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Redx Pharma: the three-year journey from administration to FTSE 100 deal

The story of Redx Pharma, a junior biotech that saw its fortunes turned around by chief executive Lisa Anson

Redx Pharma PLC - Redx Pharma: the three-year journey from administration to FTSE 100 deal

Redx Pharma PLC (LON:REDX) may turn out to be a turnaround story that will be studied in finance textbooks in the future.

Earlier this month, the junior biotech clinched a licensing deal with a FTSE 100 colossus three years after entering, and swiftly exiting, administration.

AstraZeneca PLC (LON:AZN) agreed to pay US$17mln for an exclusive licence to develop Redx’s RXC006, a treatment for fibrotic diseases.

If the drug makes it to market, the pharma giant will dish out up to US$360mln in milestones, plus potential royalties on top of that.

Eyes on fibrosis

The new drug will target idiopathic pulmonary fibrosis (IPF), where progressive scarring of the lungs (fibrosis) is usually fatal and the prognosis worse than many cancers.

As a porcupine inhibitor, RXC006 suppresses Wnt ligand secretion from pro-fibrotic cells. Wnt ligands are known to be strong drivers of fibrotic mechanisms found in diseases such as pulmonary fibrosis (IPF).

Looking at publicly available filings, Redx is the only London-listed company targeting porcupine inhibitors.

According to chief executive Lisa Anson, herself a former AstraZeneca UK president, the deal was secured thanks to the drug’s novel approach to fibrosis and strong preclinical data.

Respiratory drugs are one of the Anglo-Swedish giant’s main therapy areas, though a marketable fibrosis treatment would fill a gap in a portfolio focused mostly on asthma and chronic obstructive pulmonary disease.

AZ has one candidate in the clinic, AZD5634 for cystic fibrosis, and is investigating other candidates, such as saracatinib for IPF.

Comfortable cash position

For Redx, the agreement has brought in some more fresh cash in the bank, following June’s arrangement to raise US$30mln via an issue of convertible loan notes.

Funds Redmile Group and Sofinnova Partners are putting up US$19mln and US$10mln respectively. The remainder is coming from a direct subscription of shares by Sofinnova.

The fresh injection of cash will be used to repay US$6.1mln of short-term debt and to take its three other projects forward now that RXC006 has found a home.

What’s next

The remaining lead candidate is RXC004, currently in phase 1 trials and scheduled to enter phase 2 next year, despite the recruitment of participants being paused due to the pandemic.

RXC004 is also a porcupine inhibitor and is being evaluated for Wnt-driven tumours.

Redx says it can be used alone or in combination with immuno-oncology agents such as anti-PD-1 checkpoint inhibitors; the latter have been have been approved in several tumour types, for example non-small cell lung cancer, melanoma and colorectal cancer.

The second programme is for RXC007, which is also for fibrosis patients but targets ROCK2, an enzyme in cell signalling pathways, so it works in a different way than porcupine inhibitors.

ROCK2 signalling plays a key role in both the inflammatory component and the tissue re-modelling that worsens many fibrotic conditions, and it is also active in chronic diseases such as diabetes and metabolic syndrome.

“We are very excited by the potential of RXC007 in a number of fibrotic conditions which might also include IPF,” Anson told Proactive.

She says the company’s third pillar is its wealth of pre-clinical research.

“We have a number of new research programmes to develop the next generation of targeted therapies across oncology and fibrosis.”

Tough times

Anson has led the turnaround since joining the company in 2018, just months after it emerged from administration.

Redx was forced into that situation by Liverpool Council in May 2017 for non-repayment of a £2mln loan, despite having raised £12mln not long before.

Within weeks administrators FRP Advisory sold the firm’s BTK Inhibitor business for US$40mln and in November, the shares were returned to trading on AIM.

This was followed by some radical changes in its board, including bringing in oncology drug veteran Andrew Saunders as chief medical officer.

From FTSE 100 to AIM

Anson arrived after two decades at AstraZeneca, where she had held several senior roles, as well as being the first female president of the Association of the British Pharmaceutical Industry (ABPI).

Her work at the ABPI involved helping the UK government develop a strategy for the sciences sector.

“What was very clear to me is that there’s fantastic science in the UK, particularly in the academic area but also in the commercial area,” she says.

“But sometimes these companies didn’t always create the value that I think is merited, partly for funding, partly for leadership, partly for different reasons.”

Anson decided to leave AstraZeneca and use her management skills to build Redx’s path to success, on the basis of its “strong science”.

“It’s a good company, I always believed it is a good company that had fallen on a hard time. That was the reason behind the move and that has been the rationale in the last couple of years.”

The turnaround

Changes were made across three areas at the Macclesfield-based outfit: leadership, financing and strategy.

Iain Ross reverted to the role of non-executive chairman after Anson’s appointment, with another AstraZeneca veteran joining the board.

James Mead took over as chief financial officer, having held the same role at the blue chip’s Netherlands division.

Meanwhile, Redx held several discussions with investors, looking for those who would really understand the sector, the company’s assets and what it would take in terms of funding to bring them to the clinic.

Finally, the strategy was shifted from a preclinical company to driving some of the research into trials, focused on two priority assets: porcupine and ROCK inhibitors.

“Our strategy is to take forward molecules through to the clinical proof concept, obviously that’s a big investment, a big step, so we can’t do it with all the great molecules that Redx scientists have developed,” Anson told Proactive.

“What we’ve chosen to do is to select some to take forward ourselves and a couple of others to partner because we think it’s important that they find a way to the clinic.”

After many financial hurdles, investors can hope Anson's strategy will take Redx Pharma on a successful path.

Quick facts: Redx Pharma PLC

Price: 55.25 GBX

Market: AIM
Market Cap: £151.32 m


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on 7/12/20

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