(Alliance News) - Redx Pharma PLC on Monday said it has entered into a GBP5 million short term loan agreement from entities controlled by US investor Redmile Group LLC.
In February, the drug discovery company said Redmile agreed to subscribe to 11.5 million shares at 11.2 pence each, - raising GBP1.3 million - in addition to providing a GBP5 million loan.
The amount will be borrowed in a single drawdown and is fully repayable by August 31, 2020. The loan has an interest rate of 10% per annum. Three months from signing, the interest rate will be 20%. The loan amount is secured over all of of Redx's assets and its subsidiaries, with the exception of the RXC006 and GI-Targeted ROCK research programmes.
The loan proceeds will be used to increase Redx Pharma's general working capital, and extend the company's cash runway into the third quarter of 2020.
Redx noted that although Redmile holds 48.2% of shares - which makes it a related-party transaction - the terms are fair and reasonable.
The stock closed 3.0% lower at 13.82 pence each on Monday in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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