(MENAFN- ProactiveInvestors - UK) ''The fundamentals of the business are incredibly strong and we now need to maximise the value that we can secure from the portfolio. After that the share price takes care of itself.''
The words are those of Redx Pharma Plc (LON:REDX) chief executive, Neil Murray, commenting on the impact of the biotech rout on the company''s share price.
Murray acknowledges that the slide in biotech stocks has been a problem but points to the unwavering support of his blue-chip investor base that boasts Axa Framlington and Seneca Partners.
This was evident in the recent 10mln share placing in April, which received strong support from the investor base. In fact, two new institutions were added to the register, household names Aviva (LON:AV. and Legal & General (LON:LGEN).
These major investors have recognised that Redx is in areas of research that are really hot at the moment.
Redx''s oncology team is developing treatments that use the body''s own immune system to fight cancer.
Its anti-infectives team, meanwhile, is working on classes of antibiotics that might one day help head off the time-bomb caused by drug resistant infections.
When we last spoke to Murray the mantra was to partner these new compounds early; indeed it already had collaborations with AstraZeneca (LON: AZN) and the NHS.
The latest fundraising has provided Redx with more financial flexibility and the opportunity to take promising candidates to the clinical trial stage.
Its Porcupine inhibitor is being propelled along this pathway and should undergo first-in-human studies to assess its safety in the first quarter of next year.
Initially it will be given to cancer patients with solid tumours to confirm safety, though the treatment is likely to be focused on difficult to treat cancers such as pancreatic and gastric cancers.
Porcupine inhibitors are a new and potentially breakthrough method of fighting the killer disease.
They work by targeting cancer stems cells that can often lie dormant after traditional treatment and are associated with a recurrence of the illness. Kill the stem cells and you have a chance of eradicating the disease completely.
Novartis currently is the only drug major with a Porcupine inhibitor in the clinic and Redx is using the Swiss giant''s compound as its benchmark ''with a view to coming up with something better''.
It is also developing the next-generation of Bruton''s tyrosine kinase (BTK) inhibitors for the treatment of leukaemia.
Redx''s BTK will be one of the second-generation of compounds with fewer side-effects than the market leader Imbruvica (Ibrutinib). More importantly, the company''s drug is targeted at overcoming resistance that patients have developed to ibrutinib.
''We have come up with a series of compounds that are not only clean and selective for BTK, dialling out the side-effects, but which have been specifically designed to work in patients who are suffering from Ibrutinib resistance,'' said Murray.
Redx hopes to have selected a candidate by the end of this year ready to go into the clinic in early 2018.
That''s far from the end of the story for the oncology pipeline, which includes a Smoothened inhibitor for basal cell carcinoma (a form of skin cancer).
It is also developing a compound that inhibits IDO, a pathway active in many cancers and it is working on a number of targets in the emerging area of immuno-oncology.
In anti-infectives, Redx has teamed up with the Liverpool and Broadgreen University Hospital NHS Trust to develop drugs to tackle gram-positive bacteria such as MRSA.
"Critically, these are novel drug scaffolds, so they are potentially the first new class of antibiotics in a generation,'' said Murray.
''One of the main reasons that we are facing such a critical shortage of antibiotics that still work is because our industry has been unable to create new classes of drugs.''
Not just that, they are designed in a way to make it very difficult for the bacteria to evolve resistance. Redx also has a programme developing drugs to combat Gram-negative strains. It is already having some early success with gonorrhoea where the venereal disease has become resistant to the traditional drugs.
Now back to the share price and, in particular, what''s likely to get it jump started.
The notoriously slow pharma industry has taken note of the rapid progress Redx is making. Although the company was only founded in 2010, it has already advanced seven programs to pre-clinical proof of concept. Notably, all programmes have reached this stage well ahead of industry averages.
''One of the challenges of this industry is we are not selling widgets. So deals are lumpy and infrequent,'' said Murray.
''But we are pleased with the way commercial discussions are progressing around our programs.''
Redx has already successfully secured early stage partnerships and collaborations, but the company will also look for partners in later phases a strategy that will allow Redx to keep a bigger slice of the pie, so to speak. In other words, the longer Redx keeps the programme, the greater the returns.
What should really interest investors is that a deal could happen at any time and when it does, it will act as a catalyst for Redx''s share price.
So where most biotechs only have one program that could lead to a seismic share price moment, Redx differentiates itself by offering many opportunities to catapult its share price ahead. Further catalysts include Redx''s candidates entering the clinical trial phase - the Porcupine inhibitor is expected to do so in the first quarter of next year.
Redx, therefore, offers a compelling investment case which is likely why Redx''s CEO and its major investors remain unfazed by the recent biotech rout. Indeed, a review of the business does suggest the share price will ''take care of itself''.
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