19 May 2021

Spotlight on Redx Pharma

The healthcare sector has witnessed decades of innovation and technological advancement. Barriers to entry and cost curves have come down so dramatically that new treatments and solutions in the fields of genomics, precision medicine, tech-enabled procedures, and digital health have become commercially scalable. The Covid-19 pandemic has accelerated the rate of innovation and is attracting record funding from investors in this long-term field. LGB Investments sees the value the companies behind this surge bring to the market and their specific fields.

LGB Investments recently met with Redx Pharma, which specialises in the discovery and early clinical development of small molecule therapeutics, with an emphasis on oncology and fibrotic disease. The two lead compounds will be progressed through proof-of-concept studies and then partnered for further development. Existing earlier-stage collaboration partners include AstraZeneca and Jazz Pharmaceuticals. Redx had come to our attention after it was rescued by the US fund Redmile, which is also the largest shareholder in Scancell. The research team at Trinity Delta, with whom we have a close relationship, recommended we take an interest in the company.

Lisa Anson, CEO, and Peter Collum, CFO, together with their chairman, the biotech veteran Iain Ross, presented their model for the discovery and early clinical development for small molecule therapeutics for oncology and fibrotic disease. The company's FY20 results illustrate the strength of their progress over the last year. Despite delays to clinical trials due to Covid-19, two of Redx Pharma's inhibitors are on course to reach important value inflection points this year.

The management team is impressive and boasts substantial medicinal chemistry expertise, many with AstraZeneca backgrounds- Lisa Anson seems to have been a high-flier there. The company brought its cost base under control under the new management and with the new shareholder base, has recapitalised, and is making waves.  

Redx is focussed on what they see as de-risked targets, and on tackling resistance or side-effects to otherwise promising drugs. Their focus is on four proprietary programmes (two in house, two out):

  • RXC004 tackles the Porcupine (Porcn) enzyme in order to stop the growth of certain solid tumours
  • RXC007 tackles the ROCK2 receptor in order to address fibrosis without triggering hypotension.
  • RXC006 has been scooped up by AstraZeneca and is a variant on RXC004.
  • They have two projects with Jazz Pharmaceuticals to tackle mutant tumours.

Plus they are working on a treatment for Crohn's, and anticipate another three projects by 2025.

The value of their approach is illustrated by the one that got away. When their excessive cost base drove them (under previous management) into administration in 2017, they sold a BTK inhibitor to a company called Loxo for $40m. Loxo was subsequently acquired by Eli Lilly for $8bn- the BTK inhibitor was an important part of their portfolio (it was one of four drugs mentioned in Lilly’s press release about the acquisition).

The company is currently funded through to late 2022, and Redmile with 80% (Sofinnova and Polar Capital are other name shareholders) presumably see the company as destined for Nasdaq. The market cap is already over $200m. Liquidity is low but presuming things go to plan the only way to get exposure will be through the secondary market.

Trinity Delta’s coverage is here. Their brokers’ research is here. In both cases, they see the material upside.

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