Redx Pharma PLC shares (LON:REDX) rocketed 137% after it received some welcome good news after the company announced it had sold one of its cancer research programmes for up to US$203mln.
Like all deals of this kind, the agreement with Jazz Pharmaceuticals (NASDAQ:JAZZ) of Ireland has a tiered payment structure. So, Redx will receive a far more modest upfront sum of US$3.5mln.
There are then a series of what are called milestone payments, the first of which is handed over when preparatory works begins for an investigational new drug (IND) application. A further sum will be paid when the IND is lodged.
Interestingly, Jazz has said it will fund Redx to carry out the research and preclinical development required to complete the above-mentioned IND-enabling studies.
The American drug developer is acquiring Redx’s pan-RAF inhibitor programme designed to tackle ‘mutant’ tumours that are resistant to certain current front-line cancer treatments.
"It is a really interesting agreement that recognises the scientific interest in our assets and also Redx’s capability in this area," said chief executive Lisa Anson in a call with Proactive's Andrew Scott.
The US group will fund all future development of the pre-clinical assets and, if a commercial drug comes out the other end, the AIM-listed group will receive a tiered royalty on sales.
The deal is in line with Redx’s previously-stated strategy of “realising value” from this early-stage research effort.
It comes as the company looks at longer-term methods of strengthening its balance sheet, having last month secured short-term debt funding.
“This transaction validates Redx's excellence in drug design and represents the company's second oncology deal in the last two years, following the sale of our BTK inhibitor programme to Loxo Oncology in 2017,” said CEO Anson.
The BTK inhibitor assets were sold for US$40mln.
The stock jumped 8.59p to 14.84p.
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