REG - Redx Pharma plc - Interim Results for the Six Months Ended 31 March
23/06/2022 07:00
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RNS Number : 8784P Redx Pharma plc 23 June 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
REDX PHARMA PLC
("Redx" or "the Company")
Interim Results for the Six Months Ended 31 March 2022
Strong progress with both wholly-owned and partnered pipeline
RXC008, a GI targeted ROCK inhibitor, nominated as the Company's next
wholly-owned clinical development candidate in fibrostenotic Crohn's disease
Significantly strengthened financial position with post-period fundraise of
£34.3 million (gross)
Alderley Park, UK, 23 June 2022 Redx (AIM:REDX), the clinical-stage
biotechnology company focused on discovering and developing novel, small
molecule, highly targeted therapeutics for the treatment of cancer and
fibrotic disease, today announces its unaudited financial results for the six
months ended 31 March 2022.
Lisa Anson, Chief Executive Officer, Redx Pharma, said: "We have made strong
progress across all aspects of our pipeline. Importantly, we have moved our
lead oncology asset, RXC004, into Phase 2 clinical studies; reported
encouraging Phase 1 clinical results for our lead fibrosis asset, RXC007; and
nominated our next development candidate, RXC008. We expect RXC008, a GI
targeted ROCK inhibitor with the potential to be a first-in-class treatment
for fibrostenotic Crohn's disease, to be ready to enter the clinic by the end
of 2023. Together with the recent acceptance of the IND submission for the
pan-RAF inhibitor, JZP815, by our partner, Jazz Pharmaceuticals, Redx has
demonstrated strong progress across all aspects of our pipeline - a testament
to the world class abilities of our drug discovery team."
"In addition to our strong pipeline progress, we were particularly pleased,
post-period, to have completed a £34.3 million (gross) placing of our shares.
These proceeds will fund our development plans through the end of 2023. We
were delighted to receive strong support from all our existing investors as
well as welcoming a new specialist healthcare investor, Invus."
Operational Highlights
· Significant clinical progress on lead oncology asset, RXC004, an
oral, potent, selective, small molecule Porcupine inhibitor:
o In November 2021, initiated PORCUPINE, a Phase 2 trial in genetically
selected MSS metastatic colorectal cancer, with US Investigational New Drug
(IND) now open;
o In January 2022, initiated PORCUPINE2, a second Phase 2 trial in genetically
selected pancreatic cancer and unselected biliary cancer.
· On 10 March 2022, Redx presented encouraging Phase 1 safety data for
RXC007, an oral selective Rho Associated Protein Kinase 2 (ROCK2) inhibitor
with potential for development in multiple fibrotic conditions:
o Data showed an excellent safety and pharmacokinetic profile in both the
Single Ascending Dose (SAD) and multiple dose cohorts.
· On 30 March 2022 nominated RXC008, a Gastrointestinal (GI) targeted
Rho Associated Coiled-Coil Containing Protein Kinase (ROCK) inhibitor, as the
Company's next clinical development candidate:
o RXC008 is a potential first-in-class treatment for fibrostenotic Crohn's
disease, which has shown strong anti-fibrotic effects in preclinical models.
· Progressed the discovery portfolio with the announcement on 27
January 2022 of the Company's Discoidin Domain Receptor (DDR) inhibitor
fibrosis programme:
o Developed potent proprietary DDR inhibitors with drug-like characteristics
that are now in the lead optimisation phase.
· Advanced preclinical and clinical collaborations with world-leading
institutions to enhance the Company's research capabilities:
o Entered a strategic partnership with Caris Life Sciences in December 2021 to
accelerate Phase 2 study recruitment in the US for the RXC004 PORCUPINE
clinical trial;
o Post-period, in April 2022, expanded our collaboration with the Garvan
Institute of Medical Research to investigate novel therapeutic targets in
cancer-associated fibrosis.
· Significantly progressed our partnered programmes with AstraZeneca
and Jazz Pharmaceuticals, resulting in milestones totalling $19 million during
the period:
o On 9 December 2021, a $10 million (£7.4 million) milestone was triggered
from Jazz Pharmaceuticals for the progress in the oncology research
collaboration focused on two cancer targets on the MAPK pathway. Post period,
one target under this oncology research collaboration with Jazz
Pharmaceuticals is confirmed to continue to progress towards an IND
application, whilst a second target has been discontinued due to pipeline
prioritisation by Jazz given the evolving competitive landscape;
o On 23 December 2021, a $9 million (£6.6 million) milestone was triggered
from AstraZeneca as RXC006 entered Phase 1 clinical trials;
o Post period, on 15 June 2022, Redx announced a milestone of $5 million from
Jazz Pharmaceuticals triggered by the US Food and Drug Administration (FDA)
clearance of the IND for pan-RAF inhibitor programme, JZP815, which will
represent the fifth clinical programme from Redx's discovery engine to enter
the clinic.
· Further strengthened the Board of Directors and management team:
o Board appointments of Dr Jane Griffiths as Chair from 1 December 2021 and Dr
Rob Scott as Non-Executive Director on 27 January 2022;
o Established a Science Committee of the Board on 8 March 2022 to oversee
Redx's progress in achieving its scientific and clinical goals;
o Appointed Claire Solk on 17 January 2022 to the newly created position of
General Counsel.
Financial Highlights
· Cash balance at 31 March 2022 of £31.6 million (31 March 2021 £39.9
million) which includes $19 million in milestone payments received from
partnered programmes during the period;
· Successful placing of £34.3 million (gross) completed post-period in
June 2022, which received strong support from existing investors and included
a new specialist healthcare investor, Invus, which funds the Company's
operations through calendar year 2023, including important Phase 2 proof of
concept data readouts for RXC004 and RXC007;
· Post period, on 15 June 2022, Redx also triggered a further milestone
payment of $5 million from Jazz;
· Increasing investment, reflecting the strong progress in our
pipeline, led to increased research and development expenses of £12.9 million
(H1 2021: £10.5 million);
· Loss for the period of £9.8 million (H1 2021 £12.7 million).
The person responsible for the release of this announcement on behalf of the
Company is Andrew Booth, Company Secretary.
For further information, please contact:
Redx Pharma Plc T: +44 (0)1625 469 918
Caitlin Pearson, Head of Communications ir@redxpharma.com
(mailto:ir@redxpharma.com)
UK Headquarters
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, highly targeted
therapeutics for the treatment of cancer and fibrotic diseases, aiming
initially to progress them to clinical proof of concept before evaluating
options for further development and potential value creation. Redx's lead
oncology product candidate, the Porcupine inhibitor RXC004, commenced a Phase
2 programme in November 2021. The Company's selective ROCK2 inhibitor product
candidate, RXC007, is in development for idiopathic pulmonary fibrosis and
commenced a Phase 1 clinical trial in June 2021. Encouraging safety and
pharmacokinetic data has been reported, and a Phase 2 clinical program is
confirmed to start in 2022. Redx's third drug candidate, RXC008, a GI-targeted
ROCK inhibitor for the treatment of fibrostenotic Crohn's disease, is
currently in pre-IND stage, with Phase 1 clinical studies expected to commence
in 2023.
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 two wholly-owned clinical-stage
product candidates and rapidly expanding pipeline, but also by its strategic
transactions, including the sale of pirtobrutinib (RXC005, LOXO-305), a BTK
inhibitor now in Phase 3 clinical development by Eli Lilly following its
acquisition of Loxo Oncology and RXC006, a Porcupine inhibitor targeting
fibrotic diseases including idiopathic pulmonary fibrosis (IPF), which
AstraZeneca is progressing in a Phase 1 clinical study. In addition, Redx has
forged collaborations with Jazz Pharmaceuticals, which includes JZP815, a
preclinical pan-RAF inhibitor which has received IND clearance from the US FDA
and an early stage oncology research collaboration.
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Chief Executive's Statement
I am very encouraged with the strong progress the Company made in the six
months to 31 March 2022, where we achieved significant milestones which are
the foundations for our future success.
Most significantly, in the clinic RXC004, our lead oncology asset, progressed
into Phase 2 studies, following the encouraging Phase 1 data that we reported.
Our lead fibrosis asset, RXC007, also returned encouraging Phase 1 safety data
and is expected to enter Phase 2 clinical studies in H2 2022. Beyond the
clinic, our world class discovery team nominated our next development
candidate, RXC008, a GI-targeted ROCK inhibitor as a potential first-in-class
treatment for fibrostenotic Crohn's disease. This ensures that we are
positioned at the forefront of potential clinical developments for
hard-to-treat diseases with high unmet need, and supports our ambition of
submitting three new wholly-owned INDs by 2025.
Importantly, our financial position was bolstered by $19 million (£14
million) in milestone payments received under our partnerships with
AstraZeneca and Jazz Pharmaceuticals during the period, with a further $5
million triggered post-period in June 2022. Against a challenging market
backdrop, we were particularly pleased to complete, post period, a successful
equity fundraise of £34.3 million (gross), which will fund the Company
through the calendar year 2023 and allow us to deliver significant Phase 2
data readouts in 2023 for both RXC004 and RXC007. We were delighted to receive
continued support from all our existing institutional investors and to welcome
a new specialist investor, Invus, further validating the strength of our
portfolio and Redx's investment case.
As the Company continues to develop as a clinical-stage biotech, we
strengthened our Board of Directors with the appointments of Dr Jane Griffiths
as Chair and Dr Rob Scott as a Non-Executive Director. Jane brings significant
experience and understanding of managing global strategies across the
pharmaceutical sector, whilst Rob has extensive clinical development and
regulatory experience both in the US and globally, having held senior
positions in global pharmaceutical companies for over thirty years.
I believe that these clinical and portfolio developments, together with our
strengthened financial position, supportive investor base and experienced
leadership, position Redx well to execute against our strategy.
Clinical Programmes
RXC004 - in Phase 2 for Wnt-ligand driven cancers
Redx's lead oncology programme, RXC004, an oral, potent, selective, small
molecule Porcupine inhibitor, became our first wholly-owned asset to enter
Phase 2 clinical trials in November 2021. Following the successful completion
of the Phase 1 monotherapy study, results from which were presented at the
European Society of Medical Oncology (ESMO) Congress in September 2021, an
oral dose of 2mg once daily was selected as the recommended dose to take
forward into Phase 2, which has been shown to be safe and well tolerated with
no grade 4 or 5 adverse events (AEs) reported.
The first study in the Phase 2 programme, PORCUPINE, is focused on patients
with advanced microsatellite stable metastatic colorectal cancer (MSS mCRC)
who have progressed following treatment with standard of care and will
evaluate preliminary efficacy and safety of RXC004 in genetically selected
patients with Ring finger protein 43 (RNF43) or R-spondin (RSPO) aberrated,
advanced MSS mCRC. Redx demonstrated preclinically that RXC004 can block
activation of the Wnt pathway and restore the ability of the immune system to
fight the tumour, meaning that RXC004 has the potential to both directly
inhibit tumour growth and have an immune-enhancing effect in patients with
tumours that have high Wnt-ligand drive. Given this dual mechanism of action
and strong rationale for immune therapy combination in the MSS mCRC setting, a
second module of the trial, evaluating RXC004 in combination with an
anti-PD-1, nivolumab, (OPDIVO® - Bristol Myers Squibb) as an immune-oncology
agent is expected to commence in H2 2022 following completion of the ongoing
Phase 1 dose escalation safety study, to enable the selection of a Phase 2
dose. Post period, we presented a poster on the clinical study design with
Chief Investigator, Professor Scott Kopetz, The University of Texas MD
Anderson Cancer Center, Houston, TX at the American Association of Clinical
Oncology (ASCO) Annual Meeting in June 2022.
In December 2021, we announced a strategic partnership with Caris Life
Sciences to accelerate recruitment into the Phase 2 PORCUPINE study of RXC004
in the US. This partnership allows the Company to access Caris' clinical trial
solutions including molecular profiling, trial matching and real-world
clinical data, which will accelerate identification and enrollment of
appropriate patients.
A second Phase 2 study of RXC004, PORCUPINE 2, as a monotherapy for
genetically selected pancreatic cancer and unselected biliary cancer, a highly
Wnt-ligand driven cancer, commenced in January 2022. We expect to move forward
with an additional combination arm in biliary cancer with an anti-PD-1 agent
once the Phase 1 combination module has completed and we have selected a
suitable dose.
We expect to report topline data readouts from the Phase 2 programme starting
in the first half of 2023.
RXC007 - moving into Phase 2 for IPF
RXC007, a selective inhibitor of Rho associated protein Kinase 2 (ROCK2), a
known nodal point for pro-fibrotic signaling central to fibrosis, entered a
Phase 1 healthy volunteer trial in June 2021. The primary objective of this
first-in-human study was to evaluate the safety profile of the molecule.
RXC007 is initially being developed in idiopathic pulmonary fibrosis (IPF), a
life-threatening illness for which there is currently a high unmet need and
limited treatment options, with patients having a poor prognosis, most only
surviving 3-5 years after diagnosis and experiencing a diminishing quality of
life.
We were pleased to be able to present data from the completed single ascending
dose and multiple ascending dose cohorts of this Phase 1 study at the
Interstitial Lung Disease (ILD) Drug Development Summit in March 2022, which
showed excellent safety and pharmacokinetic profiles. The pharmacokinetics
observed were as predicted from preclinical data, with essentially linear
exposure for 2-70mg and biologically relevant exposures achieved at higher
doses. Importantly, no adverse events were observed following single doses of
2-70mg, dosed once or twice a day, with the data also showing a half-life of
approximately 9 hours, which could make RXC007 suitable for once-daily dosing.
Similarly, no clinically meaningful adverse events were observed in the
multiple dose phase, dosed at 50mg twice daily for 14 days.
This data gives us confidence to move forward with the planned staged Phase 2
clinical development programme, expected to commence later this year. An
initial 12-week randomised placebo-controlled Phase 2a study will assess early
efficacy, safety and tolerability of RXC007, in addition to target and disease
biomarker engagement, both with and without standard of care agents. This
staged approach will allow us to avoid over-commitment to clinical costs by
ensuring that we understand biomarkers, target engagement and see early signs
of efficacy before we progress into 12-month efficacy studies.
Discovery Engine
RXC008 - newly nominated for clinical development
It was encouraging to see the tangible progress from our discovery engine
during the period with the nomination of our next development candidate,
RXC008, a Gastrointestinal (GI) targeted Rho Associated Coiled-Coil Containing
Protein Kinase (ROCK) inhibitor designed to act exclusively in the GI tract at
the site of fibrosis in Crohn's disease patients. ROCK is a known nodal point
for pro-fibrotic signalling and by targeting ROCK, and ensuring that this
remains isolated to the GI, we are seeing virtually no systemic exposure and
are hopeful that we can halt, and potentially reverse, fibrosis in this
hard-to-treat chronic disease.
We are now progressing the preclinical work required to enable an IND
submission at the end of 2023.
Discoidin Domain Receptors (DDRs) - new research programme in fibrosis
Redx announced in January 2022 that we have developed a promising DDR series
of potent inhibitors which are currently in the lead optimisation phase. DDRs
have recently gained traction as new targets with the potential to treat
multiple fibrotic conditions. 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 DDR expression is increased in many fibrotic diseases and proof of concept
for small molecule inhibitors has been demonstrated in preclinical models of
lung and kidney fibrosis.
Partnered Programmes - momentum continues
The momentum behind our partnered programmes continued with the receipt of $19
million in milestone payments during the period and $5 million post period.
In December 2021, a $9 million milestone from AstraZeneca was triggered as a
result of the initiation of a Phase 1 clinical trial in healthy volunteers for
the Porcupine inhibitor RXC006 (AZD5055), being developed for IPF. This
payment means that Redx has received the full potential total of $17 million
available under this agreement between deal signature and successful
commencement of the first clinical trial. There remains the potential for
future development and commercial milestones and tiered royalties of
mid-single digit percentages, based on any future net sales.
We triggered a milestone of $10 million from Jazz Pharmaceuticals, also in
December 2021, with whom we have an oncology research collaboration to
discover and develop drug candidates for cancer targets in the RAS/Raf/MAP
kinase (MAPK) pathway, as it entered its second year. Under this agreement,
signed in September 2020, Redx is responsible for research and preclinical
development activities up to IND submission. Post period, one target under
this oncology research collaboration with Jazz Pharmaceuticals is confirmed to
continue to progress towards an IND application, whilst a second target has
been discontinued due to pipeline prioritisation by Jazz given the evolving
competitive landscape.
The quality of the Redx partnered molecules was further validated when, post
period, in June 2022, a $5 million milestone payment from Jazz Pharmaceuticals
was triggered following the clearance of an IND submission by the FDA for
JZP815. JZP815 is a preclinical pan-RAF inhibitor for the treatment of
RAF-driven tumours, a programme which Jazz Pharmaceuticals acquired from Redx
in July 2019 and for which Redx has been undertaking pre-clinical work under a
collaboration agreement signed in parallel. Now that this preclinical work
has been completed by Redx, Jazz Pharmaceuticals expects to advance JZP815
into a Phase 1 clinical programme. When initiated, JZP815 will be the fifth
compound discovered by Redx to enter the clinic. Redx remains entitled to
development, regulatory and commercial milestone payments as well as
incremental tiered royalties in mid-single digit percentages, based on any
future net sales.
These partnered programmes underscore the differentiation of Redx's medicinal
chemistry and drug discovery capabilities, and we are pleased to see the
continued positive momentum across all our collaborations.
World leading research collaborations
We have entered into a number of research collaborations which expand and
compliment the scope of our research capabilities and validate our
world-leading science. This includes a collaboration with the Garvan Institute
of Medical Research, a world-renowned Australian medical research institute,
announced on 5 April 2022, to expand on our preclinical work already underway.
This collaboration brings together the Garvan's research capabilities and
preclinical models and Redx's proprietary molecules now in development for
novel targets potentially implicated in cancer-associated fibrosis, a much
researched, but little understood, clinical area.
We also have a longstanding collaboration with Ghent University, in which we
have undertaken research into non-invasive methods of monitoring intestinal
fibrosis and have successfully showed that Magnetic Resonance Imaging (MRI)
analysis can be used to detect fibrosis in the GI in the dextran sulphate
sodium (DSS) model. When compared to histology results, we saw the same
reduction in fibrosis was evident, highlighting the potential to track
fibrosis through non-invasive means.
Securing finance - funded to end of 2023
During the period we increased investment in research and development
activities significantly, in line with our strategy and reflecting the strong
progress in our pipeline. As a result, research and development expenses
increased to £12.9 million (H1 2021 £10.5million).
The Redx Board decided to strengthen the balance sheet beyond the non-dilutive
milestone payments outlined above. Post period, we were pleased to
successfully complete a fundraise of £34.3 million (gross), which was
approved by shareholders at a General Meeting on 6 June 2022 and results in a
cash balance of £59.7 million after expenses. The fundraise was supported by
our existing investors Redmile, Sofinnova, Polar Capital and Platinum, as well
a new specialist healthcare investor, Invus. Redx is now funded through 2023
and the anticipated progression of our clinical development and research stage
programmes to important value inflection points, including data readouts from
the Phase 2 programmes for RXCX004 and RXC007.
Strong Governance
We strengthened the Board with the appointment of Dr Jane Griffiths as our new
Chair, and the addition of Dr Rob Scott as Non-Executive Director. Following
this, we formed a new Board committee, the Science Committee, which is
responsible for reviewing and assessing Redx's R&D programmes and
strategies, in addition to overseeing the Company's progress in achieving its
scientific goals. The committee is chaired by Dr Bernhard Kirschbaum, with Dr
Rob Scott and Lisa Anson serving as members.
As we develop as a clinical-stage biotech organisation, we continue to build
our team to provide the capabilities, infrastructure and skills required to
support this growth. After the return to more normalised working procedures
following COVID-19, we took the opportunity to engage with all employees,
including through a staff survey in September 2021 and aligning around our
mission. Together with the team we have implemented an explicit set of values
- Teamwork, Resilience, Innovation, High Standards and Agility. These continue
to be embedded throughout the business to ensure that Redx is not only a
world-class biotech scientifically, but also a Company that truly values its
employees and continues to attract top-tier talent.
Outlook
During the period, we continued to make strong progress in advancing our
wholly-owned pipeline and partnered assets. Our lead oncology asset, RXC004,
entered Phase 2 monotherapy studies; our lead fibrosis asset, RXC007, returned
encouraging Phase 1 safety data; and we announced an exciting new clinical
development candidate, RXC008. The progression of our partnered assets means
Redx continues its enviable track record of assets that enter the clinic as
well as further validating our world-class research and development
capabilities.
I am excited by the differentiated assets in our pipeline and look forward to
continuing to build a world-class biotech company. Our increased financial
strength will enable us to deliver on important value inflection points over
the coming months to drive benefits for patients and value for shareholders.
On a personal note, I would like to thank the management team, Board and
shareholders for their continued support in the Company as we continue to grow
as a clinical-stage biotech organisation. I would also like to thank our
employees for their hard work and commitment to Redx and congratulate them on
the continued strong progress in both research and clinical development.
Lisa Anson
Chief Executive Officer
Consolidated Statement of Comprehensive Loss
Unaudited Unaudited Audited
Half Year Half Year Year to 30 September 2021
to 31 March 2022
to 31 March 2021
Note £000 £000 £000
Revenue 2 8,353 2,101 10,035
Research and Development expenses (12,913) (10,463) (24,445)
General and Administrative expenses (4,905) (3,797) (6,455)
Other operating income 625 498 1,120
Loss from operations (8,840) (11,661) (19,745)
Finance income 4 8 1 13
Finance expense 4 (850) (1,000) (1,711)
Loss before taxation (9,682) (12,660) (21,443)
Income tax 5 (81) (55) (133)
Loss attributable to owners of Redx Pharma plc (9,763) (12,715) (21,576)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Exchange difference from translation of foreign operations 8 - 29
Total comprehensive loss for the period attributable to owners of Redx Pharma (9,755) (12,715) (21,547)
plc
Pence Pence Pence
Loss per share 6 (3.5) (5.3) (8.4)
From continuing operations
- basic & diluted
Consolidated Statement of Financial Position
As restated Audited
Unaudited Unaudited
31 March 31 March 30 September 2021
2022
2021
Note £000 £000 £000
Assets
Property, plant and equipment 3,047 3,209 3,325
Intangible assets 403 408 405
Total non-current assets 3,450 3,617 3,730
Trade and other receivables 7 4,881 2,270 6,231
Current tax 26 32 32
Cash and cash equivalents 31,583 39,862 29,552
Total current assets 36,490 42,164 35,815
Total assets 39,940 45,781 39,545
Liabilities
Current liabilities
Trade and other payables 8 5,678 3,385 4,699
Contract liabilities 9 11,044 5,748 4,318
Lease liabilities 599 525 575
Total current liabilities 17,321 9,658 9,592
Non-current liabilities
Borrowings 14,971 13,673 14,247
Lease liabilities 2,268 2,941 2,574
Total liabilities 34,560 26,272 26,413
Net assets 5,380 19,509 13,132
Equity
Share capital 10 2,753 2,739 2,753
Share premium 66,299 65,999 66,299
Share-based payment 6,746 2,835 4,752
Capital redemption reserve 1 1 1
Exchange translation reserve 37 - 29
Convertible note reserve 3,524 3,524 3,524
Retained deficit (73,980) (55,589) (64,226)
Equity attributable to shareholders 5,380 19,509 13,132
Consolidated Statement of Changes in Equity
Unaudited As restated Unaudited Unaudited Unaudited As restated As restated Unaudited
Unaudited Unaudited Unaudited
Share capital Share premium Share-based payment Capital redemp'n reserve Exchange translation reserve Convertible note reserve Retained deficit Total
equity
£000 £000 £000 £000 £000 £000 £000 £000
Movements by half year
At 30 September 2020 1,952 37,184 1,191 1 - 4,572 (42,874) 2,026
Loss and total comprehensive loss for the period - - - - - - (12,715) (12,715)
Transactions with owners in their capacity as owners
Issue of ordinary shares 459 25,208 - - - - - 25,667
Transaction costs on issue of ordinary shares - (1,051) - - - - - (1,051)
Partial conversion of loan notes 328 4,658 - - - (1,048) - 3,938
Share-based compensation - - 1,644 - - - - 1,644
Release of share options lapsed in the period - - - - - - - -
At 31 March 2021 2,739 65,999 2,835 1 - 3,524 (55,589) 19,509
Loss for the period - - - - - - (8,861) (8,861)
Other comprehensive income - - - - 29 - - 29
Total comprehensive loss for the period - - - - 29 - (8,861) (8,832)
Transactions with owners in their capacity as owners
Issue of ordinary shares 14 300 - - - - - 314
Share-based compensation - - 2,141 - - - - 2,141
Release of share options lapsed in the period - - (224) - - - 224 -
At 30 September 2021 2,753 66,299 4,752 1 29 3,524 (64,226) 13,132
Loss for the period - - - - - - (9,763) (9,763)
Other comprehensive income - - - - 8 - - 8
Total comprehensive loss for the period - - - - 8 - (9,763) (9,755)
Transactions with owners in their capacity as owners
Share-based compensation - - 2,003 - - - - 2,003
Release of share options lapsed in period - - (9) - - - 9 -
At 31 March 2022 2,753 66,299 6,746 1 37 3,524 (73,980) 5,380
Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year Year to 30 September 2021
to 31 March 2021
£000 £000 £000
Net cash flow from operating activities
Loss for the period (9,763) (12,715) (21,576)
Adjustments for:
Income tax 81 55 133
Finance costs (net) 842 999 1,698
Depreciation and amortisation 438 376 633
Share based compensation 2,003 1,644 3,785
Movements in working capital
Decrease / (increase) in trade and other receivables and contract assets 8,694 (402) (4,651)
Increase / (decrease) in trade and other payables and contract liabilities 278 (1,298) (1,414)
Cash generated by / (used in) operations 2,573 (11,341) (21,392)
Tax credit received 8 - -
Interest received 8 1 13
Net cash generated by / (used in) operations 2,589 (11,340) (21,379)
Cash flows from investing activities
Purchase of property, plant and equipment (158) (534) (754)
Net cash used in investing activities (158) (534) (754)
Cash flows from financing activities
Proceeds of share issues - 25,667 25,980
Share issue costs - (1,051) (1,051)
Payment of lease liabilities (408) (393) (786)
Net cash (used in) / generated by financing activities (408) 24,223 24,143
Net increase in cash and equivalents 2,023 12,349 2,010
Cash and cash equivalents at the beginning of the period 29,552 27,513 27,513
Foreign exchange difference 8 - 29
Cash and cash equivalents at the end of the period 31,583 39,862 29,552
Reconciliation of changes in liabilities arising from financing activities
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year Year to 30 September 2021
to 31 March 2021
£000 £000 £000
IFRS16 Lease liability
Balance b/fwd 3,149 3,712 3,712
Remeasurement - - (60)
Payment of lease liabilities (408) (393) (786)
Interest on lease liabilities 126 147 283
Balance c/fwd (disclosed as current and non-current lease liabilities) 2,867 3,466 3,149
Convertible loan notes
Balance b/fwd 14,247 16,758 16,758
Converted into ordinary shares - (5,086) (5,086)
Remeasurement on conversion - 1,147 1,147
Interest 724 854 1,428
Balance c/fwd (disclosed as non-current borrowings) 14,971 13,673 14,247
Notes to the Interim Results
1. Basis of preparation and accounting policies
1.01 Description of Group and approval of the consolidated interim
financial statements
Redx Pharma plc (''Redx" or "the Company") is a limited liability company
incorporated and domiciled in the UK. Its shares are quoted on AIM, a market
operated by The London Stock Exchange. The principal activity of the Group is
drug discovery, pre-clinical development and licensing.
The Group's consolidated interim financial statements are presented in pounds
sterling, which is the Group's presentational currency, and all values are
rounded to the nearest thousand (£000) except where indicated otherwise.
The consolidated interim financial statements were approved by the Board of
Directors on 22 June 2022.
1.02 Basis of preparation
The Group's consolidated interim financial statements, which are unaudited,
consolidate the results of Redx Pharma plc and its subsidiary undertakings
made up to 31 March 2022. The Group's accounting reference date is 30
September.
The financial information contained in these interim financial statements does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006. It does not therefore include all of the information and disclosures
required in the annual financial statements. The financial information for the
six months ended 31 March 2022 and 31 March 2021 is unaudited.
The information for the period ended 30 September 2021 has been extracted from
the statutory accounts for the year ended 30 September 2021, prepared in
accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The statutory accounts were approved
by the Board on 26 January 2022 and delivered to the Registrar of Companies.
The audited financial statements of the Group in respect of the year ended 30
September 2021 received an unqualified audit opinion and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006. The audit
report included a reference to a material uncertainty that might cast
significant doubt over the Group's ability to continue as a going concern, to
which the auditors drew attention by way of emphasis without qualifying their
report.
1.03 Significant accounting policies
The accounting policies used in the preparation of the financial information
for the six months ended 31 March 2022 are in accordance with the recognition
and measurement criteria of International Accounting Standards ('IAS') in
conformity with the requirements of the Companies Act 2006 and are consistent
with those adopted in the annual statutory financial statements for the year
ended 30 September 2021.
While the interim financial information included has been prepared in
accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) as adopted by the European Union (EU),
the interim financial statements do not include sufficient information to
comply with IFRS.
1.04 Segmental information
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The Board of
Directors and the Chief Financial Officer are together considered the chief
operating decision-maker and as such are responsible for allocating resources
and assessing performance of operating segments.
The Directors consider that there are no identifiable business segments that
are subject to risks and returns different to the core business. The
information reported to the Directors, for the purposes of resource allocation
and assessment of performance is based wholly on the overall activities of the
Group.
The Group has therefore determined that it has only one reportable segment.
1.05 Going concern
As part of their going concern review the Directors have followed the
guidelines published by the Financial Reporting Council entitled ''Guidance on
the Going Concern Basis of Accounting and Reporting on Solvency Risks -
Guidance for directors of companies that do not apply the UK Corporate
Governance Code''. The Directors have also taken into account recent FRC
guidance for companies in relation to going concern and Covid-19.
The Group is subject to a number of risks similar to those of other
development stage pharmaceutical companies. These risks include, amongst
others, generation of revenues in due course from the development portfolio
and risks associated with research, development, testing and obtaining related
regulatory approvals of its pipeline products. Ultimately, the attainment of
profitable operations is dependent on future uncertain events which include
obtaining adequate financing to fulfil the Group's commercial and development
activities and generating a level of revenue adequate to support the Group's
cost structure.
The Board have adopted the going concern basis in preparing these accounts
after assessing the Group's cash flow forecasts and principal risks.
At March 31, 2022 the Redx Pharma Plc Group ('the Group') held £31.6
million of cash and cash equivalents. The Group has a history of recurring
losses from operations, including a net loss of £9.8 million for the
six-month period ended March 31, 2022 and an accumulated deficit of £74.0
million at that date. Operational cash outflows continue to be driven by the
ongoing focus on the research, development and clinical activities to advance
the programs within the Group's pipeline. The Group recorded a net increase in
cash and cash equivalents of £2.0 million for the six-month period ended
March 31, 2022 primarily from the receipt of milestones on partnered
programmes. On June 7, 2022 the Group closed the sale of 58,070,956 Ordinary
shares, resulting in gross proceeds of £34.3 million (£33.5 million net of
transaction costs). Following receipt of these proceeds at completion, the
Group held sufficient cash and cash equivalents to provide a cash runway
through December 2023 at currently budgeted levels of expenditure, including
certain forecast milestone receipts and conversion of the Group's convertible
loans into equity or extension of the term on those convertible loans.
In undertaking the going concern review, the Board has reviewed the Group's
cash flow forecasts to August 31, 2023 (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. The convertible loan notes held
by RM Special Holdings 3 LLC and Sofinnova Crossover 1 SLP have an aggregate
principal amount of £17.1 million outstanding and mature in August 2023.
The term can be extended for an additional seven years up to a maximum ten
year term. At the maturity date, the loan notes will either be converted into
Ordinary share capital of Redx Pharma Plc at a conversion rate of 15.5p per
share, be repaid in full, or the term will be extended by an additional year.
The decision as to whether the convertible loan notes are converted, extended
or repaid in August 2023 is outside the control of the Group. If the
convertible loan notes are to be repaid, the Group would require additional
capital from either existing or new investors. Further funding is required
under the Board's plan to continue to develop its product candidates and
conduct clinical trials, and the Group plans to raise significant further
finance within this period, either from existing or new investors. Given these
plans and requirements, a review period of 15 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 loan and the ability to raise further capital is 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 including capital expenditure. In the event
that the convertible loan notes are not converted or extended, the Group would
need to raise additional capital within the going concern period and this is
outside the control of the directors. It therefore represents a material
uncertainty regarding the Group's ability to continue as a going concern.
Notwithstanding the existence of the material uncertainty, 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 repaid in August 2023 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 74% when compared to the share price at
which the June 7, 2022 fundraising was completed, in which both convertible
loan note holders participated.
· the Group has a track record and reasonable near-term visibility of
meeting expectations under its collaboration agreements and receiving the
associated milestone payments.
· the Group retains the ability to control capital and other
discretionary expenditure and lower other operational spend, as necessary.
There can be no assurance that the convertible loan notes will be converted
rather than recalled. If the loan notes are not converted, the Group may not
have sufficient cash flows to support its current level of activities beyond
the maturity date. In the event the loan notes are recalled, 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 programs; 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 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.
1.06 Prior year restatements
The Group has identified an error within its accounting entries recorded on
the adoption of IFRS 16 - Leases, which was adopted on 1 October 2019. The
error identified was an overstatement of the right of use asset recorded on
transition of £661,000 due to an incorrect reversal of the rent-free period
accrual recognised under IAS 17 through retained earnings rather than as a
reduction of the right of use asset. This resulted in a corresponding
understatement of the retained deficit recorded in the Statement of changes in
equity on transition.
The financial impact of the error identified is as follows:
As at 1 October 2020 As at 31 March 2021
Reported Adjustment Restated Reported Adjustment Restated
£'000 £'000 £'000 £'000 £'000 £'000
Property, plant and equipment 3,573 -661 2,912 3,272 -661 2,611
Retained deficit 42,213 661 42,874 54,928 661 55,589
As part of the finalisation of the consolidated financial statements for the
year ended September 30, 2021, the Group revised the provisional methodology
through which its accounting entries had been recorded in respect of the
partial conversion of its Convertible loan notes during December 2020 and
presented in the interim financial statements at March 31, 2021. In revising
the methodology, it was noted that the accounting adopted at March 31, 2021
had resulted in an understatement of the liability element of the convertible
loan note of £1,147,000, an overstatement of the Share premium account of
£99,000, and an overstatement of the Convertible note reserve of £1,048,000.
The financial impact of the adjustment is as follows:
As at 31 March 2021
Reported Adjustment Restated
£'000 £'000 £'000
Borrowings -12,526 -1,147 -13,673
Share premium -66,098 99 -65,999
Convertible note reserve -4,572 1,048 -3,524
There was no impact on any periods prior to 31 March 2021.
2. Revenue
Unaudited Unaudited Audited
Half year to 31 March Half year to 31 March Year to 30 September
2022 2021 2021
£'000 £'000 £'000
Revenue from milestones on scientific programmes and research collaboration 6,684 - 5,009
Revenue from research collaboration 701 1,321 2,751
Revenue from research and preclinical development services 968 780 2,275
8,353 2,101 10,035
3. Share-based compensation
Share options have been issued to certain Directors and staff, and the charge
arising is shown below. The fair value of the options granted has been
calculated using a Black‑Scholes model. 18,270,779 of the options granted
are subject to performance conditions based on scientific, clinical and
commercial milestones. There are no further conditions attached to the vesting
of other options other than employment service conditions.
Unaudited Unaudited Audited
Half Year Half Year Year to 30 September 2021
to 31 March 2022
to 31 March 2021
Number Number Number
Outstanding at the beginning of the period 33,577,104 23,930,800 23,930,800
Options granted and vested in period - - -
Options exercised in period - - (1,394,992)
Options surrendered and lapsed in period (616,667) (50,000) (226,668)
Options granted and vesting in future periods 2,100,000 7,967,964 11,267,964
Outstanding at the end of the period 35,060,437 31,848,764 33,577,104
£000 £000 £000
Charge to Statement of Comprehensive Loss in period 2,003 1,644 3,785
Assumptions used were an option life of 5 years, a risk free rate of 0.6% -
7% and no dividend yield. Other inputs were:
· Volatility 40% - 141%
· Share price at date of grant in a range between 13.75p and 85p
· Exercise price in a range between 15.5p and 85p
· Weighted average fair value of each option in a range between 0.1p
and 69.2p
At 31 March 2022, a total of 5,141,537 options were vested.
4. Finance income and expense
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year to 31 March 2021 Year to 30 September 2021
£'000 £'000 £'000
Finance income
Bank and other short-term deposits 8 1 13
8 1 13
Finance expense
Loan interest 724 853 1,428
Interest on lease liabilities 126 147 283
850 1,000 1,711
5. Income tax
Unaudited Unaudited Audited
31 March 31 March 30 September
2022 2021 2021
£'000 £'000 £'000
Current income tax
Corporation tax 81 57 135
Amounts in respect of previous periods - (2) (2)
Income tax charge per the income statement 81 55 133
6. Loss per Share
Basic loss per share is calculated by dividing the net income 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:
Unaudited Unaudited Audited
Half Year Half Year Year to 30 September 2021
to 31 March 2022
to 31 March 2021
£'000 £'000 £'000
Loss for the period attributable to the owners of the Company (9,763) (12,715) (21,576)
Number Number Number
Weighted average number of shares 275,282,205 238,456,094 256,430,270
- basic & diluted
Pence Pence Pence
Loss per share - basic & diluted (3.5) (5.3) (8.4)
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.
7. Trade and other receivables
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year to 31 March 2021 Year to 30 September 2021
£'000 £'000 £'000
Trade receivables 356 195 2,730
VAT recoverable 815 271 650
Prepayments and other receivables 3,634 1,729 2,782
Accrued income 76 75 69
4,881 2,270 6,231
Included within prepayments & other receivables is an other receivable of
£0.6 million (March 2021: £nil, September 2021: £0.4 million) which is due
after more than one year.
8. Trade and other payables
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year to 31 March 2021 Year to 30 September 2021
£'000 £'000 £'000
Trade payables 2,201 1,521 1,789
Employee taxes and social security 224 181 194
Other payables 9 5 24
Accruals 3,244 1,678 2,692
5,678 3,385 4,699
9. Contract liabilities
Unaudited Unaudited Audited
Half Year to 31 March 2022 Half Year to 31 March 2021 Year to 30 September 2021
£'000 £'000 £'000
Contract liabilities 11,044 5,748 4,318
Reconciliation
Balance b/fwd 4,318 7,069 7,069
Contract asset debtor received 7,427 - -
Transfer to revenue (701) (1,321) (2,751)
11,044 5,758 4,318
The contract liability relates to a single research collaboration contract.
The impact of the non-adjusting post period end event disclosed in note 12
will be a reduction of £5.52m in the contract liability, with a corresponding
increase in revenue.
This represents the recognition as revenue of all remaining contract
liabilities with regard to the discontinued target, as there are no further
obligations on the company, and amounts received to date with respect to this
target are non-refundable.
These adjustments will be reflected in the financial statements at 30
September 2022.
10. Share capital
Unaudited Unaudited Audited
Half Year Half Year Year to 30 September 2021
to 31 March 2022
to 31 March 2021
Number Number Number
Number of shares in issue 275,282,205 195,247,413 195,247,413
In issue at 1 October
Issued for cash - 45,833,641 45,833,641
Loan note conversion - 32,806,159 32,806,159
Exercise of share options - - 1,394,992
275,282,205 273,887,213 275,282,205
£'000 £'000 £'000
Share capital at par, fully paid 2,753 2,739 2,753
Ordinary shares of £0.01
11. Contingent liability
During the course of the members' voluntary liquidation of Redx
Anti-Infectives Ltd, a counterparty submitted a proof of debt relating to a
contract signed in 2013 that was rejected by the joint liquidators. The
counterparty has issued an application at the High court of Justice to reverse
the joint liquidators' decision. The joint liquidators are opposing the
application.
No provision has been made in these accounts, because the Company believes
that the potential claim is without foundation.
12. Post period end events
On 6 June 2022, a general meeting authorised the issue of 58,070,956 Ordinary
shares by way of a placing, raising a further £34.3 million (gross) of funds
to be used to further support and augment the Group's research pipeline. The
shares were admitted to trading on AIM on 7 June 2022.
As noted earlier in this Interim Results announcement, as a result of pipeline
prioritisation by Jazz given the evolving in the competitive landscape, a
decision has been taken with Jazz Pharmaceuticals to discontinue one of the
two targets on the MAPK pathway being researched under the collaboration
agreement between the two companies. The impact of the decision with regard to
revenue recognition and Contract liabilities is set out in note 9.
FURTHER INFORMATION FOR SHAREHOLDERS
AIM: REDX
Company number: 07368089
Investor website: http://redxpharma.com/investors (http://redxpharma.com/investors)
Registered office: Block 33, Mereside, Alderley Park, Macclesfield, SK10 4TG
Directors: Dr Jane Griffiths (Chair)
Lisa Anson (CEO)
Peter Presland (Non-Executive Director)
Dr Bernhard Kirschbaum (Non-Executive Director)
Sarah Gordon Wild (Non-Executive Director)
Dr Thomas Burt (Non-Executive Director)
Natalie Berner (Non-Executive Director)
Dr Rob Scott (Non-Executive Director)
Company Secretary: Andrew Booth
END
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