Sam Waksal’s attempt to buy Redx Pharma has fallen apart. The failure of a company set up by the once-jailed biotech executive to close a deal led Redx to turn to Redmile for the cash to keep going until next month.
Redx revealed it was in talks with Waksal, the former ImClone CEO who was jailed for insider trading, and associates about a possible acquisition late last year. Days later, Waksal was listed as owning 60% of a new company, Yesod Bio-Sciences, that sought to buy Redx. Talks went on throughout January and February, with Redx stating last month that it had made “significant progress.”
The progress enabled Redx to push back the date for agreeing a deal to the end of February. Shortly before the deadline, Yesod revealed it would not make a firm offer to buy Redx. Around 90 minutes later, Redx disclosed it had secured funding from Redmile.
Redx said the deal collapsed because the offer put together by Yesod “substantially undervalued” its operation. The end of takeover talks pushed Redx to look elsewhere, primarily to debt, for money to support its operations.
Redmile is set to make an equity investment of around £1.3 million ($1.7 million) in Redx, extending the British biotech’s cash runway out to next month. Redx plans to take on debt to keep the lights on beyond April. Redmile is in talks about providing Redx with a £5 million short-term loan. Redx is also talking to Redmile and Sofinnova Partners about a £20 million convertible loan. Last year, Redx relied on a loan from Moulton Goodies, its largest shareholder, to remain operational.
Debt has caused Redx problems in the past. In 2017, Redx went into administration as the council in the English city of Liverpool sought to recoup a £2 million loan. The crisis forced Redx to sell its BTK inhibitor to Loxo Oncology for $40 million upfront. The deal lacked success-based payments, leaving Redx unable to profit from Eli Lilly’s plan to run “an ambitious comprehensive development program” for the asset it acquired in its takeover of Loxo.
The sale of the BTK inhibitor made porcupine inhibitor RXC004 the top priority at Redx. By acting on the Wnt signaling pathway, Redx thinks RXC004 can improve outcomes in solid tumor patients and combine well with checkpoint inhibitors. However, Redx’s efforts to test that hypothesis have been hindered by safety problems, which led it to pause its trial for nine months and change the protocol.
Redx resumed the trial early last year and, according to ClinicalTrials.gov, expects to complete it in the coming months. The completion of the study could provide a fillip for Redx, enabling it to raise more money, but it first needs to finalize the loan that will get it to that near-term milestone.