Regeneus - Japan clinical licence deal expected near term

Regeneus is aiming to license Progenza for clinical development in Japan in the current quarter. A licence deal would trigger a US$5m milestone payment from partner AGC and would likely see Progenza commence a potentially pivotal Phase II trial in knee osteoarthritis in Japan. Regeneus is in separate discussions with potential licensees for the Sygenus secretions technology following encouraging results from a clinical trial in acne. We add Sygenus to our rNPV model and increase our valuation to A$170m (vs A$146m) or A$0.82/share. Depending on the financial terms, we estimate that a Progenza licence deal could add up to ~A$50m to our valuation.