 and the Directors’ Report and the
Independent Auditors’ Report on those accounts will be presented to shareholders for approval.

Resolutions 2, 3 and 4
Article 122 of the Company’s articles of association requires that at every annual general meeting of the Company at least one
third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not greater
than one third) shall retire from office by rotation and that all Directors holding office at the start of business on the date of this
Notice, and who also held office at the time of both of the two immediately preceding annual general meetings and did not
retire at either such meeting, shall retire from office and shall be counted in the number required to retire at the annual general
meeting. Having so retired by rotation in accordance with Article 122, the following Directors are standing for reappointment by
the shareholders at the annual general meeting:

• Olav Hellebø, who is the Chief Executive Officer of the Company;

• Michael Hunt, who is the Chief Financial Officer of the Company;

• Dr Tim Corn, who is a Non-executive Director of the Company.

Resolution 5
In accordance with Article 114 of the Company’s articles of association, every Director who has been appointed since the last
annual general meeting of the Company is required to retire from office. Dr Claudia D’Augusta, having been appointed as
a Director since the last annual general meeting therefore retires, and being eligible, offers herself for reappointment by the
shareholders at the annual General Meeting.

Resolution 6
At every annual general meeting at which accounts are presented to shareholders, the Company is required to appoint auditors
to serve until the next such annual general meeting. PricewaterhouseCoopers LLP have confirmed that they are willing to
continue as the Company’s auditors for the next financial year. The Company’s shareholders are asked to reappoint them and to
authorise the Directors to determine their remuneration, which will, in accordance with the Company’s practice concerning good
corporate governance, be subject to the recommendation of the Audit Committee.

Resolution 7
This resolution seeks to authorise the Directors to allot shares, subject to the normal pre-emption rights reserved to
shareholders contained in the 2006 Act. The Investment Association (“IA”) regards as routine a request by a company
seeking an annual authority to allot new shares in an amount of up to a third of the existing issued share capital. In addition,
the IA will also regard as routine a request for authority to allot up to a further third of the existing issued share capital
provided such additional third is reserved for fully pre-emptive rights issues. Resolution 7 seeks to reflect the spirit of the IA’s
recommendations, though sub-paragraph (b) of Resolution 7 covers a broader range of offers, issues and allotments. The limits
imposed under sub-paragraphs (a) and (b) of Resolution 7 each represent one third of the existing issued share capital of the
Company.

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AGM

Explanatory notes to the business
of the annual general meeting
continued

Resolution 8
Pursuant to Section 561 of the 2006 Act existing shareholders of the Company have a right of pre-emption in relation to
future issues of shares. Sub-paragraph (1)(i) of Resolution 8 allows the disapplication of pre-emption rights to allow the issue
of shares to existing shareholders, for example, by way of a rights issue or open offer. The limit imposed in respect of the
general disapplication pursuant to sub-paragraph 1(ii) of Resolution 8 represents 10% of the existing issued share capital of the
Company. The Directors consider it important that they have the authority set out in sub-paragraph (1)(ii), which would allow
them to issue shares in connection with the grant of options (or other rights to acquire Ordinary shares) in accordance with the
rules of the Company’s share option schemes and more generally for other purposes.

Resolution 9
The Company is seeking shareholder approval for a new US Incentive Stock Option Plan (the “ISO Plan”) for the Group’s US
employees. The ISO Plan provides for employees to be granted options to acquire ordinary shares in the Company, including
options that are intended to qualify as “incentive stock options” under Section 422 of the US Internal Revenue Code of 1986.
Incentive stock options may offer tax-favoured compensation to participants who are US taxpayers. In order for incentive
stock options to be granted under the ISO Plan, the ISO Plan must be approved by the shareholders of the Company within
12 months prior to or after the date the ISO Plan is adopted. A more detailed summary of the main features of the ISO Plan is
set out in Appendix I to this document. The Remuneration Committee considers that the ISO Plan is designed to provide an
appropriate incentive for employees to encourage them to acquire shares in the Company.

Resolution 10
Pursuant to Resolution 10, the Company is proposing to adopt new articles of association in substitution for the existing articles
of association, principally for the purposes of increasing the cap on the annual aggregate fees that may be paid to Directors
for their services as Directors (which has not been revised for many years) and enabling the Company to take advantage of
developments in the use of electronic communications since the Company’s current articles of association were first adopted. It
is anticipated that the use of electronic communications will allow the Company to reduce paper usage (as well as printing and
posting costs) and it is better for many shareholders who can choose and access just the information they need from the website
at any time. A summary of the proposed substantive amendments to the Company’s exiting articles of association is included at
Appendix II hereto.

Appendix I

SUMMARY OF THE PRINCIPAL TERMS OF THE PROPOSED RENEURON GROUP PLC
US INCENTIVE STOCK OPTION PLAN (THE “ISO PLAN”)
The ISO Plan provides for eligible employees to be granted options to acquire ordinary shares in the Company (each, an
“Option”), including options that are intended to be incentive stock options within the meaning of Section 422 of the US Internal
Revenue Code of 1986 (each, an “Incentive Stock Option”) and options that are not intended to be incentive stock options (each,
a “Nonqualified Stock Option”). To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a
Nonqualified Stock Option. At the end of a performance period, an Option will normally vest and become exercisable. The vesting
of the Option may be subject to the satisfaction of performance conditions. Shares will not be issued or transferred until after the
Option has been exercised.

1. Eligibility and grant procedure
Executive Directors and other employees of the Company and its subsidiaries (the “Group”) may be chosen to participate in the
ISO Plan at the discretion of the Remuneration Committee (the “Committee”).

Options can be granted by the Committee at any time following the adoption date except that no Options may be granted
while the Company is in a closed period.

No Options can be granted more than ten years following the earlier of the date the ISO Plan is adopted by the Company or is
approved by shareholders.

Options can only be granted to individuals who are employed with the Group on the date the Option is granted

No consideration is required for the grant of Options.

The ISO Plan is administered by the Committee.

2. Plan limits
The maximum aggregate number of shares available to be issued through Options under the ISO Plan is a number of shares
that represents 3% of the total issued share capital outstanding at the date the ISO Plan is adopted by the Committee. Each
share available for issuance through an Option under the ISO Plan may be issued through an Incentive Stock Option.

3. Individual limit
Each Option shall be designated in the applicable award agreement as either an Incentive Stock Option or a Nonqualified
Stock Option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares with
respect to which Incentive Stock Options are exercisable for the first time by the grantee during any calendar year exceeds
$100,000, such Options shall be treated as Nonqualified Stock Options. For the purposes of this rule, the fair market value of the
shares shall be determined as of the time the Option with respect to such shares is granted.

4. Exercise price
The exercise price of an Option shall be not less than the fair value of the shares subject to the Option at the date of grant of
the Option. The exercise price of an Incentive Stock Option granted to an employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or any of its subsidiaries shall be not less than 110% of the fair
value of the shares subject to the Incentive Stock Option at the date of grant of the Incentive Stock Option.

5. Performance conditions
An Option may be subject to performance conditions, which the Committee anticipates will be measured over three years. To the
extent that the performance conditions are not satisfied, the Option will lapse.

6. Cessation of employment
Options granted to participants will typically lapse on cessation of employment unless the participant leaves by reason of injury,
ill-health or disability, redundancy, retirement, the employing Company being transferred outside the Group, being employed in
an undertaking or part of an undertaking which is transferred outside of the Group or in other circumstances at the discretion of
the Committee (“Good Leavers”).

Good Leavers will be able to exercise their Options during the period of three months from the date of cessation of employment.

If an employee dies, his or her Option will vest and be exercisable during the period of 12 months from the date of death.

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AGM

Appendix I continued

Appendix II

In the aforementioned circumstances, the Committee will determine the extent to which an Option shall vest having regard
to the extent that the performance conditions are met by that date, and the proportion of the performance period that has
elapsed and any other factors they consider relevant.

If a participant leaves the Group otherwise than by reason of death or becoming a Good Leaver, Options will lapse on cessation
of employment.

Notwithstanding the above, no Option shall be exercisable on or after the tenth anniversary of its grant date, and an Incentive
Stock Option granted to an employee who owns more than 10% of the total combined voting power of all classes of stock of
the Company or any of its subsidiaries shall not be exercisable on or after the fifth anniversary of its grant date.

7. Change of control or other early vesting events
In the event of a change of control of the Company, the Committee may determine, with the acquiring company’s agreement,
that an Option shall be replaced with an equivalent Option over shares in another company (generally the acquiring company).
Where the original Option was subject to performance conditions, any such replacement Options would (unless the acquiring
company decides otherwise) be subject to performance conditions which the acquiring company considers equivalent to those
applicable to the original Options.

If no replacement Option is granted, the Committee will determine the extent to which an Option vests having regard to the
extent that the performance conditions are met at the date of the change of control and the proportion of the performance
period that has elapsed. Any unvested or unexercised portion of an Option will be cancelled upon a change of control of the
Company unless the Committee determines otherwise.

Options will also vest early on a voluntary winding-up of the Company. The Committee will determine the extent to which an
Option will vest having regard to the extent that the performance conditions are met by that date and the proportion of the
performance period that has elapsed. Any unvested or unexercised portion of an Option will be cancelled upon a voluntary
winding-up of the Company unless the Committee determines otherwise.

8. Rights attaching to shares
Options will not confer any shareholder rights until the Option has been exercised and the participants have been registered as
the owners of shares. Participants will therefore have no entitlement to dividends and no voting rights in respect of the shares
prior to the Option being exercised.

All shares allotted under the ISO Plan will carry the same rights as any other issued ordinary shares in the Company and
application will be made for admission to the AIM market operated by the London Stock Exchange plc of any new shares issued
under the ISO Plan.

Options are not pensionable. Gains made on the exercise of Options will not be taken into account when calculating
pensionable remuneration.

Options granted under the ISO Plan may not be assigned or transferred except on a participant’s death. If a participant ceases
employment he will not be entitled to compensation for the loss of his Option.

9. Adjustment of Options
If there is a variation in the share capital of the Company (including without limitation a capitalisation, rights issue, open offer,
consolidation, subdivision or reduction of capital, a capital distribution, demerger or other event having a material impact on
the value of the shares), the shares under Option and/or the exercise price may be adjusted as the Committee reasonably
considers appropriate to reflect that variation.

10. Alterations to the ISO Plan
The Committee may amend the rules of the ISO Plan provided that no amendment may have a material adverse effect on a
participant with a subsisting option except with the consent of the participant or participants who hold the majority, by number
of shares subject to award, of the subsisting options affected by the amendment.

Any amendment increasing the maximum number of shares that may be issued under the ISO Plan, changing the employees
eligible to receive Incentive Stock Options under the ISO Plan, or changing the class of corporation that may be participating
subsidiaries will be subject to approval by the shareholders of the Company.

SUMMARY OF THE PROPOSED SUBSTANTIVE AMENDMENTS TO THE COMPANY’S EXISTING
ARTICLES OF ASSOCIATION

1. Companies Acts
Since the Company’s articles were initially adopted in August 2005, the Companies Act 2006 (the “2006 Act”) has been enacted
as the primary source of company law for companies registered in England & Wales. The existing articles of association of the
Company (the “Existing Articles”) continue to make reference to the Companies Act 1985 and the Companies Act 1989, which
were largely repealed by the 2006 Act, and the proposed new articles of association of the Company (the “New Articles”) have
been updated to make reference to the applicable provisions of the 2006 Act now in force.

2. Memorandum
The Company’s Existing Articles continue to make reference to the Company’s memorandum of association. As of 1 October
2009 all provisions of the Company’s memorandum of association are, by virtue of the enactment of the 2006 Act, to be treated
as forming part of the Company’s articles of association. For this reason the Company is proposing to remove all references to
the memorandum of association in the New Articles.

3. Directors’ fees
Article 134 of the Company’s Existing Articles specifies a cap on the annual sum of fees that may be paid to Directors for their
services as Directors of £200,000 per annum in aggregate. Article 134 of the New Articles specifies a cap on the annual sum of
fees that may be paid to Directors for their services as Directors of £400,000 per annum in aggregate. The cap in the Existing
Articles has been in place for many years and could potentially restrict the Board’s ability to appoint the best board members
available. The proposed cap of £400,000 is in line with other comparable companies listed on AIM and will provide flexibility
to respond to competitive and market conditions and in structuring the fees of individual Directors. The cap in the Existing
Articles may also restrict the ability to appoint additional Directors and, therefore, increasing the cap should provide the Board
with additional flexibility and facilitate the effective review and management of the composition of the Board. The cap does not
apply to the remuneration of the executive Directors, or to any additional fees paid to any other Directors in respect of services
that are outside the scope of the ordinary duties of a Director.

4. Strategic reports
The New Articles contain a specific provision, in accordance with the terms of sections 426 and 426A of the 2006 Act, that a
strategic report (together with the necessary supplementary material) may be provided to shareholders instead of a copy of
the Company’s annual report and accounts. This replaces the equivalent provision in the Existing Articles which referred to a
summary financial statement under the 2006 Act before the legislation was changed to require the provision of a strategic report
to shareholders in place of a summary financial statement.

5. Electronic communications
Provisions of the 2006 Act enable companies to communicate with members by electronic and/or website communications.
The New Articles allow communications to members in electronic form and, in addition, they also permit the Company to take
advantage of provisions relating to website communications. Before the Company can communicate with a member by means
of website communication, the relevant member must be asked individually by the Company to agree that the Company may
send or supply documents or information to him by means of a website, and the Company must either have received a positive
response or have received no response within the period of 28 days beginning with the date on which the request was sent
(the “Consent Letter”). The Company has enclosed a copy of the Consent Letter with this Notice. The Company will notify
members (either in writing, or by other permitted means) when a relevant document or information is placed on the website and
a member can always request a hard copy version of the document or information.

6. General
Generally the opportunity has been taken to update, as necessary, statutory references included in the New Articles.

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ReNeuron 2018 Annual ReportFINANCIAL STATEMENTS84
84

Advisers

OTHER INFORMATION

Glossary of scientific terms

Company Secretary and registered office
Michael Hunt
Pencoed Business Park
Pencoed
Bridgend
CF35 5HY

Principal banker
Barclays Bank plc
PO Box 326
28 Chesterton Road
Cambridge
CB4 3UT

Patent agents
Elkington & Fife
Prospect House
6 Pembroke Road
Sevenoaks
TN13 1XR

Nominated adviser and joint broker
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET

Joint broker
Nplus1 Singer Advisory LLP
One Bartholomew Lane
London
EC2N 2AX

Financial PR consultants
Buchanan
107 Cheapside
London
EC2V 6DN

Registrars
Computershare Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE

Solicitors
Covington & Burling LLP
265 Strand
London
WC2R 1BH

Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
1 Kingsway
Cardiff
CF10 3PW

Shareholder information

Shareholder enquiries
Any shareholder with enquiries should, in the first
instance, contact our registrar, Computershare Services,
using the address provided above in the Advisers section.

Share price information
London Stock Exchange Alternative Investment Market
(AIM) symbol: RENE

Information on the Company’s share price is available on
the ReNeuron website at www.reneuron.com

Financial calendar
Financial year end
Full year end results announced
Annual General Meeting

31 March 2018
12 July 2018
12 September 2018

Investor relations
ReNeuron Group plc
Pencoed Business Park,
Pencoed,
Bridgend,
CF35 5HY

Email: info@reneuron.com
Phone: 020 3819 8400
Website: www.reneuron.com

Allogeneic:
Where a tissue donor and recipient of the cells are
different individuals.

Cell line
A well characterised cell culture that has been demonstrated
to be consistent. Cell lines may comprise a family of cells
isolated from a single tissue or organ, or may be clonally
derived from a single ancestor cell.

Cell therapy
A process by which healthy cells are introduced into a tissue
or an organ to reconstruct or promote regeneration in order
to treat disease.

Immortalised cell line:
A population of cells from a multicellular organism which
would normally not proliferate indefinitely but, due to
mutation, have evaded normal cellular senescence and
instead can keep undergoing division. The cells can therefore
be grown for prolonged periods in vitro.

Immunosuppressants
An agent that can suppress or prevent the body’s
immune response.

In vitro vs in vivo:
‘In vitro’ is in an artificial environment whereas ‘in vivo’ is in
a more natural environment (animal model).

Cone rod dystrophy
A group of inherited eye disorders with degeneration of cone
cells in the retina resulting in loss of central acuity and colour
vision that is progressive over time.

Investigational New Drug Application (IND)
First step in the drug review process whereby a request to the
Food and Drug Administration (FDA) is made to authorise
administration of an investigational drug to humans.

Cryopreservation:
Maintenance of the viability of cells using agents to protect
them from damage that can occur during cooling and storage
at very low temperatures.

Modified Rankin Scale:
A well-established, 7-point, clinician-reported global measure
of functional disability in patients and their dependence upon
others in carrying out daily activities.

Differentiation:
Development of a stem cell into a more specialised type.

Nano-sized
Between 1-100nm in size.

ExoPr0
Our first CTX-derived exosome therapeutic candidate which
targets cancer.

Open-label
Type of clinical trial in which the identity of treatment is known
by all involved in the trial.

Exosomes
These are nanoparticles secreted from many different types of
cells, including the Company’s proprietary CTX stem cell line.
They play a key role in cell-to-cell signalling.

Glioblastoma:
Glioblastoma or glioblastoma multiforme (GBM) is an
aggressive form of brain cancer with approximately
2,000 new cases diagnosed in the UK every year.

Good Manufacturing Process (GMP)
Regulations, codes and guidelines to ensure that products
are consistently produced and controlled according to quality
standards appropriate to their intended use and as required
by the product specification.

Photoreceptors
Cells in the retina (rod cells and cone cells) that convert light
into electrical impulses.

Proliferation
The increases in cell numbers that occurs through repeated
cell division.

Proprietary technology
This technology is the property of a business or an individual.

Regeneration
The restoration of function in damaged body organs
and tissues.

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Glossary of scientific terms continued

Retinal diseases
Conditions that lead to damage of the layer of tissue in the
back of the eye that senses light and sends images to the brain.

Retinitis pigmentosa
A group of inherited diseases of the retina that cause damage
to the rods leading to a loss of peripheral vision that is
progressive over time.

Senescence:
The point at which a normal cell ceases to divide and grow.

Stem cell:
A cell that is both able to reproduce itself and, depending on its
stage of development, to generate all or certain other cell types
within the body or within the organ from which it is derived.

Stroke
Damage to a group of nerve cells in the brain due to
interrupted blood flow, caused by a blood clot or blood
vessel bursting. Depending on the area of the brain that
is damaged, a stroke can cause coma, paralysis, speech
problems and dementia.

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ReNeuron 2018 Annual ReportReNeuron Group plc
Pencoed Business Park
Pencoed
Bridgend
CF35 5HY

t: +44 (0) 203 819 8400

e: info@reneuron.com

www.reneuron.com

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