From developing highly differentiated ‘best-in-class’ new drugs to IPO

Redx is focused on the development of proprietary, small molecule therapeutics to address areas of high, unmet medical need, principally in cancer and infection. By improving the characteristics of existing drug classes to create highly differentiated, novel, best-in-class drugs, Redx has already established a portfolio of 13 proprietary, (patent-protected) drug programs. Five programs have now achieved pre-clinical proof of concept, with relevance for respective therapies to treat MRSA, bone tumours, skin, brain and blood cancers. In March Redx Pharma became the latest UK life  science company to IPO on AIM. Here we talk to their CEO Dr Neil Murray.

B&M: A good place to start today would be to understand a bit more about Redx Pharma. If we could start with you giving us your elevator pitch.

NM: Redx is a small molecule discovery and development business which is positioned as a pipeline generator for large pharma. It’s really in response to the changes we’ve seen in the industry, with big pharma backing off of doing early stage R&D and looking to licence in products at an earlier stage than they previously would. Rather than taking the traditional biotech
approach of being narrowly focussed on individual targets or
indications, we have a very broad based approach in cancer and
infectious disease and now moving in to immunology where we are looking at striking multiple license deals with pharma partners.

B&M: What would you say is your unique angle across those focus areas?

NM: There are various aspects that we think mark us out. We have an approach called Redox Switch that is a proprietary medicinal chemistry approach. We also have very strong capability around computational chemistry and modelling of drug targets as well as proprietary biology capabilities. So it’s about putting these things together in a unique way that allows us to create new drugs faster and more efficiently than our peers. In some respects though, it could be described as old fashioned, because it’s about rational drug design.
So this is not high through-put screening, big combinatorial
libraries, which are still the source of a lot of large pharma compounds today. This is about a detailed understanding of biological targets, specifically designing drugs that are going to interact with those targets in a more effective way. And then crafting those drugs chemically, testing them, and going through that iterative loop in order to produce compounds that have the characteristics you’re looking for in any particular indication.

We now have multiple data points across our pipeline that show we can produce these candidates in about half the time of our peers and again, not surprisingly, for less than half the cost of our peers. So it’s a very effective way of doing drug discovery and development.

B&M: You mentioned the 2 market areas, cancer and infectious
disease. Are you treating both markets equally?

NM: In terms of resourcing, we’ve got about 140 staff in the business and more than 120 of those are scientists. That 140 is split roughly 90 in cancer and 50 in infection. Within cancer one of our key focus areas is around the developing science of tumour immunology using small molecule drugs. So looking at targets like IDO for example, cFMS, and even PD1. Another key area is in cancer stem cells where there’s a lot of interest in drugs targeting specific pathways like the WNT pathway. That opens up opportunities in cancer therapy that were previously blocked off.

On the infection side it’s primarily about anti-microbial resistance. Globally, AMR is probably the biggest challenge of our generation. For example, the O’Neill Review on behalf of UK Government is
forecasting that the global cost of AMR by 2050 will be $100 trillion. That’s a huge number. And you’re talking about the number of people dying from resistant infection rising to 10 million a year.

We haven’t seen any new classes of drugs to treat AMR in a generation and this is something that we are trying to change. So resistant infection is a big focus of Redx. We also have some anti-viral activity, particularly around hepatitis B.

B&M: Was it a purely strategic decision to go into those markets?

NM: It was very much a strategic decision. The key thing for us is the programs we’re working on have to be commercially attractive to our customers who are large pharma and emerging pharma companies. That means that there has to be a clear clinical need for patients.
We’ve got to be able to licence these programs on to partners, otherwise there isn’t any point in doing them. So it’s not about science for science sake – every program we work on starts with an assessment of what the clinical need and the market
opportunity is for any given target.
We spend a lot of time talking to both large and emerging pharma companies, about what it is they need and want, and crucially why as that allows us to produce new drug programs that partners will want to license.

B&M: Is there one particular program that you would highlight as being particularly exciting?

NM: Picking out one is quite difficult to be honest. At the moment we’ve got 13 programs in our pipelines across cancer and infection. If there was a highlight in our oncology portfolio in terms of standout commercial opportunity, it would probably be our IDO program. IDO is a target that has seen a huge amount of interest in the industry of late. Recently BMS bought Flexus for a reported $800 million up front, and that was all to get hold of their IDO asset. And indeed just last week Roche did a deal on an IDO program. So there’s a strong appetite around that particular target. So that’s a program that is dear to our hearts. But equally something like our Porcupine program, in cancer stem cells, is a very exciting program. That’s one that is a perfect exemplar of the power of Redx’s approach. We only started in February of last year and we’ve just announced the completion of a successful in vivo proof of concept study. So from ground zero to in vivo POC in 12 months – you just can’t do it any faster than that.

On the infection side, one of the things that is exciting is our MRSA program which we’re doing in collaboration with the NHS. We signed a deal in November of 2013 with the Royal Liverpool and
Broadgreen University Hospitals Trust, which they tell us is a unique deal. It’s the only time the NHS has actually invested money into a drug program in return for a share of commercial up side from that program going forward.

And that’s been a particularly effective collaboration. It’s allowed us to access their infection expertise and particularly their clinical
knowledge around infection. The collaboration sees Redx generating anew drug for MRSA to go into clinical studies at the Royal Liverpool Hospital. They will run the early clinical studies in their clinical trials unit in Liverpool, then Redx will licence that program on to a large pharma client following successful completion of those studies.

B&M: We’re now a month since the IPO. It would be good to get an understanding of the reasoning and rationale behind the listing.

NM: The rationale behind the IPO was all about creating options for the business. Up until the IPO we had had about £13 million of equity investment and about £11.5 million of grant funding and that had allowed us rapidly to take the business to a certain point in its
development. The founders and Board were then looking at how best do we take Redx forward? Not just with the breadth of pipeline that we’ve got but equally how do we look at leveraging the new RGF grant that we received to support the establishment of an immunology group.

So it was about being able to access the capital that gave us the options to look at how we take the existing programs forward but also how we expand the business. For example, we wanted to have the flexibility that if we saw a particular asset in our portfolio that we wanted to take further into development, we could do so, and have the availability of funding to do that.

In assessing the decision to enter the public markets, we did think about other markets as well as AIM, as you would expect. But the Board came to the decision that, given the size and character of the business, AIM was the best home for us. We were just very pleased to get the IPO away solidly.

There was a different climate around the markets in the first quarter of this year compared to of last year. In the first three months of 2014, there were 17 IPOs on AIM that raised over £1.1 billion combined. In the first three months of this year, there were 9 IPOs on AIM that raised £84 million. Going forward the Board will continue to look at the strategy of the business and make sure we have appropriate capital available to meet our needs.

B&M: What is it that you think made your story compelling when going to investors?

NM: I think the key part for us is the fact that we’re not a traditional
biotech with a binary risk profile. One of the real challenges for our sector in the public markets, is the perception, rightly or wrongly, about previous generations of biotech companies and a failiure to deliver for investors.

Biotech is a tough business. And one of the reasons we have the strategy we have is frankly about risk mitigation. Not everything is going to be successful. Consequently, if you only have one or two things in your pipeline, and one of them is not successful, you’ve got a problem.

If you have a breadth of programs in your pipeline, and particularly if you have the kind of model we have which is more about earlier licencing and therefore crystallising revenues at a much earlier point, it potentially gives you a much more rapid path to profitability and sustainability as a business. I think that was what was attractive about Redx, particularly to generalist investors. And I think that was what got people interested.

B&M: We often ask CEO’s their experience, lessons learned from the process. Is there anything you like to share?

NM: I think the critical thing about it is understand it’s a process. And accept it for what it is. Make sure you’ve got a strong story. Make sure it’s presented in the right way, and that you come across as credible. Institutional investors are not charities, they’re looking for a return on their investment. So you’ve got to give them that feeling that they can trust you to generate a return for them. That’s the long and short of it.

B&M: What are the aspirations or ambitions you have for Redx going forward?

NM: Ever since the four founders set up Redx, we have always sought to grow and develop the business. We’ve got a market cap of around £55 million right now. Our plan is for it to be significantly higher than that. Whilst Redx has had great success to date, we’re not content with where we’re at. This is about growing a meaningful, sustainable pharmaceutical company.

B&M: What are the challenges you foresee in achieving that ambition?

NM: Clearly any mechanism by which we’re deriving revenue is a critical part of what we do. At the same time, for me, if we’re doing all the right things in the company the revenue will take care of itself. Part of doing the right thing is making sure we’ve got detailed engagement with our customer base. That’s something we’ve always done from the very start. Even before we had things to sell, we spent a lot of time sitting down with people just saying, “Hi, this is who we are”, and developing those relationships. And we’ll continue to build that going forwards.

But the critical thing for me, the big challenge, is managing growth. If you look at what we’ve done as a business, in March of 2012 Redx was 15 staff. In March of 2014 we were 140 staff. So we had a very rapid growth phase in the company. And adding an
immunology subsidiary will see a further growth in staff numbers.

We have to make sure that, through that growth phase, not only do we deliver for our investors, but we deliver in a way that is consistent with the values and aspirations of the company. It’s very easy when you’re bringing in a lot of people quickly for that to become diluted. And you actually lose your focus and lose your way. And of course the consequence of that is you don’t deliver.

That’s the challenge for us. If we do that, the rest will take care of itself.

B&M: To close, what is it that excites you about the potential of Redx?

NM: I’m very excited about some of the programs we’ve got in the
pipeline. I talked for example about our porcupine program
earlier, which really is the essence of what we do in terms of the speed with which we’ve been able to drive that program forward.

And that’s what excites me about the business. I’ve spent my career in the pharmaceutical industry and I know how challenging drug discovery and development is. And when I see the great results that our guys generate every day, it’s just exciting. We have fantastic people in Redx and there’s a real buzz about the company and what we’re achieving. And not just for the next 12 months but beyond that, that’s something we will continue to harness and drive the business forward.

You can read this and 10 other exclusive executives interviews in May’s Drugs & Dealers Magazine.


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