Trinity Delta Lighthouse: Redx Pharma
Trinity Delta view: The $4m AstraZeneca milestone is an apt reminder of the momentum being generated and the quality of the investment case. Redx Pharma has an acknowledged expertise in medicinal chemistry which underpins its discovery platform and has created, in our view, an attractive, and well balanced, clinical portfolio. The two lead in-house assets, porcupine inhibitor RXC004 in oncology and ROCK2 inhibitor RXC007 for fibrosis indications, are both in the clinic and on track to progress to key proof of concept trials. The partnered assets are also progressing towards the clinic as evidenced by partner-derived revenues such as this RXC006 milestone. A solid balance sheet with £39.9m in cash resources means Redx Pharma is funded through to end-2022; a period that covers a number of important value-inflection points. Our rNPV-based valuation, based on conservative assumptions, is £350.7m, equivalent to 128p/share (86p fully diluted).Redx Pharma is engaged in drug discovery, pre-clinical development and licensing. The principal activities of the business are the discovery and development of proprietary, small molecule drugs to address areas of high, unmet medical need. Co. is developing a porcupine inhibitor drug candidate, RXC004, as a cancer treatment using in vivo models of pancreatic and gastric cancer. ROCK1/2 inhibitors (known as systemic pan-Rock inhibitors) are known to induce hypotension. Co.'s ROCK inhibitor is designed to only work at the site of action in the gastrointestinal tract and degrades quickly, once absorbed, through enzyme-mediated metabolism in the blood, deeming it a soft inhibitor.
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