REDX.L Regulatory News (REDX)

21 March 2017

AIM: REDX

REDX PHARMA PLC

("Redx" or "the Company")

Final results for the year ended 30 September 2016

Redx (AIM: REDX) announces its results for the year ended 30 September 2016

· Discovery engine delivers two assets to progress into clinical stage from extensive pipeline

· Strategic refocus:

o Redx restructures to become a research and development focused company

· £12 million gross raised post the period end and £10 million gross raised in March 2016

Pipeline produces first development assets:

· RXC004 - our best-in-class Porcupine inhibitor

o Development candidate nominated for pancreatic, biliary and gastric cancer

o Shown to have the potential to be used in combination with other immune-oncology products such as immune checkpoint inhibitors (anti-PD-1), with data presented at EORTC-AACR meeting in November 2016

o Scheduled to enter first-in-human studies post clinical trial application (CTA) submission in Q2

o Potential to treat fibrotic disease being investigated

· RXC005 - our best-in-class reversible BTK inhibitor

o In vivo proof of concept achieved for the reversible BTK program

o Development candidate nominated for drug resistant chronic lymphocytic leukaemia (CLL) post -period

o Pre-clinical profile presented at ASH meeting in December 2016

o Investigational new drug (IND) application and CTA to be filed around the end of 2017

Strategic Refocus

· Redx will refocus its business to concentrate on its key assets in oncology and immunology, namely Porcupine and BTK

· Anti-infectives research proposed to continue only under external collaborations

· Redx remains committed to discovery research, but at a reduced investment level

· Head count will be significantly reduced by around 86 positions. This equates to an approximately 60% reduction in staff.

Key Financials

· Net cash at 30 September 2016: £5.8m (2015: £9.4m)

· Other operating income: £2.4m (2015: £2.6m)

Changes to the Board of Redx Pharma

The Board has received notifications from two directors, Dr. Frank M. Armstrong, Chairman of the Board of Directors and Mr. Peter McPartland, Non-Executive Director, have decided not to stand for re-election at the upcoming Annual General Meeting for shareholders. Dr. Peter Jackson, Non-Executive Director, co-founder of Redx and Executive Chairman up to August 2014, will be stepping down from the Board on 31 March 2017.

Neil Murray, Chief Executive of Redx Pharma Plc, commented, "Redx has created a world-class capability in small molecule drug discovery in oncology and immunology. We have a strong research engine that continues to deliver an innovative pipeline, but we must now shift our focus towards developing our key portfolio assets, specifically our Porcupine and BTK programs for hard to treat diseases. To reflect this new focus, we are reorganizing our business, including plans to reduce headcount. 

"On behalf of the Board of Redx I would like to thank Dr. Frank M. Armstrong, Dr. Peter Jackson and Mr. Peter McPartland for their immense contributions to the success of Redx, both as a private and as a public company. Dr. Peter Jackson has worked tirelessly for Redx since he helped found the business. I would also like to extend my personal thanks to Frank, Pete and Peter for the support they have given me and for the highly professional way in which they have carried out their roles."

Dr Frank M. Armstrong, Chairman of Redx Pharma Plc, added, "I am pleased to have been a part of Redx, guiding the Company through the transition from private to public markets. Redx has made substantial progress with the portfolio since the IPO and I look forward to the Company's continued progress as it makes this critical transition to clinical development and wish the Management, staff and shareholders every success for the future."

Conference Call

Redx Pharma will host a conference call today at 14:00 GMT / 10:00 EST to discuss its final results for the year ended 30 September 2016. A presentation will be available on the Redx Pharma website 10 minutes before the start of the call at http://redxpharma.com/investors.html. To access the conference call, please dial one of the appropriate numbers below quoting the conference ID 86599055.

UK: +44 (0)1452 55 55 66

US: +1 (866) 966-9439 

The call will be conducted in English and a replay will be available on the Company website for 30 days.

For further information, please contact:

Amber Fennell/ Matthew Neal/ Melissa Gardiner +44 203 709 5701 redx@consilium-comms.com 

About Redx Pharma Plc

Company website: Redxpharma.com

Redx is focused on the discovery and development of proprietary, small molecule therapeutics to address areas of high, unmet medical need, principally in cancer, immunology and infection providing a pipeline of assets to larger and emerging companies. By improving the characteristics of existing drug classes to create highly differentiated, novel, best-in-class drugs, Redx has already established a broad portfolio of proprietary drug programs.

Chairman's Statement

Overview

It has been another important year for Redx and I am pleased to report the Company's second set of annual results as a publicly listed company. Redx's £10m (gross) share placing at the end of March 2016 allowed the Company to aggressively continue to progress its pipeline.

Redx has made significant progress with its proprietary research programs over the year. We identified two drug development candidates in oncology, in our Porcupine (RXC004) and reversible BTK (RXC005) programs. BTK was announced after financial year end in October 2016. During the year, we demonstrated that our Porcupine inhibitor could have a crucial role in improving the immune system response of some cancer patients when used in combination with an existing immunotherapy, anti-programmed cell death-1 (anti-PD-1). We also achieved our seventh pre-clinical proof of concept, with our reversible BTK program in oncology.

The newly established immunology research team at Redx made good progress during 2016. One of the key disease areas for the team is fibrotic diseases of the lung, kidney and liver. There remains a huge unmet medical need in this area, and we believe we already have a range of potent and novel compounds which are being progressed into further research studies.

One of the key developments for the anti-infective team was the identification of novel antibiotic compounds against drug resistant Gram-negative bacteria. In vivo testing confirmed that these compounds are highly effective and they have the potential to provide a new class of antibiotic agents in the fight against Anti-microbial Resistance (AMR) which is an area of medical concern.

In developing new therapies, all our research teams will continue to focus on targets which are both commercially attractive and scientifically validated. Our objective is to create valuable, novel drug candidates that we can progress into development ourselves or in partnership with large pharmaceutical companies or well-financed emerging companies.

Our Team

We have established an outstanding senior executive team, with breadth and depth of scientific and commercial experience. The success we have achieved so far reflects the talent and ambition within the business as a whole and on behalf of the Board, I would like to thank everyone at Redx for their continued hard work and commitment over the year.

During the year, we were delighted to further strengthen our Board of Directors with the appointments of Bernd Kirschbaum and David Lawrence as Non-Executive Directors. Bernd has over 25 years' experience in the industry having held research leadership positions in Merck/Merck Serono, Sanofi-Aventis, Aventis and Hoechst Marion Roussel and brings expert knowledge in drug research across a range of therapeutic areas. David also has over 25 years' experience in the biotech and pharmaceutical industries including companies such as Chiron, Acambis and GlaxoSmithKline. He has a strong track record in strategy, business development and commercial management, including working with a number of investors, biotech start-ups and SMEs.

At the end of September 2016 our CFO Phil Tottey left the Company and Andrew Booth, formerly Financial Controller, has been acting as Interim Finance Director pending a permanent appointment.

Outlook

We look forward with confidence to further developments of the business in 2017, which the Board expects will be a transformational year for Redx as it transitions from a pre-clinical to a clinical stage Company. As we make that change, our investment focus will be on driving our high-value, clinical development programs. We will continue to support the right level of pre-clinical projects to maintain the breadth of our pipeline and provide the next generation of clinical programs for the Company, however the implementation of this restructuring will mean a reduction in the current headcount of Redx. Although, unfortunately, this will have a major impact on many valued employees of the Group, the Board has agreed that this is the right thing to do to enable Redx to progress its emerging clinical pipeline. The business will make every effort to support and assist those affected.

We also aim to seek further opportunities to develop the business, including potential new commercial partnerships.

On a personal note, after careful consideration I have decided not to offer myself for re-election at the next Annual General Meeting. I am pleased to have been a part of Redx, guiding the Company through the transition from private to public markets. Redx has made substantial progress with the portfolio since the IPO in 2015 and I look forward to monitoring the Company's continued progress as it makes this critical transition to clinical development and wish the management, staff and shareholders every success for the future.

Dr. Frank Armstrong, Non-Executive Chairman

Operational Review

The successful share placing (£10m gross) in March 2016 established the financial foundations for Redx to progress its pipeline during the year. The progress of our two leading programs, Porcupine (RXC004) and BTK (RXC005), has been rapid and, as these programs transition into the clinic, the Company will need to focus and balance its resources on the clinical development of these key assets in addition to continuing to maintain a steady flow of projects through the research pipeline. 

Pipeline Progress

The Redx pipeline has continued to advance significantly over the last year. During the period, we achieved in vivo proof of concept for the reversible BTK program, taking the total to seven. We currently have two programs, reversible BTK and Porcupine, which we are progressing into first-in-human clinical studies.

Oncology

During the financial year, our oncology research team nominated a development candidate in our Porcupine program (RXC004). This compound is now in formal development studies in preparation for progress into first-in-human clinical studies and RXC004 is expected to enter clinic in the next few months. We also secured proof of concept in our reversible BTK program and aim to initially develop this compound for Chronic Lymphocytic Leukaemia (CLL). Post financial year-end, we nominated a clinical candidate in this BTK program (RXC005). RXC005 is now in formal development studies and is targeted to be ready for the clinic by the end of 2017.

Reversible Bruton's Tyrosine Kinase program

Bruton's Tyrosine Kinase (BTK) is a key biological enzyme target which has been validated by the approval of the drug ibrutinib (Imbruvica™) in the treatment of a range of blood cancers, such as chronic lymphocytic leukaemia. Redx's reversible BTK inhibitor RXC005 has shown potent inhibitory activity towards wild-type (normal) BTK as well as mutant BTK (C481S), the latter of which is refractory to ibrutinib inhibition.

Porcupine program

Porcupine is a key enzyme in the oncogenic Wnt signalling pathway. This pathway is implicated in a range of hard-to-treat cancers with poor prognosis such as pancreatic, biliary and gastric cancers. Our Porcupine inhibitor, RXC004, is a potent inhibitor of this enzyme and pathway, leading to strong tumour growth inhibitory effects in a variety of cancer models. We have also shown that RXC004, when administered together with an immune checkpoint inhibitor (anti-PD-1) has a synergistic immune system modifying effect. Our initial clinical studies with RXC004 will be as a monotherapy but we have included the option for a combination therapy expansion arm together with a checkpoint inhibitor in our clinical study design.

Pan-Raf program

Raf kinases have been implicated in a multitude of cancers. Although there are already several Raf inhibitors approved there is scope for improving the characteristics of these drugs. Redx is developing novel small molecule therapeutics with activity against several Raf isoforms. These novel compounds target mechanisms of resistance associated with first generation Raf inhibitors. Currently these compounds are in lead-optimisation phase.

Immunology

The immunology group is focussing on BTK and Porcupine targets for a variety of immunology indications, with an emphasis on fibrotic diseases such as Idiopathic Pulmonary Fibrosis (IPF), Diabetic Nephropathy and Non-alcoholic Steatohepatitis (NASH) and autoimmune conditions. This is supplemented by work on Rho-associated protein kinase 2 (ROCK2), a target that is also implicated in fibrotic disease.

Anti-infectives

The anti-infectives group made significant progress in its infection portfolio during the period - particularly in its Gram negative antibacterial program which shows great promise. Whilst Redx's antibacterial assets continue to offer the prospect of value, future research and development activities will be conducted under external collaboration arrangements in order that we can focus our efforts on priority programs in oncology and immunology.

Industry Overview

The pharmaceutical industry continues to struggle with drug pricing which was a key topic in the US Presidential election. It remains to be seen how the new Trump administration will interact with the industry but there are clear signs that pricing will remain on the agenda. There are early indications that this may be off-set by a more liberal regulatory approach that could make it easier for companies to get new therapies approved. Following the surge in new drug approvals in the US over the last 5 years which alleviated concerns over the industry's R&D productivity, approvals in 2016 dropped to lows not seen since 2007 with only 19 new drugs sanctioned during the year.

Deal-making activity continued apace in the year although the move back to a preference for clinical-stage assets was further confirmed. In addition to continued attention on immuno-oncology assets and, particularly, combination therapies, one key trend that emerged during the year was the increased focus on fibrotic disease. Novel agents for conditions such as diabetic nephropathy (affecting the kidneys), non-alcoholic hepatosteatitis (NASH - affecting the liver) and idiopathic pulmonary fibrosis (IPF - affecting the lungs) are sought after as the industry turns its attention to a slate of chronic life-threatening conditions that are inadequately served by current therapies. When we established our immunology group in 2015, fibrotic disease was one of the key pillars that our research portfolio was built around.

All of this reinforces Redx's strategy to focus on cancer and immunology taking our lead programs into clinic so increasing their value and lining up the potential for higher value deals once clinical proof of concept is secured.

Collaborations and Partnerships

Redx continues to build on the partnerships that have been secured to date. In particular, our collaboration with AstraZeneca focused on an undisclosed oncology target has made good progress.

Our pipeline assets have been carefully chosen as programs that not only match the demand for new therapies that will improve patient outcomes but which are attractive to potential commercialisation partners. Looking forward, we continue to have encouraging discussions for out- and in-licensing programs with a number of parties regarding future commercial collaborations across our pipeline.

Strategy

Redx is entering a pivotal period in its growth. Over the last few years, we have created a world-class capability in small molecule drug discovery. The Company's discovery engine has created an innovative pipeline that has delivered two development assets - the Porcupine inhibitor RXC004 and the BTK inhibitor RXC005. As we take these assets forwards towards first-in-man clinical studies, the Company needs to concentrate its resources on ensuring that we secure the best return possible from our portfolio.

To this end, moving forwards, Redx will focus its business on its key assets in oncology and immunology. Whilst we continue to see value in our infectious disease portfolio, we will seek to continue to progress these assets under collaborative arrangements with external partners.

Redx remains committed to discovery research in order to ensure that we maintain an effective, high-value pipeline but the balance of resource allocation will shift to support a greater degree of development activity as we move forward into clinic in 2017. One result of this rebalancing will be a reduction in fixed costs as we decrease the number of research staff during the year.

Senior Management Team

At the beginning of the financial year, we were delighted to announce the appointment of Nicholas Adams as Chief Business Officer and at the end of the financial year Karl Hård joined as Head of Investor Relations and Corporate Communications. These key appointments have significantly strengthened the senior management team.

Financial Review

Other operating income

The Group generated other operating income of £2.4 million during the year ended 30 September 2016 (2015: £2.6 million). This principally comprised £2.2 million in respect of Regional Growth fund grants for immunology research administered by the Department of Business, Energy and industrial Strategy.

There were no new sources of other operating income during the year.

Share based compensation

During the year a Save as You Earn scheme was launched for all staff, resulting in the granting of 1.1m new options, this together with other new and existing options resulted in a charge of £0.2m being recognised in the Consolidated Statement of Comprehensive Income. (2015: £0.6m)

Non recurring relocation costs

During late summer 2016 the Group relocated its oncology research facilities from Liverpool to Alderley Park in Cheshire, consolidating the Redx Pharma group on a single site. For clarity, the employment, removal and other costs associated with the move have been disclosed separately in the consolidated Statement of Comprehensive Income, and amounted to £0.56m. It is not expected that there will be any further costs incurred in relation to the relocation.

Taxation

This year the financial statements record a tax charge of £0.1m (2015: credit of £0.7m), As part of it's continued discussions with HMRC regarding the impact of RGF funding on the recoverability of R&D tax credits, the group took the decision not to include any provision for R&D tax credits until the position has been clarified, leading to a reduction in the provision for amounts receivable for prior years of £0.75m. Amounts due under Research and Development Expenditure credit are unaffected.

Losses

The loss before taxation was £15.4 million (2015: £8.8million). The net loss for the year was £15.5 million (2015: £8.2 million) representing a loss of 19.8 pence per share (2015: 14.1 pence per share).

Cash Flows

The Group had a net cash outflow of £3.7 million for the year ended 30 September 2016 as compared to a net cash inflow of £6.5 million for the previous year.

Cash used by operating activities increased by £6.6 million to £13.3 million for the year compared to £6.7 million in the previous year. This was driven by increased research activity in immunology (its' first full year), increased staff costs, and the progress of programs to more expensive pre-clinical stages.

Tax credits received in the year increased by £0.65 million to £0.75 million.

Cash inflow from financing activities was £ 9.3 million, being the net proceeds of the equity placing in April 2016. (2015: £13.4 million).

Financial Position

As at 30 September 2016, total cash and cash equivalents held were £5.8 million (2015: £9.4 million).

Headcount

Average headcount of the Group for the year was 199 (2015: 145). The increase in headcount is attributable to the further strengthening of the management team, together with a first full year of immunology research.

Outlook

We anticipate that 2017 will be an important year for Redx as our first programs are being prepared for entry to first-in-human clinical studies. The £12m (gross) fundraising in early 2017 leaves the Group well placed to implement its strategy. While the planned restructuring will be a time of uncertainty for some, we firmly believe that this is the correct course of action to allow us to focus on our core high value assets whilst maintaining sufficient research capability and progressing our anti-infectives research through collaborations.

Dr. Frank Armstrong is stepping down as Chairman of the Group, and together with Dr. Peter Jackson and Peter McPartland, will not seek re-election at the Annual General Meeting. The appointment of a new Chairman will be announced in due course.

A number of commercial discussions are underway across our pipeline assets and the Board is confident that we will secure further partnerships.

We are also exploring options to broaden Redx's capability and asset base as we seek to further increase the growth capacity for the business. The Board remains confident that Redx will continue to adapt its strategy to ensure optimal shareholder returns in the medium to long-term.

Dr. Neil Murray, Chief Executive Officer

Consolidated Statement of Comprehensive Income

For the year ended 30 September 2016

Consolidated Statement of Financial Position

At 30 September 2016 Company No. 7368089

Consolidated Statement of Changes in Equity

For the year ended 30 September 2016

Consolidated Statement of Cash Flows

For the year ended 30 September 2016

Notes to the financial information

1. Basis of preparation

The financial information set out herein does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the year ended 30 September 2016 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 20 March 2017 and will be delivered to the Registrar of Companies for England and Wales.

The financial information for the year ended 30 September 2015 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 19 January 2016 and which have been delivered to the Registrar of Companies for England and Wales.

The reports of the auditor on both these financial statements were unqualified, did not include any references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

The information included in this preliminary announcement has been prepared on a going concern basis under the historical cost convention, and in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board ("IASB") that are effective or issued and early adopted as at the date of these financial statements and in accordance with the provisions of the Companies Act 2006.

The Company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2. Going concern

As part of their going concern review the Directors have followed the guidelines published by the Financial Reporting Council entitled ''Guidance on Risk Management and Internal Control and Related Financial and Business Reporting''.

The Group incurred a net loss of £15.5m during the year; however, the Directors are satisfied, based on detailed cash flow projections and after the consideration of reasonable sensitivities, that sufficient working capital is available to meet the Group's needs as they fall due for the foreseeable future and at least 12 months from the date of signing the accounts.

The detailed cash flow assumptions are based on the Group's annual budget, prepared and approved by the Board, which reflects a number of key assumptions in respect of costs and revenue forecasts, underpinned by the current pipeline. The Board have also taken into consideration the effects of the successful post year end fundraise of £12m (gross), and the cost savings expected from the restructuring explained elsewhere in the Financial Statements. Sensitivity analysis has been performed on both cost and revenue forecasts to reflect a variety of opportunities, risks and mitigating actions, both in timing and quantum. These projections are reviewed by the Board on a regular basis.

Within the revenue forecasts, and as discussed in the Principal Risks and Uncertainties section of the Strategic Report, there are inherent judgements regarding the commercial and technical risk of programs. Whilst acknowledging the uncertainties in the operating environment and their resultant impact on revenues, the Directors have identified a number of further opportunities to manage working capital, to mitigate against any deteriorations and uncertainties in trading conditions.

On the basis of the above review, the Directors are confident that the Group has sufficient working capital to honour all of its obligations to creditors as and when they fall due. Accordingly, the Directors continue to adopt the going concern basis in preparing the Financial Statements.

3. Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Board of Directors and the Chief Financial Officer are together considered the chief operating decision-maker and as such are responsible for allocating resources and assessing performance of operating segments.

The Directors consider that there are no identifiable business segments that are subject to risks and returns different to the core business. The information reported to the Directors, for the purposes of resource allocation and assessment of performance is based wholly on the overall activities of the Group.

The Group has therefore determined that it has only one reportable segment under IFRS8.

4. Loss per share

5. Related parties

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and other related parties are disclosed below:-

Trading transactions

The Group has purchased services in the normal course of business from the following companies related to individuals who are or were Directors of the Group:

Intelia Consulting Ltd - owned by P. Jackson

Acceleris Capital Ltd - of which N. Molyneux is a Director

Norman Molyneux Consultancy Ltd - owned by N. Molyneux

Dr Frank M Armstrong Consulting Ltd - owned by F. Armstrong

The Group has purchased arms length administration services from Mrs. J. Murray, who is the wife of N. Murray.

The Group has purchased other services, and has paid deal fees and commissions, in connection with external fundraising from Acceleris Capital Ltd. These are also set out below, and were charged to the share premium account.

The Group has provided services in the normal course of business to the following companies related to individuals who are or were Directors of the Group:

Redag Crop Protection Ltd - of which N. Molyneux is a Director. A loan has also been granted as part of the sale of this company.

The amounts outstanding are unsecured.

The Group has a loan of £605,000 due from Redag Crop Protection Ltd. N. Molyneux, N. Murray, D. Lindsay, P. Jackson and P. McPartland are all shareholders in Redag Crop Protection Ltd.

On 10 June 2016, a short term, interest free loan of £25,000 was made to AMR Centre Ltd, of which P Jackson is a Director.

Amounts owed to/by related parties are disclosed in other receivables, other non current receivables, and within trade payables.

6. Contingent liabilities

The Group has continued to receive Regional Growth Fund grants administered by the Department of Business, Energy and Industrial Strategy of the UK Government in support of its research programs around early stage proprietary small molecule therapeutics. At the end of the year the Group had received total grants carried forward as follows:

Receipt of these grant monies is subject to various performance criteria, the most significant of which are the obligation to defray specific operational expenditure in relation to the research programs before the claims were made (considered to be the funded expenditure); and the requirement to confirm the reasonable belief that funded expenditure will lead to the creation or safeguarding of a specific average number of jobs connected with those programs to the end of the monitoring periods which are for RGF2 31 March 2017, for RGF3 17 April 2019 and 31 March 2020 for RGF5 (considered to be the long term results). If the Group fails to create or safeguard an average number of jobs connected with the research programs through to the end of the monitoring periods, which are 160 for RGF2, 99 for RGF3 and 70 for RGF5, it may be required to repay £37,000, £47,475 and £58,756 in relation to RGF2, RGF3 and RGF5 respectively for each job not created or safeguarded. The Group has never been asked to make any such repayment in the past and believes it has satisfied the Monitoring Officer appointed by the Department of Business, Energy and Industrial Strategy. The Group has therefore made no provision for such repayment. There were no other contingent liabilities at the year end.

7. Events after the reporting period

On 11 October 2017, pursuant to the exercise of options, 145,319 Ordinary shares were issued (110,025 at £0.50 each and 35,294 at £0.425 each).

On 15 February 2017, the Company issued 5,999,999 Ordinary shares at £0.375 each pursuant to a placing and admission to trading on AIM. On 1 March 2017 the Company issued a further 26,779,958 Ordinary shares pursuant to a placing and open offer, and admission to trading on AIM. The gross amount raised being £12m.

As part of this transaction, and Pursuant to a Subscription Agreement with the Company, Lanstead Capital agreed to subscribe for 11,500,000 Subscription Shares at the Issue Price representing gross proceeds of £4,312,500. £646,875 of the Subscription proceeds (being 15 per cent. of the gross proceeds of the Subscription) were retained by the Company and £3,665,625 (being 85 per cent. of the gross proceeds of the Subscription) were pledged to Lanstead under a Sharing Agreement pursuant to which Lanstead will make monthly settlements (subject to adjustment upwards or downwards, as measured against a Benchmark Price of 50 pence per Ordinary Share) to the Company over 18 months.

As a result of entering into the Sharing Agreement the aggregate amount received by the Company under the Subscription and the related Sharing Agreement may be more or less than £4,312,500

On 20 March 2017 the Board of directors agreed a proposal to undertake a restructuring of the Group, which is likely to lead to a significant reduction in headcount across all areas of operation. In line with the proposed strategic refocus, we envisage making an estimated fixed cost saving of £4.2m, which is of course subject to consultation. The Group proposes to continue it's Anti-Infectives research under external collaborations.

The Board has also received notification from three directors, Dr. Frank Armstrong, Dr. Peter Jackson and Peter McPartland that they will not be seeking re-election at the forthcoming Annual General Meeting.

8. Report and accounts

A copy of the Annual Report and Accounts will be sent to all shareholders with notice of the Annual General Meeting shortly and will also be available to download from the Group's website at www.redxpharma.com.