Pan-RAF agreement strengthens balance sheet

REDX is a clinical-stage R&D company focused on drugs targeting oncology and fibrotic disease. 2018 was a year that reset the benchmarks – new management team, restructured organisation focused on two therapeutic areas, and a clean balance sheet. A core focus for 2019 has been to strengthen the balance sheet. REDX has entered into a definitive agreement with Jazz Pharmaceuticals (JAZZ) for the sale of its pan-RAF inhibitor programme. Under the terms of the contract, REDX will receive an upfront payment of $3.5m (£2.84m) and is eligible to receive up to $203m (£162m) in milestone payments.

• Strategy: REDX is focused on the discovery and early clinical development of small molecule therapeutics in oncology and fibrotic disease. Its strategy is to develop assets through proof-of-concept clinical trials and then partner them for late-stage development and commercialisation.
• Agreement with JAZZ: REDX has signed a definitive agreement with JAZZ for its pre-clinical stage pan-RAF inhibitor programme. JAZZ has made an upfront payment of $3.5m (£2.84m) to REDX, with the potential for further payments up to $203m (£162m) in development, regulatory and commercial milestones.
• Partnering: In a separate agreement, JAZZ will also pay REDX an undisclosed sum to perform additional research and pre-clinical work, with the aim of completing IND-enabling studies. JAZZ is a strong partner, with five marketed products, and more than 20 R&D programmes in multiple stages of development.
• Risks: REDX has emerged from fiscal 2018 in a clean position with a focused strategy. The company has limited cash resources, boosted by a short-term shareholder loan, while it continues to explore the long-term funding of the group to advance the proof-of-concept trials for its development programmes.
• Investment summary: The business plan focuses cash resources on progressing its drug leads in oncology and fibrotic disease to early clinical development proof-of-concept. Big pharma has been shown to pay substantial prices for good science and novel and/or de-risked assets with clinical data, reinforcing REDX’s strategy, potentially generating good returns and enhancing shareholder value.