REG - Redx Pharma plc - Final Audited Results for Year Ended 30 September
15/12/2023 07:00
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RNS Number : 9116W Redx Pharma plc 15 December 2023
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REDX PHARMA PLC
("Redx" or the "Company")
Final Audited Results for Year Ended 30 September 2023
Zelasudil enters Phase 2a clinical programme in IPF and delivers compelling
preclinical data in other fibrotic indications
IND-enabling studies and regulatory submission completed for RXC008
Refined strategy to focus on advancing differentiated ROCK inhibitor
portfolio
Post-period financing extends cash runway into Q3 2024
Alderley Park, UK, 15 December 2023 Redx (AIM:REDX), the clinical-stage
biotechnology company focused on discovering and developing novel, small
molecule, targeted therapeutics for the treatment of fibrotic disease and
cancer today announces audited financial results for the year ended 30
September 2023.
Lisa Anson, Chief Executive Officer, Redx Pharma, commented: "We are pleased
to report significant progress across our pipeline of clinical and
pre-clinical assets. Commencing our Phase 2a IPF clinical trial for our lead
asset zelasudil, formerly RXC007, underscores our commitment to advancing our
differentiated ROCK-inhibitor portfolio. During the year, we presented
compelling preclinical data that demonstrate the potential of zelasudil in
several other fibrotic indications that we intend to investigate further in
the future. We are also pleased to confirm the submission of a CTA for our
second ROCK asset, RXC008, for which we expect to commence a Phase 1 study
early in 2024.
Despite the ongoing challenges in the equity markets and broader economic
landscape, post-period we were pleased to secure a £14.1 million (£13.6
million net) equity financing with existing institutional investors which
extends our cash runway into Q3 2024 and will allow us to deliver multiple
near-term value inflection points, in line with our refined strategic focus.
I would like to take this opportunity to again thank our shareholders for
their ongoing support, and our employees whose dedication make our
achievements possible."
Operational Highlights:
Significant pipeline prioritisation review undertaken with strategic focus
refined to the advancement of differentiated Rho Associated Coiled-Coil
Containing Protein Kinase (ROCK) inhibitor portfolio through the next stages
of clinical development, with RXC004 identified for partnership.
· Initiated a Phase 2a clinical study for zelasudil (RXC007), a
selective ROCK2 inhibitor being developed for fibrotic disease.
o In October 2022, first patient enrolled into Phase 2a clinical study in
patients with idiopathic pulmonary fibrosis (IPF). Recruitment into first
cohort of patients with dosing at 20 mg BID was completed with no safety or
tolerability findings that precluded dose escalation;
o Post-period, recruitment into the 50 mg BID cohort was completed, with
dosing ongoing. A decision on the dose level for a potential third cohort of
patients will be made in Q1 2024 following the next safety data review;
o In October 2022, preclinical efficacy data showing pleiotropic effects of
RXC007 in chronic graft versus host disease (cGvHD) was presented at the
International Colloquium on Lung and Airway Fibrosis (ICLAF);
o In November 2022, further preclinical data was presented at the
Antifibrotic Drug Discovery (AFDD) Meeting showing the potential of ROCK2
inhibition in lung fibrosis, other fibrotic diseases and cancer-associated
fibrosis;
o In May 2023, data from preclinical models of pancreatic ductal
adenocarcinoma (PDAC) in combination with chemotherapy were presented at the
Resistant Tumour Microenvironment, Keystone Symposia, which showed an increase
in survival compared to single agent standard of care alone;
o In August 2023, the Company announced that the US Food and Drug
Administration (FDA) granted zelasudil Orphan Drug Designation for IPF.
o In September 2023, FDA Type A meeting confirmed that design of ongoing
investigative dog study is suitable to meet the requirements to potentially
lift the partial clinical hold and allow dosing durations greater than 28-days
in the US in future clinical studies.
· Advanced RXC008, a GI-targeted ROCK inhibitor for the treatment
of fibrostenotic Crohn's disease, through IND-enabling studies and post-period
submitted a Clinical Trial Application (CTA), with the commencement of a Phase
1 study expected in early 2024.
o In November 2022, preclinical data presented at the Inflammatory Bowel
Disease (IBD) Nordic Conference showed RXC008 can supress fibrosis and
attenuate tissue injury in animal models of GI-fibrosis; and has the potential
to be developed as a novel therapy to inhibit fibrotic stricture formation in
Crohn's disease.
· Closed recruitment into Phase 2 programmes for RXC004, a
Porcupine inhibitor for the treatment of Wnt-ligand dependent cancers, with
partnership being sought following Phase 2 data readout.
o In November 2022, presented Phase 1 data from combination module of RXC004
PORCUPINE study in genetically selected patients with microsatellite stable
metastatic colorectal cancer (MSS mCRC) and opened patient enrolment for Phase
2 combination modules;
o In December 2022, a clinical trial collaboration and supply agreement with
MSD (Merck & Co., Inc., Rahway, NJ, USA) announced for the supply of
KEYTRUDA®(1) (pembrolizumab) for the combination arm of the PORCUPINE2 study
in Biliary Tract Cancer;
o In March 2023, topline data from PORCUPINE2 monotherapy Biliary Tract
Cancer module was announced showing some patients received durable clinical
benefit with overall safety and efficacy profile as seen in the Phase 1 study;
o In October 2023, confirmed that recruitment had been closed into all
PORCUPINE and PORCUPINE2 modules, with data readout expected H1 2024.
· Delivered novel drug candidate programmes from core medicinal
chemistry expertise.
o In October 2023, announced nomination of a new development candidate,
RXC009, a Discoidin Domain Receptor 1 (DDR1) inhibitor for the treatment of
chronic kidney disease;
o In October 2023, announced a KRAS (Kirsten rat sarcoma virus) inhibitor
programme in early development targeting both G12D selective and multi-KRAS
profiles.
o In November 2023, presented preclinical data from RXC009 at the American
Society for Nephrology (ASN) Annual Meeting which showed that in a therapeutic
unilateral ureteral obstruction (UUO) murine model of kidney fibrosis RXC009
treatment resulted in a significant reduction in histological markers of both
inflammation and fibrosis.
· Management team and Board of Directors changes during the year.
o In July 2023, Dr. Thomas Burt, a representative of Sofinnova Crossover I
SLP ("Sofinnova") informed the Board of Directors of his intention to resign
effective 1 September 2023; on 6 September 2023 the appointment of Dr. Joseph
Anderson as a Sofinnova representative was confirmed;
o Effective 30 September 2023, Sarah Gordon-Wild resigned as an independent
Non-Executive Director for personal reasons;
o Post-period, Dr. Jane Robertson informed the Company of her intention to
step down as Chief Medical Officer (CMO) to return to a clinical setting. Jane
will remain an advisor to the Company and from 1 January 2024, Dr. Helen
Timmis will be appointed Interim CMO until further notice.
Financial Highlights:
· Cash balance at 30 September 2023 of £18.1 million (30 September
2022 £53.9 million);
· Post-period a £14.1 million (gross) £13.6 million (net) equity
financing was secured with existing institutional investors at market price to
fund the near-term value inflection points, providing cash runway into Q3
2024;
· Significant investment in research and development activities led
to overall expenditure of £34 million (FY 2022: £34.4 million)(2);
· Loss for the period of £33.2 million (FY 2022 £18.0 million);
· Extension to the term of the convertible loan notes, issued by
the Company to both RM Special Holdings 3, LLC ("Redmile") and Sofinnova
Crossover I SLP ("Sofinnova") until August 2024, under the terms and
conditions of the original agreement.
· In April 2023, a recommended all-share business combination with
Jounce Therapeutics, Inc. ("Jounce"), was terminated following the withdrawal
by the board of directors of Jounce of its recommendation for the combination,
in favour of an unsolicited all-cash offer from a third-party.
The person responsible for the release of this announcement on behalf of the
Company is Nischal Hindia, Interim Company Secretary.
For further information, please contact:
Redx Pharma Plc T: +44 (0)1625 469 918
UK Headquarters
Caitlin Pearson, Head of Communications
ir@redxpharma.com (mailto:ir@redxpharma.com)
Lisa Anson, Chief Executive Officer
US Office
Peter Collum, Chief Financial Officer
SPARK Advisory Partners (Nominated Adviser) T: +44 (0)203 368 3550
Matt Davis/ Adam Dawes
WG Partners LLP (Joint Broker) T: +44 (0)203 705 9330
Claes Spång/ Satheesh Nadarajah/ David Wilson
Panmure Gordon (UK) Limited (Joint Broker) T: +44 (0)207 886 2500
Rupert Dearden/ Freddy Crossley/ Emma Earl
FTI Consulting T: +44 (0)203 727 1000
Simon Conway/ Ciara Martin
About Redx Pharma Plc
Redx Pharma (AIM: REDX) is a clinical-stage biotechnology company focused on
the discovery and development of novel, small molecule, targeted therapeutics
for the treatment of fibrotic disease, cancer and the emerging area of
cancer-associated fibrosis, aiming initially to progress them to clinical
proof of concept before evaluating options for further development and
potential value creation. The Company's lead fibrosis product candidate, the
selective ROCK2 inhibitor, zelasudil (RXC007), is in development for
interstitial lung disease and is undergoing a Phase 2a trial for idiopathic
pulmonary fibrosis (IPF) with topline data expected in H1 2024. The Company's
second fibrosis candidate, RXC008, a GI-targeted ROCK inhibitor for the
treatment of fibrostenotic Crohn's disease, is progressing towards the clinic
with a Clinical Trial Application (CTA) submitted during the fourth quarter of
2023. Redx's lead oncology product candidate, the Porcupine inhibitor RXC004,
being developed as a targeted treatment for Wnt-ligand dependent cancers, is
expected to report Phase 2 anti-PD-1 combination data during the first half of
2024, following which Redx will seek a partner for ongoing development.
The Company has a strong track record of discovering new drug candidates
through its core strengths in medicinal chemistry and translational science,
enabling the Company to discover and develop differentiated therapeutics
against biologically or clinically validated targets. The Company's
accomplishments are evidenced not only by its wholly-owned clinical-stage
product candidates and discovery pipeline, but also by its strategic
transactions, including the sale of pirtobrutinib (RXC005, LOXO-305), a
non-covalent (reversible) BTK inhibitor now approved by the US FDA for adult
patients with mantle cell lymphoma previously treated with a covalent BTK
inhibitor, and AZD5055/RXC006, a Porcupine inhibitor targeting fibrotic
diseases including IPF, which AstraZeneca is progressing in a Phase 1 clinical
study. In addition, Redx has forged collaborations with Jazz Pharmaceuticals,
which includes JZP815, a pan-RAF inhibitor developed by Redx which Jazz is now
progressing through Phase 1 clinical studies, and an early stage oncology
research collaboration.
To subscribe to Email Alerts from Redx, please
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1. Registered trademark of Merck & Co., Inc.,
2. Excluding share based charges and extraordinary costs
Chair's Statement
Dear Shareholder,
I am pleased to report a successful, although challenging, year for Redx, as
we have continued to progress our pipeline, building on our scientific
strengths to deliver our corporate strategy and ending the year with a
positive trajectory into 2024.
Our ambition is to create world-leading medicines that will transform
patients' lives. By leveraging our distinguished medicinal chemistry and
translational science expertise, we can create best-in-class or first-in-class
treatments for unmet medical needs. During the year we undertook a detailed
pipeline prioritisation review which resulted in an increased focus on driving
our differentiated ROCK inhibitor portfolio through the next stages of
clinical development. Alongside this, to ensure that we optimally deploy our
resources and management focus, we made the strategic decision to partner our
Porcupine inhibitor, RXC004. As our ROCK assets have progressed, we have
required increased resources to develop them, requiring us to be even more
focused in our portfolio prioritisation.
During the period, Redx made significant clinical and regulatory progress
against this strategy, with key achievements including:
· Zelasudil (RXC007) initiated ongoing Phase 2a study -
our selective ROCK2 inhibitor, is being developed for interstitial lung
diseases (ILD) including idiopathic pulmonary fibrosis (IPF) a
life-threatening orphan disease with poor prognosis.
· RXC004 closed recruitment for Phase 2 programme - our
Porcupine inhibitor is being developed as a targeted therapy for Wnt-ligand
dependent cancers in combination with immunotherapies and potentially other
agents.
· RXC008 successfully completed IND-enabling studies and
submitted a CTA - our Gastro-Intestinal (GI)-targeted ROCK inhibitor for the
treatment of fibrostenotic Crohn's disease.
· Investment in our Redx discovery engine continued and
post-period we nominated our Discoidin Domain Receptor 1 (DDR1) inhibitor as
our next development candidate, RXC009.
Post-period, in October 2023, we announced a £14.1 million (gross), £13.6
million (net) financing which was supported by existing institutional
shareholders including Redmile, Sofinnova, Polar and Invus. This financing
will support key milestones including the Phase 2a IPF data readout for
zelasudil, as well as enabling RXC008 to commence a Phase 1 healthy volunteer
study in early 2024. Although disappointed that our proposed business
combination with Jounce Therapeutics did not complete, we believe we are
well-positioned to deliver long-term success and shareholder value creation.
During the year, the composition of our Board was changed following the
resignations of Dr. Thomas Burt and Sarah Gordon-Wild, and I would like to
personally thank both Thomas and Sarah for their invaluable support to the
Board and the Company throughout their tenures. I would also like to welcome
Dr. Joseph Anderson who has joined the Board as a representative of Sofinnova,
in place of Thomas Burt.
Our experienced management team led by our CEO, Lisa Anson, has continued to
implement a successful corporate strategy aimed at getting our novel,
differentiated drug candidates into the clinic. We have a strong internal team
who can support these efforts and who continue to guide the Company towards
its ambition and I would like to take this opportunity to thank all Redx
employees throughout the year for their resilience, high-standards and
teamwork - it is the ultimate foundation of our success.
Likewise, I would like to extend my gratitude to our shareholders,
particularly those who supported the Company through our recent financing
which is fundamental to our ability to progress our pipeline and deliver the
next key milestones.
I am proud of the significant progress we have made in the last 12 months and
remain enthused about the multiple value inflection points that we have in the
near term, and I look forward to continuing to report our achievements
throughout 2024.
Dr Jane Griffiths
Chair, Board of Directors
Chief Executive's Report
Over the last 12 months we have demonstrated strong momentum in progressing
our clinical programmes and bringing forward novel drug candidates in line
with our core strategy of developing potential best-in-class or first-in-class
therapeutics in areas of high unmet medical need.
During the year, we have strategically prioritised the progression of our
differentiated Rho Associated Coiled-Coil Containing Protein Kinase (ROCK)
portfolio through the next stages of clinical development, where we see
significant opportunities as potential best- or first-in-class treatment
options in fibrotic diseases. To optimally deploy our resources and management
focus, we undertook a significant pipeline prioritisation review and have
decided to seek partners for a number of assets for further development,
including our clinical-stage Porcupine inhibitor, RXC004.
We are now a well-established, clinical-stage biotechnology company with two
assets, zelasudil (RXC007) and RXC004, in Phase 2 development, with data from
both programmes expected during the first half of 2024. We have also
progressed a third programme, RXC008, through Investigational New Drug
(IND)-enabling studies and expect to commence a Phase 1 study in healthy
volunteers early in 2024.
We continue to demonstrate the strength of our medicinal chemistry expertise
as we execute on our ambition to create world leading medicines that transform
patients' lives, and we have advanced a number of novel, differentiated drug
candidates in our development pipeline. Post-period, in October 2023, we
nominated our next development candidate, RXC009, a potent and selective
Discoidin Domain Receptor 1 (DDR1) inhibitor; and announced our Kirsten rat
sarcoma virus (KRAS) inhibitor programme, which is currently in lead
optimisation.
In October 2023, we were also delighted to announce a £14.1 million (gross),
£13.6 million (net) financing supported by existing institutional investors.
These funds will allow us to progress our assets through the next stages of
clinical development and important value inflection milestones, as outlined
below.
Strategic Focus on Advancing Our Differentiated ROCK Inhibitor Portfolio with
Lead Asset Zelasudil (RXC007)
Our lead asset is zelasudil (RXC007), a highly selective ROCK2 inhibitor being
developed as a potential best-in-class fibrosis treatment for conditions such
as Idiopathic Pulmonary Fibrosis (IPF). ROCK2 is a biologically- and
clinically-validated target that has been shown to sit at a nodal point in
cell signalling pathways thought to be central to fibrosis. We have a robust
preclinical data package for zelasudil which shows anti-fibrotic effects
across multiple industry-standard in-vivo preclinical models demonstrating its
potential for efficacy in progressive fibrotic interstitial lung diseases
(ILD), in highly fibrotic tumours such as pancreatic cancer, and in widespread
multi-organ fibrosis, such as chronic Graft versus Host Disease (cGvHD) and
systemic sclerosis.
Phase 2a Study in IPF Initiated with Two Cohorts Recruited
Our initial development focus for zelasudil is in IPF, given the evidence of
the upregulation of ROCK2, along with our strong package of supportive
preclinical data.
IPF is a severe and life-threatening disease for which there is currently no
cure and where the current standard of care treatments, pirfenidone and
nintedanib, have significant side effects limiting their use in over 50% of
IPF patients. Therefore, there is an extremely high unmet need for new
therapeutic treatment options for these chronically ill patients.
In October 2022, we announced that the first patient had been enrolled in the
Phase 2a IPF clinical study for zelasudil. This study is a randomised,
double-blind, placebo-controlled, dose ranging study which will provide early
efficacy readouts and evaluate the safety and tolerability of zelasudil in IPF
patients with or without standard IPF therapy. Cohorts of 16 patients will be
treated at each selected dose level with a 3:1 ratio between zelasudil and
placebo. Within each cohort, a minimum of four patients will be on nintedinib
and four on pirfenidone as standard treatment. Each cohort has a 12-week
dosing duration with an option to continue for a further 12-weeks in an open
label extension.
Recruitment into the first cohort of patients, dosing at 20mg BID, was
successfully completed with no safety or tolerability findings that precluded
dose escalation. Post-period, recruitment into a second cohort of patients at
50 mg BID was completed, with dosing ongoing. A decision will be made in Q1
2024 on the dose level for a potential third cohort of patients following the
next data review. The study, which is being conducted in the UK and seven
other European countries, is expected to report topline data during H1 2024,
once all enrolled patients have completed the initial dosing period.
In August 2023, the US Food and Drug Administration (FDA) granted zelasudil
Orphan Drug Designation for the treatment of IPF which will, in time, allow us
to benefit from various development and commercial incentives, including
market exclusivity. At this time, under our open IND in the US, dosing for
longer than 28-days is under an FDA partial clinical hold based on skeletal
muscle findings in dog toxicology studies. We held a Type A meeting with the
FDA to confirm that the design of our ongoing 13-week investigative dog study
will meet their requirements with the main objective of the study being to
show that the skeletal muscle findings seen in the dogs are monitorable and
reversible. To date, no similar findings have been observed in humans or other
species at any dose. It is expected that a complete response will be submitted
to the FDA during Q2 2024 which could allow the partial hold to be lifted, and
potentially allow longer-term dosing to take place in the US in future
clinical studies.
Following completion of the main 12-week Phase 2a study, we intend to initiate
a 28-day translational science sub-study to evaluate key translational science
endpoints such as treatment-related changes in fibrosis-related proteins from
broncho-alveolar lavage (BAL) fluid and gene expression changes in bronchial
epithelial cells. Up to 16 patients will be recruited into this translational
science sub-study, which will be undertaken at specialist centres in the UK
and the US.
Robust Preclinical Data Package Supporting Broader Development in Fibrotic
Indications
Due to the pleiotropic mechanism of action of zelasudil, resulting from the
nodal positioning of ROCK2 within cell signalling pathways, we have
established a robust preclinical data package supporting multiple life cycle
management opportunities in a range of fibrotic indications.
Initially, we see a major opportunity in cancer-associated fibrosis, or
fibrotic oncology, alongside anti-tumour agents including chemotherapy. We
have undertaken several preclinical studies and, in May 2023, presented
preclinical data from our pancreatic cancer models, undertaken with our
collaboration partner, the Garvan Institute of Medical Research (Garvan), at
the Resistant Tumour Microenvironment, Keystone Symposia.
Pancreatic cancer is known to be a highly fibrotic tumour type which is
hard-to-treat, with limited treatment options. The preclinical data presented
at the Keystone Symposia were from a pancreatic ductal adenocarcinoma (PDAC)
model which showed that zelasudil in combination with
gemcitabine/Abraxane®(1) in metastatic and high-extra cellular matrix (ECM)
patient-derived PDAC models, increased survival compared to single agent
standard of care alone. Furthermore, data from a chemotherapy-resistant
patient derived model in which collagen content is increased upon development
of resistance showed that a close analogue of zelasudil, REDX10616, in
combination with FOLFIRINOX re-sensitised the tumour to treatment and led to a
striking increase in survival.
REDX10616 has the potential to be developed separately for oncology, however,
our current focus is on our clinical-stage asset, zelasudil. These data, taken
together and reviewed with other preclinical data generated, show the
potential of zelasudil as a treatment for cancer-associated fibrosis in
combination with standard of care. Our plan is to investigate this potential
further in a Phase 1b/2 study, which we hope to initiate in 2024.
Beyond cancer-associated fibrosis, we have a compelling preclinical data
package in chronic graft versus host disease (cGvHD), where there is a
precedent of ROCK2 inhibition treatment following the FDA approval of
belumosudil in August 2021. Preclinical data were presented at the
International Colloquium on Lung and Airway Fibrosis (ICLAF) in October 2022
and at the Antifibrotic Drug Discovery (AFDD) Meeting in November 2022, which
showed the anti-fibrotic effects of zelasudil in the murine sclerodermatous
GvHD model which recapitulates aspects of human scleroderma with prominent
skin thickening, upregulation of cutaneous collagen and lung fibrosis.
Furthermore, the underlying disease mechanisms that drive pathology in the
model show similarities to those observed in auto-immune driven fibrotic
diseases such as systemic sclerosis and interstitial lung disease (ILD).
Zelasudil, dosed orally and therapeutically, was able to significantly reduce
skin thickness, fibrosis and collagen deposition in the skin and lungs as
measured by hydroxyproline. These data lead us to believe that zelasudil has
potential for efficacy in progressive fibrotic interstitial lung diseases,
cGvHD and systemic sclerosis; and we will continue to look at opportunities in
this area as part of our clinical development plan for zelasudil.
Progressing RXC008 Towards the Clinic as a First-In-Class Opportunity
Our second ROCK inhibitor programme is RXC008, a GI-targeted ROCK inhibitor
with first-in-class potential in fibrostenotic Crohn's disease. The current
management of fibrotic strictures of the gastrointestinal tract is primarily
surgical as no drugs are specifically approved for the underlying fibrosis,
which can progress despite intervention with anti-inflammatory therapies.
RXC008 is expected to enter clinical development in early 2024, commencing a
Phase 1 study in healthy volunteers.
RXC008 is a potent, oral, small molecule non-systemic ROCK 1/2 inhibitor.
RXC008 avoids the significant cardiovascular side effects of pan-ROCK
inhibitors, including tachycardia and hypotension, by being restricted to the
GI-tract via high efflux and low permeability. This results in virtually no
systemic breakthrough, with the molecule being rapidly metabolised by
paraoxonase enzymes in the plasma should any breakthrough occur under
particular circumstances.
In November 2022, we presented preclinical data from adoptive transfer and
chronic dextran sulphate sodium (DSS) studies of RXC008 at the Inflammatory
Bowel Disease (IBD) Nordic Conference. The most compelling preclinical data
were seen in a therapeutic 12-week DSS model with a closely related
GI-targeted ROCK inhibitor, REDX08087, which was able to fully reverse
fibrosis back to baseline levels when the compound was administered orally
once a day from weeks 6 to 12 once fibrosis was established. We were able to
show complete reversal of preformed GI-fibrosis as measured by trichome
collagen staining, with this level of anti-fibrotic effect the strongest seen
in any of Redx's fibrosis models and modes of action to date.
Further to this, we have undertaken work in collaboration with Ghent
University to incorporate the use of non-invasive magnetic resonance imaging
(MRI) texture analysis and histology to assess reduction in tissue injury and
fibrosis, which we hope to use translationally in our clinical studies moving
forward. If successful, this could lead to a reduction in the number of
invasive surgical procedures Crohn's patients require.
Phase 1 Healthy Volunteers Study Expected to Commence H1 2024
Significant progress was made during the year with the RXC008 IND-enabling
programme.
In August 2023, we held a scientific advisory meeting with the UK Medicines
and Healthcare products Regulatory Agency (MHRA) to review the preclinical
data package and we can confirm that post-period, the CTA for RXC008 was
submitted and we expect to commence a Phase 1 healthy volunteers study in
early 2024.
We held a series of meetings with key opinion leaders and created a specific
Scientific Advisory Board to review the Phase 1 study protocol, as well as to
discuss the overall clinical development plans beyond Phase 1. We have been
pleased by the interest from clinicians in this area, and the support from
clinical bodies such as the Science, Translational & Clinical Andrology
Research (STAR) consortium.
The Phase 1 study will be split into two parts. The first part will consist of
a single and multi-ascending dose in healthy volunteers dosed over 14 days
with safety as the primary endpoint. The study will also evaluate
pharmacokinetics (PK), including data on faeces, plasma and tissue in the
highest multi-ascending dose cohort. Following completion of this first part
of the study, we aim to initiate a second part in patients with fibrostenotic
Crohn's disease. This will consist of a one-month dosing period to show
safety, PK - confirming minimal systemic exposure in patients - target
engagement and biomarkers in paired biopsies from the terminal ileum and
colon, and changes in circulating biomarkers.
Fibrostenotic Crohn's disease affects 1.7 million patients globally(2), with
50% developing fibrotic strictures within 10 years of treatment(3). There are
currently no approved therapies for the underlying fibrosis therefore, with
our preclinical data package and key opinion leader input to date, we are
excited about the potential of RXC008 in this hard-to-treat indication.
RXC004 - Strategic Decision to Partner the Programme
As outlined above, during the period, the Company undertook a detailed
prioritisation review of all programmes and expenses to ensure the delivery of
important value inflection points whilst efficiently allocating resources to
allow programmes to continue. As part of this review, we nominated RXC004 to
be partnered for any further development.
RXC004 - Phase 2 Recruitment Closed with Data Expected H1 2024
RXC004 is a clinical-stage, highly potent and selective, orally active,
once-daily Porcupine inhibitor being developed as a targeted therapy for
Wnt-ligand dependent cancer. Aberrations in the Wnt pathway directly
contribute to tumour growth and play an important role in immune resistance,
in particular to treatment with immuno-oncology agents such as PD-1 checkpoint
inhibitors. We designed the RXC004 Phase 2 clinical programme to evaluate
RXC004 as monotherapy and in combination with anti-PD-1 therapy to provide an
initial assessment of efficacy and safety.
The first study, PORCUPINE, has been evaluating RXC004 as monotherapy and in
combination with anti-PD-1 therapy OPDIVO™(4) (nivolumab) in patients with
relapsed microsatellite stable metastatic colorectal cancer (MSS mCRC) with
upstream Wnt pathway activation by RNF43 mutations or RSPO2/3 fusions. The
second study, PORCUPINE2, was designed to evaluate RXC004 as a monotherapy in
patients with RNF43 mutated advanced pancreatic cancer, and as a monotherapy
and in combination with anti-PD-1 KEYTRUDA®(5) (pembrolizumab) in unselected
patients with biliary tract cancer (BTC). In December 2022, we announced a
clinical trial collaboration and supply agreement with MSD (Merck & Co.,
Inc., Rahway, NJ, USA) for the supply of pembrolizumab for this study.
In March 2023, we announced initial topline data from the BTC monotherapy
module of the PORCUPINE2 study. The data was from 16 previously treated
patients with advanced BTC, with a primary endpoint of progression free
survival at six months. The clinical activity and safety profile seen in these
patients was consistent with that seen in the Phase 1 trial, as presented at
the European Society for Medical Oncology (ESMO) Congress in 2021.
Some patients in this cohort received durable clinical benefit from treatment
with RXC004, and retrospective analysis of all efficacy and biomarker data in
this BTC monotherapy cohort will increase the understanding of the single
agent activity of RXC004 and will be used to aid interpretation of the
combination module efficacy. Whilst results were consistent with our
hypothesis that RXC004 has potential as an active component of combination
therapy, they were not sufficient to support the further development of RXC004
as a single agent for relapsed BTC.
In line with the industry-wide recruitment challenges seen for rare subsets of
genetically selected patients, we took the decision in May 2023 to close
recruitment into the genetically selected monotherapy modules to prioritise
resources to the combination modules; and in October 2023, we confirmed that
we had closed recruitment into the combination modules. We expect to report
data from these studies in H1 2024, once data cleaning activities are complete
and the translational results are available.
Following this, as announced at our Interim results in May 2023, we will seek
a partnership for this asset to continue its development post-Phase 2, which
could include combining more broadly with other agents.
Discovery Engine Continues to Deliver Novel Drug Candidates
Our discovery engine continues to produce novel drug candidates against
clinically- or biologically-validated targets to bring new treatment options
in areas of high unmet medical need, as we aim to produce best-in-class or
first-in-class molecules. Our medicinal chemistry and translational science
expertise is validated by our track record of producing five molecules which
have entered the clinical stage of development. In January 2023, we were
delighted that the first of these, Jaypirca™(6) (pirtobrutinib, RXC005,
LOXO-305), that was discovered and developed by Redx before being divested to
Loxo Oncology, now part of Eli Lilly, in 2017, was approved by the US FDA for
the treatment of mantle cell lymphoma. Pirtobrutinib, a non-convalent
(reversible) Bruton Tyrosine Kinase (BTK) inhibitor, is the first BTK
inhibitor of this kind to be approved by the FDA and in April 2023, the drug
also received a positive opinion from the European Committee for Medicinal
Products for Human Use (CHMP).
During the year significant progress was made in two key areas of focus for
our discovery teams: Discoidin Domain Receptor Inhibitors and KRAS
inhibitors.
Discoidin Domain Receptor (DDR) Inhibitor Programme Delivers Development
Candidate, RXC009
Post-period, in October 2023, we nominated our DDR1 selective inhibitor as our
next development candidate, RXC009, for the treatment of chronic kidney
disease (CKD).
RXC009 is a highly potent and selective DDR1 inhibitor. DDRs are receptor
tyrosine kinases containing a discoidin homology domain in their extracellular
region and which act as non-integrin collagen receptors. There are two DDR
receptors, DDR1 and DDR2, and as DDR expression is increased in many fibrotic
diseases including kidney fibrosis, they have recently gained traction as new
druggable targets. We have developed potent and selective small molecule DDR
inhibitors with drug-like characteristics and have several ongoing programmes
in this area.
In November 2022, we presented data from our lead optimisation molecule
REDX12271 at the American Society of Nephrology Kidney Week (ASN), which
showed that selective inhibition of DDR1 with REDX12271 reduces inflammation
and fibrosis in prophylactic Murine Unilateral Ureteral Obstruction (UUO)
models.
We returned to ASN in November 2023 to present data from our newly-nominated
development candidate, RXC009, in a therapeutic murine UUO model. These data
confirmed that RXC009 treatment resulted in a significant reduction in
histological markers of both inflammation and fibrosis in these models of
kidney fibrosis.
Target engagement was also demonstrated with a reduction in phospho-DDR1
(p-DDR1), and RXC009 has a favourable absorption, distribution, metabolism and
excretion (ADME) and safety profile. As patients suffering with CKD are often
on multiple supportive medications, the drug-drug interaction (DDI) profile of
RXC009 is extremely important and we were therefore pleased that a DDI
assessment confirmed its suitability for potential use in combination with
other treatment options.
To date, no selective inhibitors of DDR1 have entered the clinic, so we
believe that RXC009 has the potential to be a first-in-class treatment option
for kidney fibrosis associated with CKDs such as nephropathy, focal sclerosing
glomerulonephritis, diabetic nephropathy and Alport Syndrome, an inherited
rare disease for which there are currently no specific approved treatment
options.
KRAS (Kirsten rat sarcoma virus) Inhibitor Programme in Lead Optimisation
Post-period, in October 2023, we also announced that our latest research
programme is a KRAS inhibitor targeting both G12D selective and multi-KRAS
profiles. Rat sarcoma virus (RAS) is the most frequently mutated oncogene
across different cancer types, with KRAS mutations accounting for
approximately 85% of these mutated oncogenes. Therefore, KRAS inhibitors
targeting multiple commonly-occurring mutations may offer a treatment option
for large segments of colorectal, pancreatic and lung cancer patients who
currently have limited treatment options. Developing orally-bioavailable
agents with dosing that allows for long term target coverage, and thus reduced
risk of resistance, is a key opportunity for the next wave of KRAS-targeting
agents that act beyond the G12C mutation.
We have filed multiple patent applications claiming distinct chemical series
with KRAS activity, having generated encouraging early data from in-vitro
models. We continue to further expand the preclinical data package which we
hope to present at a conference during 2024 as we work towards nominating a
development candidate.
Partnered Programmes Continue to Progress
Our ability to secure meaningful partnerships is demonstrated by our strong
track record which includes partnerships with AstraZeneca and Jazz
Pharmaceuticals (Jazz), as well as an ongoing research collaboration with
Jazz. We have near-term potential milestones of $15 million from these ongoing
partnerships.
All of these programmes continue to progress, with Jazz confirming in November
2022 that the first patient had been dosed in the Phase 1 clinical trial of
JZP815, the pan-RAF inhibitor programme developed by Redx and acquired by Jazz
in 2019. Additionally, our research collaboration with Jazz for discovery and
preclinical development of a targeted cancer therapy on the Ras/RAF/MAP kinase
pathway continues towards a development candidate nomination.
Likewise, our partnered programme with AstraZeneca, RXC006 / AZD5055, a
Porcupine inhibitor for the treatment of fibrotic disease continues to
progress through a Phase 1 clinical trial.
Under these agreements, we still have the opportunity to benefit from further
non-dilutive potential milestone payments in the longer-term future of up to
$755 million.
Financial Overview
Our opening cash position allowed us to continue to fund our scientific
progress towards important development milestones, as we also continued to
explore ways to strengthen our balance sheet during the year.
The Company ended the period with a cash balance of £18.1 million (2022:
£53.9 million), which was further strengthened by the post-year end £14.1m
(gross), £13.6 million (net) financing which, taken with our existing
resources, provides a cash runway into Q3 2024. The financing was undertaken
at the market price of 26p with existing institutional investors and will
support our assets through the next near-term value inflection points.
We were pleased to receive notice during the year from our two largest
shareholders, Redmile and Sofinnova, of their extension of the term of the
convertible loan notes by a year, until August 2024. As a result, the
extension of these liabilities provided a £1.6 million accounting gain.
Whilst no revenue milestones have been reached in the year, our partnerships
with AstraZeneca and Jazz continue to progress well with both advancing assets
into Phase 1 development.
With two programmes now in Phase 2 development, investment into our clinical
programmes increased and, as evidenced by the recent nomination of our next
development candidate, we continued to invest in our R&D capabilities with
spending of £34.0m (2022: £34.4m). With the absence of any milestone revenue
triggering events during this year, and its impact on revenue, the Group
recorded a post tax loss of £33.2 million.
In early 2023, we pursued a recommended all-share business combination with
Jounce Therapeutics ("Jounce"), a US-based clinical-stage immunotherapy
company. The proposed transaction was unable to complete following the
acceptance of an unsolicited third-party cash offer for Jounce by their Board.
The expenses relating to the transaction have been separately disclosed in the
Consolidated Statement of Income and Expenditure.
Despite inflationary pressures during the year, we have continued to work hard
to limit the effects on the Company by pursuing stringent cash management and
resource allocation strategies, including undertaking our pipeline
prioritisation review. During the year we have managed our headcount
carefully, and as we move into 2024, have an organisation of approximately 65
employees, appropriate to execute our strategy.
We believe in the strength of our pipeline and that it provides an attractive
opportunity to investors, illustrated by the recent financing. However, we
remain cognisant of the wider macroeconomic climate and the uncertainty that
it brings, and we continue to evaluate a number of options to secure
longer-term funding for the Company, including equity financing, partnering
portfolio assets and potential for additional milestones on existing
partnerships. The associated uncertainty, along with our judgement in relation
to the maturity of convertible loan notes, is discussed in more detail in the
basis of preparation of the Consolidated Financial Statements.
Governance and Management
As we continue to grow into a business with multiple in-house, clinical-stage
assets the composition of our management team and Board have evolved to
support this development. To reflect our strategic focus on the development
of our ROCK portfolio, we have augmented our management team with the creation
of a programme manager role for zelasudil, which is now held by our Head of
Non-clinical Operations, Helen McKeever. Helen has over 25 years' experience
in nonclinical and early drug development and will lead the cross functional
project team to define and drive the scientific and clinical progress of this
programme and establish value creation across the lifecycle of the compound.
Additionally, Dr Elaine Kilgour was appointed as Head of Translational Science
in January 2023 to strengthen our expertise in this area. Elaine has over 25
years' experience in academia and industry primarily specialising in metabolic
diseases and oncology and has quickly become a key member of our team, shaping
our scientific agenda.
Dr Jane Robertson, our Chief Medical Officer (CMO), will be stepping down in
the New Year to return to a clinical setting. Jane will remain an adviser to
the Company and from 1 January 2024, Dr. Helen Timmis, currently VP, Senior
Medical Director, will become Interim CMO.
As a registered physician with over 16 years' experience in industry, Helen
has been an integral part of the clinical development team for zelasudil and
RXC008 since joining Redx and will continue to drive the clinical development
of these programmes.
There were also changes at the Board level during the period. Dr. Joseph
Anderson was appointed as a non-executive director representing Sofinnova
Crossover I SLP in the place of Dr. Thomas Burt who stepped down after three
years on the Redx Board. Additionally, we were saddened that Sarah Gordon-Wild
resigned as a non-executive director for personal reasons at the end of the
financial year.
We continue to believe that we have a strong Board with the necessary
experience and composition to drive the future strategy and success of the
Company and therefore we have elected to not replace this non-executive
position at this time.
Following these changes, the Audit, Risk and Disclosure Committee is comprised
of Peter Presland (Chair) and Rob Scott; the Remuneration Committee of
Bernhard Kirschbaum (Chair) and Peter Presland; and the Science Committee of
Bernhard Kirschbaum (Chair), Rob Scott and Lisa Anson.
Outlook
We have refined our focus and aligned our strategy to progress what we believe
are differentiated ROCK inhibitor assets. With Phase 2a data expected from
zelasudil in the first half of 2024, and a CTA submission for RXC008 completed
to allow for the commencement of a Phase 1 study early in 2024, we are
well-positioned to continue to develop these assets through their clinical
development plans.
We have continued to leverage our scientific capabilities and medicinal
chemistry expertise through the discovery of new, novel drug candidates. We
intend to develop these assets further, including through partnership where
appropriate, to ensure that they can reach their fullest potential and bring
new treatment options in areas of unmet medical needs.
I would like to take this opportunity thank our Board who have provided
support and guidance to the Company throughout its evolution and strategy
refinement. The biggest asset of any biotechnology company is its people, and
we are fortunate to have an exceptionally talented team led by senior
well-respected medicinal chemists and translational scientists. I would like
to thank all of our employees who have worked tirelessly throughout the last
year to make our significant achievements possible, and who are fundamental to
our future success.
Additionally, I would like to thank our shareholders who continue to support
the development of our novel drug candidates. Although there remain ongoing
challenges in the equity markets and broader economic landscape, we will
continue to evaluate all available options to secure the financial resources
required to allow us to continue to pursue our ambition of creating world
leading medicines to transform patients' lives.
I believe our refined strategy and focus will help us maximise the potential
of our pipeline, and with the progress made during the year, and the
significant near-term value inflection points expected across our entire
pipeline of assets, I am excited by the prospects of the Company in 2024 and
beyond.
Lisa Anson
Chief Executive Officer
Operational Review
The Directors present this Operational Review for the year ended 30 September
2023 and cover issues not covered elsewhere in their Strategic Report, namely:
Key Performance Indicators, Financial Review and the Principal Risks and
Uncertainties.
The principal activities of the business continue to be the discovery and
development of proprietary, small molecule drugs to address areas of high,
unmet medical need.
Management Team
Lisa Anson (Chief Executive Officer), Dr Richard Armer (Chief Scientific
Officer), Peter Collum (Chief Financial Officer), Dr James Mead (Chief
Operating Officer), Dr Jane Robertson (Chief Medical Officer) and Claire Solk
(General Counsel) have continued in their positions throughout the year.
Caroline Phillips, (Senior Vice President, Biology) and Cliff Jones (Senior
Vice President, Chemistry, DMPK and Intellectual property) joined the
Executive management team in June 2023.
Key Performance Indicators (KPIs)
The Group's KPIs include a range of financial and non-financial measures. The
Board considers pipeline progress, and in particular progress towards the
clinic, to be the main KPI, and updates about the progress of our research
programmes are included in the Chief Executive's Report. Below are the
Financial KPIs considered pertinent to the business.
2023 2022 2021 2020
£m £m £m £m
Cash at year end 18.1 53.9 29.6 27.5
The Group continues to focus on sufficient funding to deliver its development
plan. The year end cash, together with the £14.1 million (gross), (£13.6
million (net) raised in November 2023 is sufficient to fund the plan into the
third quarter of 2024.
2023 2022 2021 2020
£m £m £m £m
Total operating expenditure 34.0 34.4 27.1 14.1
(excluding reverse merger expenses, share-based payment costs & exchange
gains)
Expenditure has risen in line with expectations as programmes progress
positively through clinical and preclinical stages, which are cash intensive.
Management continues to maintain rigorous cost control, whilst seeking to
prioritise resources for scientific programmes.
2023 2022 2021 2020
£m £m £m £m
Net (decrease) / increase in cash and cash equivalents (35.8) 24.3 2.0 23.8
The group continued to invest in its planned R&D activity at budgeted
levels. A further £14.1 million (gross) £13.6 million (net) was raised in
November 2023, to further fund activity.
Financial Review
Financial position
At 30 September 2023, the Group had cash resources of £18.1 million (2022:
£53.9 million). Post period, in November 2023, the Group raised £14.1
million (gross), £13.6 million (net) via a placing of Ordinary shares,
supported by existing specialist investors, further strengthening the Group
position.
Whilst there were no milestones from existing partnerships triggered during
the period, £4.2 million in revenue was recognised from progress with the
ongoing collaboration with Jazz Pharmaceuticals.
This funding is sufficient to allow the Group to fund its business plan into
the third quarter of calendar year 2024, based on currently budgeted levels of
expenditure.
This cash runway and the need for further funding beyond this leads to a
material uncertainty regarding going concern, which is discussed in detail in
note 2.
Revenue
During the year, the Group continued to derive revenue from the research
collaboration with, and provision of research and preclinical development
services to, Jazz Pharmaceuticals. There was no milestone income in the year,
compared to £10.7 million in 2022. In accordance with IFRS 15 "Revenue from
Contracts with Customers", the funds received in advance for the collaboration
agreement with Jazz Pharmaceuticals are recognised as revenue as the
obligations under the contract are performed (being predominantly the
underlying development services). The stage of completeness of the Jazz
collaboration is assessed at each reporting date, and revenue recognised based
on the percentage of total expected costs incurred to date. £4.0 million was
recognised in the year, compared to £6.9 million in 2022 as revenue from a
discontinued target was recognised. The expected timing of further recognition
is detailed in note 6. Revenue from other research agreements is invoiced and
recognised as the work is undertaken.
Operating Cost management
Research and Development costs have increased from £28.6 million to £29.1
million in order to progress clinical assets. Operating expenses continue to
be tightly controlled in the context of an expanding research organisation and
programmes progressing through more cost intensive clinical stages.
Finance costs
Finance costs remain considerable as a consequence of the charging of a full
year's "effective interest" (calculated in valuing the lease liability and
convertible loan note liability under IFRS), on both the convertible loan
notes and the lease of our premises at Alderley Park in the current financial
year.
There was no actual cash interest paid in 2023 (2022: £nil). In addition,
Finance Income was significantly higher in 2023 compared to previous years
given the higher interest earned on cash bank deposits.
Cash flows
Overall negative net cash flow for the year was £35.8 million (2022: Positive
£24.3 million). See KPI's for details.
Taxation
The Group has prepared these financial statements on the basis that it will
continue to be claiming Research and Development expenditure credits rather
than R&D tax credits, as a result of the significant shareholding by Funds
managed by Redmile Group LLC. This typically leads to lower refundable
amounts.
Loss
The Group made a loss of £33.2 million in the year (2022: £18.0), as it
continued to progress its scientific pipeline. Operating costs were broadly
aligned with 2022, with the additional loss a result of lower revenue in 2023
as described above.
Consolidated Statement of Comprehensive Loss
For the year ended 30 September 2023
Year ended Year ended
Note 30 September 30 September
2023 2022
£'000 £'000
Continuing operations
Revenue 3 4,202 18,690
Research and Development expenses (29,117) (28,563)
General and Administrative expenses (8,069) (10,229)
Reverse merger expenses 4 (2,393) -
Exchange (losses) / gains on translation (447) 2,297
Other operating income 2,004 1,539
___________ ___________
Loss from operations (33,820) (16,266)
Finance income 1,224 187
Remeasurement gain on loan notes 7 1,609 -
Finance costs (1,801) (1,725)
___________ __________
Loss before taxation (32,788) (17,804)
Income tax (368) (201)
___________ __________
Loss attributable to owners of Redx Pharma Plc
(33,156) (18,005)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Exchange difference from translation of foreign operations
(4) 31
Total comprehensive loss for the year attributable to owners of Redx Pharma
Plc
(33,160) (17,974)
======== ========
Loss per share
From continuing operations
Basic & diluted (pence) 5 (9.9) (6.1)
Consolidated Statement of Financial Position
At 30 September 2023 Company No. 07368089
Note 2023 2022
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 1,940 2,699
Intangible assets 394 400
___________ __________
Total non-current assets 2,334 3,099
___________ __________
Current assets
Trade and other receivables 5,210 5,498
Current tax - 26
Cash and cash equivalents 18,092 53,854
___________ __________
Total current assets 23,302 59,378
___________ __________
Total assets 25,636 62,477
___________ __________
Liabilities
Current liabilities
Trade and other payables 3,756 5,958
Contract liabilities 6 844 4,893
Borrowings 7 15,731 15,731
Lease liabilities 676 623
___________ __________
Total current liabilities 21,007 27,205
Non-current liabilities
Lease liabilities 1,274 1,951
___________ __________
Total liabilities 22,281 29,156
___________ __________
Net assets 3,355 33,321
======== =======
Equity
Share capital 8 3,349 3,349
Share premium 99,501 99,501
Share-based compensation 10,751 8,199
Capital redemption reserve 1 1
Exchange translation reserve 56 60
Convertible note reserve 3,524 3,524
Retained deficit (113,827) (81,313)
___________ __________
Equity attributable to shareholders 3,355 33,321
======== ========
Consolidated Statement of Changes in Equity
For the year ended 30 September 2023
Share Share Share based payment Capital Exchange translation Convertible Note Reserve Retained Total
capital premium £'000 Redemption Reserve £'000 Deficit Equity
Reserve £'000
£'000 £'000 £'000 £'000 £'000
At 1 October 2021 2,753 66,299 4,752 1 29 3,524 (64,226) 13,132
Loss for the year - - - - - - (18,005) (18,005)
Other comprehensive income
- - - - 31 - - 31
Total comprehensive loss for the year
- - - - 31 - (18,005) (17,974)
Transactions with owners of the Company
Issue of ordinary shares 596 33,972 - - - - - 34,568
Transaction costs on issue of ordinary shares -
- (770) - - - - (770)
Share based compensation - - 4,365 - - - - 4,365
Release of share options lapsed in the year
- - (918) - - - 918 -
Movement in year 596 33,202 3,447 - 31 - (17,087) 20,189
At 30 September 2022 3,349 99,501 8,199 1 60 3,524 (81,313) 33,321
Loss for the year - - - - - - (33,156) (33,156)
Other comprehensive income
- - - - (4) - - (4)
Total comprehensive loss for the year
- - - - (4) - (33,156) (33,160)
Transactions with owners of the Company
Share based compensation - - 3,194 - - - - 3,194
Release of share options lapsed in the year
- - (642) - - - 642 -
Movement in year - - 2,552 - (4) - (32,514) (29,966)
At 30 September 2023 3,349 99,501 10,751 1 56 3,524 (113,827) 3,355
Consolidated Statement of Cash Flows
For the year ended 30 September 2023
Year ended 30 September Year ended 30 September
2023 2022
£'000 £'000
Net cash flows from operating activities
Loss for the year (33,156) (18,005)
Adjustments for:
Income tax 368 201
Finance costs 1,801 1,725
Finance income (1,224) (187)
Depreciation and amortisation 960 886
Share based compensation 3,194 4,365
Remeasurement of loan notes (1,609) -
Profit on disposal of assets - (13)
Movements in working capital
Increase/(decrease) in trade and other receivables (1,422) 7,631
(Decrease) in trade and other payables and provisions
(6,251) (5,593)
__________ __________
Cash used in operations (37,339) (8,990)
Tax credit received 1,432 333
Interest received 1,160 187
__________ __________
Net cash used in operations (34,747) (8,470)
__________ __________
Cash flows from investing activities
Sale of property, plant and equipment - 21
Purchase of property, plant and equipment (195) (262)
__________ __________
Net cash used in investing activities (195) (241)
__________ __________
Cash flows from financing activities
Proceeds of share issues - 34,568
Share issue costs - (770)
Payment of lease liabilities (816) (816)
__________ __________
Net cash generated by financing activities (816) 32,982
__________ __________
Net increase in cash and cash equivalents (35,758) 24,271
Cash and cash equivalents at beginning of the year
53,854 29,552
Foreign exchange difference (4) 31
__________ __________
Cash and cash equivalents at end of the year 18,092 53,854
__________ __________
Consolidated Statement of Cash Flows (Cont'd)
For the year ended 30 September 2023
Reconciliation of changes in liabilities arising from financing activities
2023
£'000
IFRS 16 Lease liability
Balance b/fwd 2,574
Payment of lease liabilities (816)
Interest on lease liabilities 192
__________
Balance c/fwd (disclosed as current and non-current lease liabilities) 1,950
__________
Convertible loan notes
Balance b/fwd 15,731
Remeasurement on change in estimated cash flows (1,609)
Interest 1,609
___________
Balance c/fwd (disclosed as current borrowings) 15,731
___________
Notes to the financial information
1. Basis of preparation
The Group's financial information has been prepared in accordance with the
historical cost convention and in accordance with UK adopted International
Accounting Standards and on a basis consistent with that adopted in the
previous year.
Whilst the financial information included in this Preliminary Results
Announcement has been prepared in accordance with the recognition and
measurement criteria of IFRS, this announcement does not itself contain
sufficient information to comply with IFRS.
The Preliminary Results Announcement does not constitute the Company's
statutory accounts for the years ended 30 September 2023 and 30 September
2022, within the meaning of Section 435 of the Companies Act 2006 but is
derived from those statutory accounts.
The Group's statutory accounts for the year ended 30 September 2022 have been
filed with the Registrar of Companies, and those for 2023 will be delivered
following the Company's Annual General Meeting. Auditors have reported on the
statutory accounts for 2023 and 2022. The audit report for 2023 was (i)
unqualified, (ii) highlighted material uncertainties in relation to going
concern to which the auditor drew attention by way of an emphasis of matter
paragraph, without modifying their report and (iii) did not contain statements
under Sections 498 (2) or 498 (3) of the Companies Act 2006 in relation to the
financial statements. The Auditors report for 2022 was (i) unqualified, (ii)
highlighted material uncertainties in relation to going concern to which the
auditor drew attention by way of an emphasis of matter paragraph, without
modifying their report and (iii) did not contain statements under Sections 498
(2) or 498 (3) of the Companies Act 2006 in relation to the financial
statements.
The Company is a public limited company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange.
2. Going concern
The Board have adopted the going concern basis in preparing these accounts
after assessing the Group's cash flow forecasts and principal risks.
At 30 September, 2023 the Group held £18.1 million of cash and cash
equivalents. The Group has a history of recurring losses from operations,
including a net loss of £33.2 million for the year ended 30 September, 2023
and an accumulated deficit of £113.8 million at that date. In addition,
operational cash outflows continue to be driven by the ongoing focus on the
research, development and clinical activities to advance the programmes within
the Group's pipeline. The Group recorded a net decrease in cash and cash
equivalents of £35.8 million for the year ended 30 September, 2023. Post
year-end on November 7, 2023 the Group closed the sale of 54,074,458 Ordinary
Shares, resulting in gross proceeds of £14.1 million (£13.6 million net of
transaction costs).
As part of its approval of the Group's budget for the year ending 30 September
2024, the Board concluded that the Group holds sufficient cash and cash
equivalents to provide a cash runway into September 2024 at currently budgeted
levels and timings of expenditure and also on the assumption that the
Group's convertible loans will be converted into equity of the Group, or that
there will be an extension of the term of those convertible loans before or in
August 2024 (see further discussion below).
In undertaking the going concern review, the Board has reviewed the Group's
cash flow forecasts to 31 December, 2024 (the going concern period).
Accounting standards require that the review period covers at least 12 months
from the date of approval of the financial statements, although they do not
specify how far beyond 12 months a board should consider. Further funding is
required under the Board's long-term plan to continue to develop its product
candidates and conduct clinical trials, and the Group plans to raise
significant further finance within the going concern period and is exploring a
number of different options to raise the required funding. Given these plans
and requirements, a review period of 12 months is considered appropriate.
The Board has identified and assessed downside risks and mitigating actions in
its review of the Group's cash flow forecasts. The potential requirement to
repay the convertible loan notes and the ability of the Group to raise further
capital are both circumstances outside the control of the directors.
Accordingly, the downside risks include severe but plausible scenarios where
external fund raising is not successful, where the Group underperforms against
the business plan, and where the convertible loan notes are recalled rather
than converted or extended. Mitigating actions include the delay of operating
expenditure for research activities and restriction of certain discretionary
expenditure. In the event that the convertible loan notes are not converted or
extended, the stated mitigating actions would be insufficient such that the
Group would need to raise additional capital within the going concern period
and this is outside of the control of the directors. Based on these
conditions, the Group has concluded that the need to raise further capital and
the potential need to repay the convertible loan notes represent material
uncertainties regarding the Group's ability to continue as a going concern.
Notwithstanding the existence of the material uncertainties, the Board
believes that the adoption of the going concern basis of accounting is
appropriate for the following reasons:
· the directors consider it highly unlikely that the convertible
loan notes will be recalled by August 2024 given that the conversion price of
15.5p represents a significant discount to the open market price of Redx
Pharma Plc share capital. This discount is around 40% when compared to the
share price at which the 7 November, 2023 equity fundraising was completed, in
which both convertible loan note holders participated; as a result the
directors do not currently expect the convertible loan notes to be recalled by
August 2024.
· the directors continue to pursue a number of options to secure
longer-term funding for the Group, including equity financing, partnering
portfolio assets and potential for additional milestones on existing
partnerships, and based on current plans and discussions with third parties
the directors have an expectation that further funding will be obtained.
· the Group has a track record and reasonable near-term visibility
of meeting expectations under its collaboration agreements and receiving
milestone payments which have the potential to increase the Group's cash
runway but are not included in the Directors' assessment given they are
outside the control of management.
· the Group retains the ability to control capital and other
discretionary expenditure and lower other operational spend.
There can be no assurance that the convertible loan notes will be converted or
extended rather than recalled. If the loan notes are not converted or
extended, the Group may not have sufficient cash flows to support its current
level of activities beyond the maturity date. While the Group has successfully
accessed equity and debt financing in the past, there can be no assurance that
it will be successful in doing so now or in the future. In the event the loan
notes are recalled, or additional financing is not secured, the Group would
need to consider:
· new commercial relationships to help fund future clinical trial
costs (i.e., licensing and partnerships); and/or
· reducing and/or deferring discretionary spending on one or more
research and development programmes; and/or
· restructuring operations to change its overhead structure.
The Group's future liquidity needs, and ability to address those needs, will
largely be determined by the success of its product candidates and key
development and regulatory events and its decisions in the future. Such
decisions could have a negative impact on the Group's future business
operations and financial condition.
The accompanying financial statements do not include any adjustments that
would be required if they were not prepared on a going concern basis.
Accordingly, the financial statements have been prepared on a basis that
assumes the Group will continue as a going concern and which contemplates the
realization of assets and satisfaction of liabilities and commitments in the
ordinary course of business.
3. Revenue
2023 2022
£'000 £'000
Revenue from milestones on scientific programmes
- 10,693
Revenue from research collaboration 4,049 6,852
Revenue from research and preclinical development services
153 1,145
4,202 18,690
4. Reverse merger expenses
On 23 February 2023 the Group announced an unanimously recommended business
combination with Jounce Therapeutics, Inc. ("Jounce"). Work continued on the
project until, following an unsolicited cash offer for its shares, the board
of Directors of Jounce withdrew its recommendation for the combination on 27
March 2023 in favour of an acquisition by another party. Given the nature
and materiality of the expense, relating to professional fees, it has been
disclosed separately within the Consolidated Statement of Comprehensive Loss.
The proposed transaction formally lapsed on 3 April 2023 and no further
expense is expected.
5. Loss per share
Basic loss per share is calculated by dividing the loss for the period
attributable to ordinary equity holders by the weighted average number of
Ordinary shares outstanding during the period.
In the case of diluted amounts, the denominator also includes Ordinary shares
that would be issued if any dilutive potential Ordinary shares were issued
following exercise of share options.
The basic and diluted calculations are based on the following:
2023 2022
£'000 £'000
Loss for the period attributable to the owners of the Company (33,156) (18,005)
Number Number
Weighted average number of shares 334,911,458 294,182,774
- basic and diluted
Pence Pence
Loss per share - basic and diluted (9.9) (6.1)
The loss and the weighted average number of shares used for calculating the
diluted loss per share are identical to those for the basic loss per share.
This is because the outstanding share options would have the effect of
reducing the loss per share and would therefore not be dilutive under IAS 33
"Earnings per Share".
The Group operates a number of share option schemes which could potentially
dilute basic earnings per share in the future. In addition, the convertible
loans could result in the issuance of 110,288,887 ordinary shares that could
potentially dilute basic earnings per share on conversion.
6. Contract liabilities
2023 2022
£'000 £'000
Contract liabilities 844 4,893
844 4,893
Reconciliation
Brought forward 4,893 4,318
Contract asset received - 7,427
Transfer to revenue (4,049) (6,852)
Carried forward 844 4,893
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance
obligations that are unsatisfied at the end of the reporting period was £0.84
million as at 30 September 2023 (2022: £4.89 million) and is expected to be
recognised as revenue in future periods as follows:
2023 2022
£'000 £'000
Within 1 year 844 3,920
In the second to fifth years - 973
844 4,893
The contract liability relates to a single research collaboration contract.
7. Borrowings
2023 2022
£'000 £'000
Convertible loan notes
Current 15,731 15,731
15,731 15,731
On 4 August, 2020 Redx Pharma plc issued convertible loan notes with a value
of £22.2m. No interest is payable during the first 3 years, thereafter it is
payable at a maximum rate equal to the US prime rate at that time, at the
discretion of the noteholder. The notes are convertible into Ordinary shares
of Redx Pharma plc, at any time at the option of the holder, or repayable on
the third anniversary of the issue. The holders retain the right to extend the
repayment date in one year increments, up to a maximum of ten years. The
conversion rate is 1 Ordinary share for each £0.155 of convertible loan note
held. The convertible loan notes are secured by a fixed and floating charge
over all the assets of the Group.
Initial measurement
In accordance with IAS 32 Financial instruments, the convertible loan notes
have been assessed as compound financial instruments containing equity and
liability components. The Group has calculated the value of the liability
component using a discount rate for an equivalent bond without an equity
component, of 8.5%. The Group determined this rate by obtaining interest rate
from external financing sources and making certain adjustments to reflect the
terms of the instrument; specifically to adjust the interest rate to account
for the expected term of the convertible loan notes, its value and the
conditions attached to it. The value of the conversion feature of £4.57
million was calculated as the residual value of the loan after calculating the
fair value of the liability component and has been recognised as an equity
component within the Convertible note reserve in the Consolidated Statement of
Financial Position. Total transaction costs of £1.1 million have been
allocate between the equity and liability components. An increase in discount
rate to 9.5% would decrease the debt element by £127k and a decrease to 7.5%
would increase the debt element by £129k.
Partial conversion
On 2 December, 2020 the Group announced that RM Special Holdings 3 LLC and
Sofinnova Crossover 1 SLP would convert £3.33 million and £1.75 million
respectively of the principal amount of the convertible loan notes into
Ordinary shares. Under the terms of the convertible loan notes, the conversion
took place at 15.5p per new Ordinary share. Accordingly, 32,806,159 new
Ordinary shares were issued. As of 30 September, 2022, an aggregate of £17.1
million in principal amount was outstanding under the convertible loan notes.
This equates to 110,288,887 Ordinary shares at £0.155 per share.
Extension of Maturity date
On June 27, 2023 confirmation was received from the Purchasers of their
intention to execute their initial extension option under the terms of the
instrument, the revised maturity date being 4 August 2024. As this feature was
included in the original instrument, this has been treated as a revision to
the cash flows associated with it, rather than as a modification.
The remaining gross principal of £17.1 million has been discounted at the
effective interest rate determined on initial measurement, resulting in a
discounted liability of £15.7 million (2022: £15.7 million). The revised
recognition of the discounted liability resulted in a gain of £1.6m, which in
accordance with IFRS 9 has been recognized as income. As no actual interest
rate has been stipulated by the loan note holders, consistent with their
rights under the Agreement, effective interest will continue to be charged up
to the revised maturity date.
8. Share Capital
Note
2023 2022
Numbers Numbers
Number of shares in issue
In issue at 1 October 334,911,458 275,282,205
Issued for cash - 58,070,956
Exercise of share options - 1,558,297
In issue at 30 September 334,911,458 334,911,458
£'000 £'000
Share Capital at par, fully paid
Ordinary shares of £0.01
At 1 October 3,349 2,753
Issued for cash - 581
Exercise of share options - 15
At 30 September 3,349 3,349
All ordinary shares rank equally with regard to the Company's residual assets.
Holders of these shares are entitled to dividends as declared from time to
time and are entitled to one vote per share at general meetings of the
Company. All rights attached to the Company's shares held by the Group are
suspended until those shares are reissued.
9. Related Parties
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. Transactions between the Group and other related parties are
disclosed below:
In March 2020, as a result of the purchase of shares by RM Special Holdings 3,
LLC ("Redmile"), it became a significant shareholder (>70%) and related
party. The Group issued £14.5 million convertible loan notes to Redmile on 4
August 2020 on terms summarised in note 7. Redmile further participated in the
placing of Ordinary shares in June 2022.
Under the terms of the agreement for its subscription for shares on 20 July
2020, Sofinnova Crossover 1 SLP ("Sofinnova") appointed a director to the
Board of Redx Pharma plc. The Board believes that this satisfies the criteria
for Sofinnova to be considered a related party. On 4 August 2020 the Group
issued £7.6 million convertible loan notes to Sofinnova, the terms of which
can be seen in note 7. Sofinnova also participated in the placing of Ordinary
shares in June 2022.
On 2 December, 2020 the Group announced that RM Special Holdings 3 LLC and
Sofinnova Crossover 1 SLP would convert £3.33 million and £1.75 million
respectively of the principal amount of the convertible loan notes into
Ordinary shares. Under the terms of the convertible loan notes, the conversion
took place at 15.5p per new Ordinary share. Accordingly, 32,806,159 new
Ordinary shares were issued and admitted to trading on AIM on 22 December,
2020. As of September 30, 2022, an aggregate of £17.1 million in principal
amount was outstanding under the convertible loan notes. This equates to
110,288,888 ordinary shares at £0.155 per share.
Following the extension of the maturity date to 4 August 2024, the remaining
gross principal of £17.1 million has been discounted at the effective
interest rate determined on initial measurement, resulting in a discounted
liability of £15.7 million (note 7).
The interest charge in the period relates to the unwinding of the discount at
the effective interest rate on the convertible loan balances held by Redmile
and Sofinnova respectively.
2023 2022
Charges from related parties £'000 £'000
RM Special Holdings 3, LLC - convertible loan note interest
1,081 995
Sofinnova Crossover 1 SLP - convertible loan note interest
528 489
1,609 1,484
2023 2022
Amounts owed to related parties £'000 £'000
RM Special Holdings 3, LLC - loan note
10,284 10,284
Sofinnova Crossover 1 SLP - loan note
5,447 5,447
15,731 15,731
Amounts owed to/by related parties are disclosed in
borrowings and the convertible note reserve.
10. Events after the reporting period
On 18 October, 2023, the Group announced that it had conditionally raised
£14.1 million (gross) by way of a placing of Ordinary shares at 26p per
share. All resolutions required to accomplish this were passed at a general
meeting of shareholders on 6 November, 2032, and accordingly 54,074,458 new
Ordinary shares were issued and admitted to trading on AIM on 7 November,
2023.
11. Report and accounts
A copy of the Annual Report and Accounts will be sent to all shareholders with
notice of the Annual General Meeting shortly and will also be available to
download from the Group's website at www.redxpharma.com
(http://www.redxpharma.com) in due course.
1. a registered trademark of Abraxis BioScience, LLC, a Bristol-Myers Squibb
Company
2. Clarivate, Crohn's disease disease landscape & forecast pg 39,
Published Sep 2022
3. Chan et al, 2018
4. registered trademark of Bristol-Myers Squibb Company
5. Registered trademark of Merck & Co., Inc.,
6. a trademark owned or licensed by Eli Lilly and Company, its subsidiaries,
or affiliates
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