Redx Pharma PLC (LON:REDX) said it is in discussions about a possible cash offer from an investor group led by Franco-US biotech veteran Sam Waksal.
The company said the announcement did not amount to a firm intention to make an offer and there can be no certainty that any offer will be made, with Waksal having until 5pm on 28 January 2020 to make a firm bid or walk away.
Founded by Waksal in 1984, ImClone Systems was sold in 2008 to Eli Lilly and Co (NYSE:LLY) for $6.5bn, though not before the founder had been arrested for insider trading in the case that also roped in Martha Stewart.
Redx said that it has been in discussions with various investors as it looks to drum up funding to take its lead cancer drug candidate into the next stage of clinical trials.
In order to continue those funding discussions, Redx is asking shareholders for permission to swap a £2.5mln loan from its largest shareholder, Moulton Goodies Ltd (MGL), for shares at a price of 5.25p apiece.
"As we have previously disclosed, the Board has been in active discussions with shareholders and third-party healthcare specialist investors regarding longer-term funding of Redx," said chairman Iain Ross in a statement on Tuesday.
He said the loan conversion "will allow us time to secure the necessary longer-term funding that will enable us to advance our innovative pipeline of novel precision medicines for cancer and fibrosis, in particular to complete our ongoing phase 1/2b programme with RXC004 and initiate phase 1 trials with one of our fibrosis programme".
"We have been encouraged by these discussions and one investor group has indicated that ongoing discussions could lead to a possible cash offer for the company."
If approved at a shareholder meeting on 21 January, the conversion shares would be admitted to trading on AIM the following day and will give MGL a 42% stake.
While having a stake above 30% would ordinarily oblige MGL to make a takeover offer, the authorities have agreed to waive this obligation.