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Redx secures funding after opting to remain independent

Redx's immediate cash needs have been sorted through a share subscription., although further funding is being negotiated

Redx Pharma Plc -

Redx Pharma PLC (LON:REDX) shares jumped on Monday after the firm said late on Friday that bid discussions with Yesod Bio-Sciences Limited have been terminated but, separately, revealed that it has secured funding via a share subscription.

In early afternoon trade, Redx shares were 16% higher at 9.00p.

In a statement, the board of the AIM-listed drug discovery and development company said it had decided that the possible offer from Yesod substantially undervalued Redx and its assets.

READ Redx Pharma extends deadline for takeover discussions

Meanwhile, it added separately, Redmile Group, a large and well-funded US-based specialist healthcare and life sciences investment firm, has confirmed that, together with Sofinnova Partners, it will provide up to £26.3mln of funding to Redx.

Firstly, Redmile has agreed to subscribe for 11.5mln new Redx shares at 11.2p a share. Redx shares closed at 7.25p on Friday, down a penny on the day.

The subscription will provide Redx with £1.3mln and will extend the company's cash runway until the end of this April.

Additionally, Redmile will provide Redx with £5mln of short-term debt funding, while Redmile and Sofinnova have indicated they will commit further investment into the company, probably in the form of a £20mln (or thereabouts) convertible loan.

The board of Redx said it intends to finalise the terms of the short-term debt funding and the convertible loan note issue as soon as possible.

"The board is pleased that it is able to bring this period of uncertainty regarding an offer for the company to an end,” Iain Ross, the chairman of Redx said in the statement.

“We believe that with Redmile and Sofinnova Partners support we will be able to secure a way forward for the company that delivers better value for shareholders. We are delighted that MGL, which has provided the company with robust support particularly throughout the last three years, continues to share our vision to build a significant enterprise and that Redmile and Sofinnova Partners, both established and sophisticated investors in the healthcare/biotech sector wish to support the company," he added.

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Quick facts: Redx Pharma PLC

Price: 35 GBX

AIM:REDX
Market: AIM
Market Cap: £66.5 m
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