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Redx Pharma Plc: THE INVESTMENT CASE

Redx reshuffles board and clarifies new strategy ahead of rejoining junior market

“We are delighted that RedX has exited administration as a going concern and with a strengthened board and management team that will ensure enhanced oversight and provide relevant industry expertise as well as continuity to the business”
test tubes in a laboratory
INVESTMENT OVERVIEW: REDX The Big Picture
Redx is focusing on its two lead cancer and fibrosis candidates

Big changes are underway at Redx Pharma Plc (LON:REDX) as the drug discovery group rejoins the junior market today (Monday).

The company had been in administration since May after a £2mln loan from Liverpool City Council made to its subsidiary, Redx Oncology, fell due.

READ: Redx shares suspended as Liverpoool City Council calls in loan

Over summer the administrators, FRP Advisory, sold Redx’s BTK inhibitors business to US firm Loxo for US$40mln.

It was confirmed last week that FRP had filed their final report in court and with the Registrar of Companies, bringing the administration to a close.

Chairman takes over the reins

Shares are set to resume trading at midday on Monday, although investors will now be backing a firm headed up by Iain Ross who has moved from non-executive to executive chairman.

READ: Biotech firm Redx Pharma comes out of administration

Ross has replaced Neil Murray who Redx confirmed has stepped down as both chief executive and as a director of the company.

Elsewhere in the boardroom, Peter Presland has joined as a non-executive director and chair of audit committee, replacing long-standing NED Norman Molyneux.

Two development programmes, five research programmes

Redx also unveiled its strategy going forward, which will see it focus on its lead cancer asset (RXC004) and fibrosis candidate (Pan-ROCK).

RXC004, a so-called 'porcupine inhibitor' (more on that below), 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 road yet but Redx reckons the potential market is around 3mln patients.

Alongside those two development programmes Redx is focusing on a further five earlier-phase research projects.

Given July’s BTK inhibitors sale, Redx has £13.6mln of cash in the bank which should last it into early 2019 and allow the company to “pass through a number of significant milestones”.

Boss “delighted” with stronger management team

“We are delighted that RedX has exited administration as a going concern and with a strengthened board and management team that will ensure enhanced oversight and provide relevant industry expertise as well as continuity to the business,” said executive chairman Ross.

“The strong research base has yielded a pipeline that is now focused on developing first or best in class drugs to validated targets in cancer and fibrosis where there remain significant unmet medical needs.

“We look forward to entering the clinic with our lead cancer compound in the first quarter of 2018 having recently received the necessary approvals for our trial design.”

He added: “Our aim is to progress our pipeline candidates, where warranted, to clinical proof of concept in order to build significant shareholder value.”

Porcupine inhibitors: Animal rescue?

Porcupine inhibitors are a new and potentially breakthrough method of fighting cancer.

They work by targeting cancer stems cells that can often lie dormant after traditional treatment and are associated with a recurrence of the illness.

The thinking goes that if you kill the stem cells, you have a chance of eradicating the disease completely.

There is a growing bank of research that has found they may also be very effective in tandem with checkpoint inhibitors such as anti-PD-1, which lower or break cancer’s defence against the body’s immune system.

That’s why Redx announced recently that the upcoming trial of its RXC004 Porcupine inhibitor will assess the drug in combination with a checkpoint inhibitor as well as deploying it as a single treatment to tackle cancer.

So Redx has previously said it will build in a “combination arm” to next year’s study, “reflecting our belief in the validity of this approach”.

As it stands, Swiss pharmaceutical giant Roche is the only drug major with a Porcupine inhibitor in the clinic.

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