LONDON (ShareCast) - Investment manager Gartmore has increased its stake in Renovo by more than two-thirds to 27.2% since the disappointing trial results for the Juvista scar treatment.
Other investors have been getting out of the shares, including RA Capital Management sold its remaining 10m shares in Renovo last week. Renovo’s main attraction may be as a shell for another business to reverse into.
Back in 2009, Gartmore was a prime mover behind the use of AIM-quoted Evolutec, another former pharma company, as a shell in which to reverse nanotechnology company Nanoco.
Renovo had around £44m in cash at the beginning of March and it is considering selling its remaining intellectual property and products. Panmure Gordon reckons that if the company were liquidated it will cost up to £7m and Renovo would be worth 19p-21p a share. There could be additional value from IP sales.
At the end of January, Gartmore reduced its stake from 33.6m to 31.9m shares (16.75%). The share price was around 73p at that time and it is currently barely one-fifth of that level. Gartmore currently owns nearly 51.8m shares.
Having examined the results of the Juvista trial, Renovo conceded that the efficacy of the treatment is insufficient to demonstrate significant benefit when tested in a broad population of scar revision patients, and has stopped all development work on the product.
In order to conserve cash, the company has put more than 100 members of its staff on notice that they are at risk of redundancy and the board will be reduced in size.
Renovo is halting recruitment to the ongoing trial of Adaprev, its flexor tendons repair device subject, at the current 32 out of the originally planned 44 patients. The fully recruited Prevascar proof of concept clinical trial in incisions and excisions of skin in African volunteers will continue.
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