Redx Pharma

Ready to ROCK as RXC008 enters the clinic

Please find attached our Redx Pharma report focused on RXC008, a potential first-in-class GI-targeted pan-ROCK inhibitor for fibrostenotic Crohn's disease. Redx is a UK-based clinical stage drug discovery company with a proven medicinal chemistry platform, pharma partnerships, and a pipeline of wholly owned assets focused on oncology and fibrotic diseases.

Symbol        REDX (AIM London)

Price           18.5p (£72.0m)

Date             28 February 2024

Redx Pharma’s differentiated ROCK inhibitor assets hold much promise in the treatment of a variety of serious and intractable fibrotic conditions. Hence, the start of a Phase I trial with second ROCK programme RXC008 is an important milestone. The preclinical data for RXC008 are extensive and, if replicated in the clinic, suggest that RXC008 could have a unique role in the treatment of fibrostenotic Crohn’s disease, a debilitating condition that requires repeated surgical interventions. Meanwhile, data for lead ROCK asset zelasudil for IPF (idiopathic pulmonary fibrosis), which are a key catalyst for Redx, continue to be expected during H124. Redx also continues to execute on business development opportunities within its pipeline, with a third deal signed with Jazz; further deal(s) could be catalysed once RXC004 data become available in H124. Our updated rNPV valuation is £386m, or 99p per share.

  • Second ROCK programme starts clinical development The first subject has been dosed in the Phase I trial for RXC008, a potential first-in-class GI-targeted pan-ROCK inhibitor for fibrostenotic Crohn's disease, which is anticipated to be used in combination with standard-of-care anti-inflammatories (anti-TNF). The first part of the Phase I study includes healthy volunteers and will primarily assess safety, with initial data expected by end-2024; the second part will include fibrostenotic Crohn's patients and will also assess target engagement and biomarkers.
  • Extensive preclinical data support Phase I development Preclinical data and pre-IND studies have established RXC008’s GI-restriction. Complete fibrosis reversal has been seen in a therapeutic preclinical model. In addition, RXC008 could have a synergistic effect with anti-TNFs in the treatment of fibrostenotic CD.
  • Third deal with Jazz highlights pipeline optionality The recent KRAS deal with Jazz is another example of Redx’s ability to execute on partnering opportunities. These contribute non-dilutive funding, with Redx eligible for remaining potential milestones of up to c $1.2bn from Jazz alone, in addition to milestones from partner AstraZeneca. RXC004 (zamaporvint) has been earmarked for partnering, hence clinical data in H124 in combination with checkpoint inhibitors will be important.
  • rNPV increased to £386m or 99p/share; cash runway into 2025 Incorporation of the Jazz KRAS deal and slightly de-risking RXC008 result in an increased valuation of £386m/$463m (from £367m/$441m previously), or 99p per share. The $10m upfront from Jazz extends the cash runway into 2025, well beyond key H124 value inflection points (Phase II zelasudil and RXC004 data).

Analysts 

Philippa Gardner pgardner@trinitydelta.org

Lala Gregorek lgregorek@trinitydelta.org

Franc Gregori fgregori@trinitydelta.org

MiFID II 

Trinity Delta only produces research that falls under the non-monetary minor benefit group in MiFID II. We do not seek payment from the asset management community and do not have any execution function, which means you will be able to continue receiving our research under the new MiFiD II regulations. To date, all compliance teams at our asset management readers have confirmed that they are satisfied that they can continue to receive our research.

If you would like any further information, please contact us on: 

Tel - +44 20 3637 5041 

Email - info@trinitydelta.org

Website - www.trinitydelta.org

About Trinity Delta 

Trinity Delta is a leading provider of issuer-paid equity research for the healthcare and life sciences sectors. We have an experienced, integrated team of analysts providing the highest quality services to companies and to investors. Our expertise in biotech, medtech, specialty pharma and consumer health sectors enable a deep understanding of our clients and their ambitions, which is translated into accessible, impactful and timely research, clearly outlining the investment case. 

Trinity Delta is regulated by the Financial Conduct Authority (Reference number: 725161). 

Trinity Delta, 3rd Floor, 80 Cheapside, London, EC2V 6EE