Redx has suspended trading of its shares after a creditor stepped up its attempt to recoup a loan. Liverpool council called in administrators to help it claw back a £2 million ($2.6 million) loan it gave Redx in 2012 by selling the biotech’s assets.
The council awarded Redx the three-year loan to help it expand in the city. Today, two years after the original repayment deadline passed, Redx has yet to pay up and has relocated its headquarters from Liverpool to AstraZeneca’s old site in neighboring Cheshire. The souring of the relationship and passing of the extended repayment deadline has prompted the council to appoint insolvency firm FRP Advisory.
U.K. law enables administrators to take over day-to-day management of a company. One goal of the process is to secure cash for creditors by offloading assets. FRP Advisory has already figured out how to squeeze money out of Redx.
“The group’s business and assets include a number of specialist oncology drugs at various stages of development, together with related intellectual property, and the administrators will be seeking to realise the assets in the interests of creditors. Interested parties in the group’s business and assets should make early contact,” the insolvency firm told YBnews.
The most advanced candidate in Redx’s pipeline is RXC004. Redx filed a clinical trial application for the inhibitor of the porcupine enzyme and Wnt signaling pathway last month. Management sees the drug as a potential treatment for pancreatic, biliary and gastric cancers, either as a monotherapy or in combination with a PD-1 checkpoint inhibitor. The planned clinical trial features a checkpoint inhibitor combination arm.
Redx’s ability to execute its R&D strategy is now in doubt.
The biotech responded strongly to the actions of Liverpool council, which chairman Iain Ross called “extremely unfortunate and quite baffling.” Ross’ response is underpinned by a belief Redx was closing in on an amicable resolution to the situation—it had an offer rejected by the council—but neither he nor the company have disputed the core facts of the case.
What is disputed is Redx’s handling of the debt. The council said Redx has “shown no willingness to make any repayment of any size”—despite raising cash from investors—and accused the biotech of failing to contact it in the run-up to the repayment deadline. Redx, in contrast, said it has had “a good relationship” with the council over the past five years and that its board felt “consistently confident” a resolution was within reach.