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Redx Pharma's AIM return might be a rare happy ending to administration

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Redx: Up and running again

One of the oddest recent episodes on AIM came to a seemingly happy conclusion today as Redx Pharma Plc shares resumed trading after a brief spell in administration.

Why odd?

Well, it’s unusual enough for a listed company to go into administration but to resume trading again seemingly unscathed is nigh on unprecedented.

The circumstances that sparked the administration were also highly unusual. 

RedX Pharma was put there by Liverpool Council in May for non-repayment of a £2mln loan.

Eyebrows were raised at the time as the council’s move came just months after the AIM-listed firm had raised £12mln.

Investors encouraged by the group’s progress in the area of immuno-oncology, one of the hottest sectors in cancer research current, had snapped up the shares.

In spite of this, Redx was sufficiently cash-strapped for administrators, FRP Advisory, to be appointed after it missed the repayment deadline.

At the time the company put out a statement saying it was baffled by the decision.

Nonetheless, it went ahead, but within weeks the administrators sold one of RedX’s divisions, its BTK Inhibitor business, for US$40mln (£28mln) or more than enough to pay off its loans and come out administration once all of the legal niceties were completed with cash in the bank.

Redx said today it has £13.6mln to be exact, which should last it into early 2019 and allow the company to “pass through a number of significant milestones”.

On the management side, Iain Ross has become executive chairman from non-executive while former CEO Neil Murray has stepped down both from this role and as a director.

Going forward, the focus will be on lead cancer asset (RXC004) and lead fibrosis candidate (Pan-ROCK).

RXC004, a so-called 'porcupine inhibitor' is set to enter the clinic in the first quarter of 2018 with results from the phase IA trial due at some point in the second half of that year.

READ: Redx gets UK go-ahead for first clinical trial of cancer treatment

Pan-ROCK, which specifically targets inflammatory bowel disease-related fibrosis, isn’t quite as far down the line yet but Redx reckons the potential market is around 3mln patients.

Alongside those two development programmes Redx is also focusing on five research programmes.

While it might be argued the BTK Inhibitor held much promise, just to be back trading under its own steam looks a major win. 

Shareholders will probably ask (rightly) how Redx got into this fix in the first place but as owners of one of the few, if possibly  only, example of a listed company returning from administration and carrying on trading they may just count their blessings.

Shares fell 11p to 27.5p in first deals on its return.

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