Business Overview
RenovaCare Inc. (RCAR) is a Scottsdale, the United States based Biotechnology company that is significantly focused on the Research and development of autologous or self-donated therapies based on stem cells for the human organ regeneration. The company’s beginning products which are still under a development phase are aimed at the largest organ of a human body, the skin. RenovaCare’s most important technological capability, the CellMist™ System, leverages another one of the company’s patented technology called SkinGun™, to disperse a liquid part of the patient’s stem cells, on the wounds. The company is also in the process of researching on and developing a clinical – grade liquid dispersing equipment for the care of wounds and irrigation packs. In diagnostic medical use in the United States of America, SkinGun™ treatments have been able to display the capability to organically and quickly heal various wounds including the likes of burns as well as some other critical wounds. The company is also in the process of development of the CellMist™ System which will be a new possibility for a person receiving medical treatment from a case of burns, both acute and long-term wounds, as well as any scars they might have on the skin.

RCAR Financial Performance (2^nd Quarter and Half Yearly results for the period ended 30^th June 2019)

Source: Company filings

On 31^st July 2019, the company reported its 2^nd Quarter 2019 and Half yearly results for the period ended 30^th June 2019 in Form 10-Q filed with the United States Securities and Exchange Commission (SEC). The company did not report any revenues for either of those periods as the products are still in the development phase. In terms of operating expenses, the expenses made on Research and Development for the second quarter ended 30^th June 2019 were reported to be at US $179,193, an increase of 65.60 per cent year on year as compared to the R&D expenses made in Q2 2018 at US $108,207. For the half year ended 30^th June 2019, this increase in R&D expenses was 60.17 per cent year on year from US $ 233,318 in H1 2018 to US $373,702 in H1 2019. The company reported an interest income of US $96,024 in Q2 2019 and of US $180,729 in H1 2019, a significant year on year increase as compared to US $5,001 in Q2 2018 and US $9,426 in H1 2018 respectively. As a result, the company reported a net loss of US $547,504 in Q2 2019, a marginal increase compared to the net loss of US $465,479 in Q2 2018 but a net loss of US $1.06 million in H1 2019, which was a marginal year on year decline as compared to the net loss of US $1.11 million in H1 2018.

RCAR Latest News
On 14^th August 2019, the company made a press release regarding being awarded a new patent that will allow the company’s novel medical device SkinGun™ to politely disperse all kinds of tissues and cells, which will be revolutionary in opening the door for its possible application in the Organ and tissues regeneration, beyond skin. Dr Ben Walthall, who’s an Advisory board member in the company, said that, as revolutionary as the needles used in the 20^th century to inject vaccinations and drugs, this product could become the syringe of tomorrow and this could be an extraordinary breakthrough in the technology related to Stem cell regeneration for organs and tissues.

RCAR Risk Factors
The three major risk factors faced by RenovaCare Inc. just like any other pharmaceuticals company are – Failing Research and Development of products or non-approval by authorities, Competition and Protection of Intellectual Property. Eventhough the company’s products have so far been able to get the approval of FDA and other regulatory authorities in Initial as well as Pre-market phases of development, unless the product is finally monetised as these are critical medical products and can have both positive as well as negative change impacts. In terms of competition, the company’s major competitors in this field are Avita Medical Limited, who have received the approvals from the regulators for ReCell™, which is a cell spray device just like the RenovaCare’s SkinGun™ as well as a cell isolation procedure, making it a big threat as a competition against RenovaCare when their products get to the market. The theft of Intellectual property creates on of the biggest risk in the biotechnology space as an incident like this could have a major impact on the company’s “Get to Market Strategy” and pricing in regard to its products.

Outlook
The company has not reported revenue yet but receiving regulatory approvals on the testing of its products as well as receiving patents, especially for SkinGun™. This signals a very positive outlook towards the company’s research and development as well as testing practices. The company’s ultimate strategy is to use the capabilities of its CellMist™ system and the cell isolation procedure for skin therapy and to become industry leader gradually. RenovaCare is well on its way for achieving its target and there are encouraging signals that company will be revenue positive by the end of FY 2021, which will be a huge step in the right direction for the company’s prospects.

On the basis of above rationale and new developments being undertaken by the group, we recommend investors to keep a “Watch” on the stock, while we look for any upcoming catalysts.

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