It is a fact of life for many UK biotechs that a deal involving a $3.5m up-front payment can represent something of a lifeline. The sum would barely warrant a press release for the cash-rich of the sector, but Redx Pharma saw its valuation more than double today on such a windfall.
That this jump represents around an additional £10m ($12m) in market cap illustrates how little investor support exists for the company. This is partly understandable: Redx emerged from bankruptcy last year straight into a clinical hold on its lead programme. But the deal announced with Jazz today, and another with Loxo Oncology last year, suggests that industry partners have seen value in the company’s research, which features some of the sector’s hottest targets.
This includes SHP2 inhibition, a mechanism that was the subject of a collaboration between Novartis and Mirati Therapeutics only today. The protein plays a signalling role in the RAS/MAP kinase pathway; these partners will test a combination of Novartis’s SHP2 inhibitor, TNO155, with Mirati’s MRTX849, a KRAS G12C inhibitor.
Redx’s work on SHP2 inhibition appears to be some way away from the clinic, and indeed much of the company’s development work remains early stage.
Lilly’s LOXO-305, bought from Redx for $40m last year in a transaction that rescued the company from financial oblivion, is said to be the sector’s most selective non-covalent BTK inhibitor but the project is still something of an unknown quantity. Redx’s most advanced asset, a porcupine inhibitor called RXC004, is still completing phase I safety studies, while the pan-RAF inhibitor programme that Jazz has just bought has yet to identify a lead candidate.
Nomination of a lead pan-RAF inhibitor would prompt the first milestone payment to Redx under the Jazz deal; future payments could reach $203m.
Banking anything close to this would be game-changing for the UK company, which ended March with £3.3m in cash. The Jazz upfront seems unlikely to secure funding much beyond early next year; the company had not responded to Vantage’s questions at the time of publication.
Surviving on a slow drip feed of finance is par for the course for small UK-based drug developers, which have long struggled with the absence of a local pool of supportive institutional investors. This means Redx will find it hard to capitalise on its share price jump by selling new stock – on decent terms, at any rate.
Presumably the next Redx asset earmarked for sale is already being polished, and as the tables below show the company is at least working in areas where there is minimal competition. But executives can only look on with envy at the likes of Revolution Medicine or Bridgebio, US-based start-ups that have recently raised hundreds of millions of dollars with little more evidence of their respective projects’ efficacy.
Without access to the sort of funds that could allow the company to demonstrate what its research engines are really capable of, it is hard to see how Redx can escape survival mode.
|In the same space? Selected competing projects to Redx's pipeline|
|Phase I||RMC-4630 (SAR442720)||Revolution Medicines/Sanofi|
|Pre-clinical||SHP2 Inhibitor Research Project||BridgeBio Pharma|
|Phase I||BAL3833||Basilea Pharmaceutica|