Redx Pharma has sold its BTK inhibitor program to Loxo Oncology for $40 million (€34 million) upfront to pay off an outstanding loan. The deal was put together by the insolvency firm Liverpool council called in to recoup the loan and rescue Redx.
Representatives of the insolvency firm, FRP Advisory, have run day-to-day operations at the British biotech since being called in in May. FRP’s job as administrator was to offload Redx assets to raise money to pay creditors, notably the city council that loaned the biotech £2 million in 2012. And, with Redx’s value lying in its pipeline, the administrators looked to preclinical programs to raise the money.
Loxo has taken advantage of the situation to snap up an early-stage candidate without tying itself to milestones and royalties. With the administrators focused on generating cash immediately, they have accepted $40 million upfront for the BTK inhibitor. Redx won’t receive a cent more, however successful the program proves to be.
That could sting if Loxo makes a success of lead BTK candidate RXC005, now known as LOXO-305. But in the near term the deal looks likely to be the salvation of Redx. The administrators think the sale will enable Redx to pay off its creditors and have enough cash left over to fund the rest of its pipeline. With remaining pipeline prospect porcupine Inhibitor RXC004 set to enter a phase 1b/2a in gastric, biliary and pancreatic cancer, Redx can immediately put the funds to good use.
The start of the trial will form part of Redx’s attempts to get back on track. Trading of Redx’s stock has been suspended since the administrators took control in May. With the Loxo deal set to return Redx to solvency, the biotech’s management team is set to regain control and apply to lift the suspension once the administrators approve a final business plan.
Across the Atlantic, Loxo is now preparing to take the BTK inhibitor Redx guided through preclinical into human testing. Loxo plans to file an IND next year. That will start the process of validating Loxo’s bet—and Redx’s former interest—in selectively and reversibly inhibiting BTK, a target relevant to B-cell leukemias and lymphomas.
“It is our belief that the widespread use of covalent BTK inhibitors, such as ibrutinib, will increasingly drive acquired resistance through a mutational event in BTK called C481S, leading to a group of relapsing patients in need of new therapies. Our work suggests that a highly selective, reversible BTK inhibitor can address this emerging unmet need in patients whose disease has progressed on a covalent BTK inhibitor,” Loxo chief business officer Jacob Van Naarden said in a statement.
Loxo has slotted the BTK inhibitor into its early-stage pipeline alongside inhibitors of RET and TRK. The Stamford, CT-based biotech is looking to the early-stage pipeline to build on the success of LOXO-101, data on which triggered a surge in its stock price earlier this year.