Regeneus Limited (ASX:RGS) CEO Leo Lee provides an overview of the company, presenting on neuropathic pain, mesenchymal stem calls, the market opportunity, and the Progenza OA deal with Kyocera.Good afternoon, everyone. It's a pleasure to be here. I think there's a couple of really interesting thing about the whole pharmaceutical industry that I want to share with the team or everyone today before we continue with the presentation.
I've been in the pharmaceutical industry for about 20 years now, and I've been a part of the development of a lot of different therapies starting with the antibiotics and then moving into the antibody treatment for treating cancer and now in cellular therapy space. I think the key take home message about making medicine is that the human body is probably the best route for innovation. All of the medicines that we use today really harvests what millions of years of evolution have created in our own systems in terms of treating diseases, managing, recovery after you suffer an injury and also as we age, help your body regulate effectively recovering and rejuvenating your body over time.
So with that in mind, and I want to highlight to you how we as a company are leveraging the learnings that we've generated over the past 10 years in understanding the human body, how we're leveraging some of the learnings in particular in cell therapy and how we're applying that to treat diseases that have a very high level of unmet need.
So with that said, can I ask you, Clive, to move to the next slide?
The presentation today is really created so that when there's interest, it gives you all the information that you might need in the soon days for you to review this deck, I will go through and cover some of the key highlights, but I will not cover every single slide, but feel free to take a read if you find Regeneus to be interesting, but some of the key highlights are what I have put on this page. Our technology platform has been developed over the past 10 years, and it's really based on us developing and finding stem cells in your body that have a pretty unique role, which it naturally takes. The stem cells in the human body are responsible for going around the body, finding areas of inflammation or areas of damage and they coordinating the treatment and the recovery of that site.
So, if you think about how the human body works, when you have an injury, it causes about inflammation in order for the body to send the right type of cells there, to have the repair, and then overtime as the repair is done, you need inflammation to subside in order for you to go into full recovery. Stem cells is really at the centre of this. While patent portfolio was developed over 10 years ago, it really allowed us to capture and benefit from the findings in the space and develop therapies. So, we have two technology platforms. One is called Progenza™, one is called Sygenus.
The way you can think about it is a stem cell really, it's almost like a cellular pharmacy. So, Progenza™ is the stem cell or the cellular pharmacy with some of the drugs and the chemicals that it secretes that benefit recovery. Sygenus is just the therapies that the stem cells is secreting and we have captured that side of all those beneficial chemicals. We call them chemokines or cytokines or even pieces of RNA and DNA. So, that's the Sygenus platform. For today's conversation, I'll focus more on Progenza™ and how we're planning to take Progenza™ to market, which is our stem cell therapy.
In drug development, some of the key things that I think as an investor is important to be aware is really about the capability of the platform, how well protected you are from a patent position, the diseases that you're addressing, whether there's a high level of unmet need, because of course we want to solve problems that really have an impact to patients and then what's the probability of success to get that product to market from both a capital perspective, as well as the technology point of view.
So from our perspective, we're quite positive because recently we have established a collaborative research agreement as well as a license agreement with a Japanese entity called Kyocera. They effectively have funded over $40 to $50 million in terms of developing our product Progenza™ to bring to the Japanese market. $27 million of that will be part of upfront and milestone payment to Regeneus and then there's a royalty that will be ongoing in high single to double digits as the product comes to market. So, we're quite excited by this because the license agreement effectively de-risk our cash runway. So, we are now going to be fully funded to market.
The market that we primarily address is the pain market, and we categorise it as neuropathic pain. So, what is neuropathic pain? So, I think we all aware, we often feel pain in our body and the way pain works is that when you damage your tissue or your muscles or you bones, it actually causes an inflammation at the site. I think we all feel it, right? It swells. It feels painful. The inflammation is intended to really recruit all the different cells in your body in order to go to that site and then initiate recovery. So, it could be killing off infection, rebuilding the tissue, rebuilding the muscle. In a case of pain, all of the neuropathic pain, the pains that we suffer as we age or with injury are caused by inflammation that does not subside.
So for example, pain in the knee, sometimes we have chronic back pain or you might have pain as a result of patients going through radiation treatment and then they have very hypersensitivity of the skin. These are inflammation that has not subsided, and this is where stem cell by its nature is extremely good therapy for treating the area of neuropathic pain. The neuropathic pain market is a very large market, and the level of unmet need is quite high because patients in the world are now getting less and less access to opioids. I think we've all have heard that opioids, the use of them have significantly gone down as result of their addictive properties. So, there's a really large opportunity for a company that can address pain to come to the market client.
Clive, next slide please.
Okay. So, here is really, it encapsulates what I have just mentioned, and then I will refer this for everyone to take a look at leisure.
Next slide.
So, what I'll do now is go through a little bit more in depth about the market opportunity that we see in neuropathic pain, the regions in which we're focusing on our development and a little bit more about our company and in technology.
Next slide.
So, as I mentioned earlier, neuropathic pain is really caused by the damaged tissue. I want to just highlight the pain covers a lot of diseases in the periphery as well as in the central. So, just to quickly go through this, so people are familiar with the disease where our platform can be applicable, diabetes and chemotherapy, a lot of diseases of degenerative nature, for example, knee osteoarthritis, back pain, even things like shingles pain, when you get a viral infection, it actually sometimes can cause a ongoing inflammation at the nerve endings and then you have pain. So, I think many of us certainly have felt this kind of pain. I know that myself, I suffer from knee pain. So, this is something that impacts a very large percentage of the population.
Next slide, please.
The global prevalence for pain is quite high. Now in particular, when you look at knee osteoarthritis, which is all of the neuropathic pain categories, knee osteoarthritis is only second to back pain. Roughly, if you look at the develop markets, right, the countries where there's a characteristics of having very high general GDP, having very high quality of life, a high disposable income, as well as an aging population, and I would think Japan, Australia to a certain extent, as well as lot of the European countries and US as well, these countries, the percentage of patients over 65 with some type of knee osteoarthritis is about 25%.
Next slide.
So, the way that mesenchymal stem cell works, as I mentioned earlier, these are cellular pharmacies, but their main feature is that they're extremely good at diagnosing at the site of injury what the issues are, and then naturally secrete the right balance of chemicals in order to treat the inflammation and facilitate regeneration to a large extent. Now, I think the key take home message really is that we harvesting the technology that has been developed in a body through millions of years of evolution, we have the capability and we develop a lot of technology around harvesting, manufacturing and optimising this technology. We concentrate the number of cells to help patients who are suffering from these diseases to get a much higher concentration of these cells, which can sure alleviate these or can treat the symptoms.
Next slide, please.
Manufacturers are probably one of the biggest challenge, right. Because if you're familiar with making medicines, often the biggest challenge is coming up with the right chemical or the right antibodies in order for you to treat the patient. In our case, the human body has really evolved these stem cells, which we participate the discovery to treat diseases. Where cellular therapy often has challenges and I think this is something that's interesting for those that want to invest in the space is, really how do you get enough cells in order to treat the diseases that you're interested in? What we think we have a real strength is that our patents around adipose-derived mesenchymal stem cells. So, these are cells that are derived from fat.
They have some unique properties, and then we have developed technology in order to find the donors that has the highest potency and that we have manufacturing knowhow and IP that allows us to take one donor and be able to scale it out for very large number of doses of therapy. So for example, in our case, in treating knee osteoarthritis, we can address the entire Japanese market or the US market or the European market with one single donor. That has a lot of the government regulatory approval benefits as well as consistency in quality. So, we're quite proud of the technology platform we develop. This is really to give you a feel for what that looks like.
Next slide, please.
So, the real benefit of a mesenchymal stem cell therapy is that in the area of pain, all current therapies, right, everything that you've seen in the marketplace in terms of oral painkillers or if you have knee pain, often you can go into the doctor's office and inject you with steroids, all it's doing is blocking the pain signal. So, it's effectively turning your back on a forest fire and the fire is raging, but you're effectively not doing anything to address the fire itself. So, stem cell therapy really is the first therapy that's going to come to market. That ability to actually modify the disease or slow the progression or actually try to address the cause of the forest fire. This is what I'm showing here is that disease modification is a term that you should really look for as you're assessing different investment opportunities, because this is the breakthrough.
Next slide.
I won't go into detail, but this just gives you an overview of our platform and the different disease areas in which we're focused. Please take a look at your convenience.
Next slide.
I think this is really important. The knee osteoarthritis market in terms of potential is quite large. As I mentioned, 25% of patients over 65 have knee osteoarthritis. In the US, we see it as a $2.6 billion market. In Japan, currently it's a $350 million market, but we certainly expect that as our therapies that modify disease come to market and all of these geographies, the market will start to expand. I guess, to be very fair today, many people are trying to not go in for knee replacements, are trying to minimize the amount of drugs they're taking and simply focus on lifestyle changes. But once we have our therapy to market, we can start to give people therapy or patients therapy early, and then they can start to reclaim some of the performance that they have in their life in terms of living a more active life.
Next slide.
I'll leave this for your viewing. This really shows you that there's not a lot of competition for us. Our first market or focus will be Japan. The reason for that is Japan has a very special super highway for stem cell therapies. So, we can get to Japan with just one single phase two clinical study, which now we will be going into and fully funded by our partner Kyocera. With that one study, we'll bring the product to market.
Next slide.
So, I think with drug discovery, it can be quite complex, right? So, I think that the key point of this is that there's a couple of things you need to do before you can bring a product to market. You need to set up manufacturing, and it has to be of certain quality so that each government will accept your product to be put into a study. You need to run a clinical study to show that it's efficacious and safe, and then you need to register with the government of each region in order to bring the product to market and of course, then bring it to the hospitals and help physicians use it properly. So, all of that will be funded for us in Japan with our partner, Kyocera, and then we'll be working on this progressing along these lines in the US ourselves. The real benefit of this licensing deal that we struck is that all of that will be funded in this process.
Next slide.
One highlight, I think there's probably a question for the company Kyocera a couple of times. What kind of business are they in? So, Kyocera is a company that generates roughly $15 million in sales of US$25 billion in market cap. They're in a variety of different business areas, but one of their core businesses is really in medical device and the production of knee replacement. So, they're really a fantastic partner for us from the perspective that they know the customers.
Next slide.
So, in summary, I think I've covered all of the main points. I think Regeneus is actually in a fantastic position from an investment perspective, because the path to market has been de-risked through this very important and very positive relationship that we have with Kyocera. Our technology has been vetted. There's a lot of information now in the marketplace around the potential of stem cell therapies. There have been a lot of success and we feel that this deal has actually in many ways, has proven that our technology is capable, is well developed and is ready to go into humans and go into the market. We're quite excited because our patent portfolio is really in pain and inflammation. So, there are many other diseases that we can address, and we'll be exploring the platform and creating more value for our shareholders.
In terms of the management team, we made a very purposeful effort to bring a team of managers, as well as board members that taken a microcap and then evolve that into a biotech that's commercialising products. There's a couple of key components in there, and you have to be really smart about capital deployment. You have to keep your non-research related expense low, and then you have to be very narrowly focused, very laser focused on the right development programs so that you can give the best return. If you look on our website, both our management team, as well as the board has done this in several occasions and created a lot of value for shareholders. So with that said, Clive, I'll return it back to you. I just want to say thank you everyone for your attention, and please feel free to contact us with any questions as you see fit.
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