Biotech company’s share price trebles after major deal with pharma giant
The value of Liverpool City Region and Cheshire based drug company Redx Pharma trebled in early trading after it revealed a deal with AstraZeneca which could be worth nearly £300m plus royalty payments.
Its share price was trading more than 10 times higher than at the start of the year, when it was priced at just 8p.
But the AIM-listed company’s value has spiked this morning, reaching 90p – a 260% increase inside the first hour. The rise saw Redx’s market value jump by £120m to £175m.
Investors’ excitement followed news of a deal with AstraZeneca that will see the pharmaceutical giant further develop and commercialise a discovery that could aid sufferers of fibrotic diseases.
It is worth $17m (£13m) in early milestone payments and Redx Pharma could receive a further $360m (£280m) in milestone payments from the global licensing deal.
It would also be eligible for tiered royalties of “mid-single digit percentages” for any future net sales.
Redx Pharma’s chief executive Lisa Anson said the agreement highlighted the company’s “ability to generate molecules that have significant potential as novel medicines”.She added:
“We are excited by the potential of porcupine inhibition as a novel approach to tackling fibrotic-associated diseases where there is a real patient need.”
Fibrosis is an internal scarring process that impairs the function of an organ or tissue. It contributes to 45% of deaths in the developed world.
Redx’s research aims to stop and reverse the formation of fibrotic tissue.
It has four main areas of focus, including idiopathic pulmonary fibrosis (IPF). The AstraZeneca deal is to license the porcupine inhibitor for IPF.
Porcupine is a novel drug target that addresses IPF, a debilitating disease of the lungs which progressively causes scarring and a reduction in lung function. Sufferers have a life expectancy of 3-5 years.
Mene Pangalos, executive vice president, biopharmaceuticals R&D at AstraZeneca, added: “Fibrotic diseases such as idiopathic pulmonary fibrosis have significant impact on patients’ lives and new therapies are urgently needed. We look forward to progressing this porcupine inhibitor into clinical trials.”