REDX.L Regulatory News (REDX)

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REDX PHARMA PLC

("Redx" or the "Company")

Placing to Raise £10 Million

Redx Pharma Plc (AIM: REDX), the drug discovery and development company, announces today that it has raised £10 million (before expenses) by way of a placing of 28,571,429 new Ordinary Shares with both new institutional investors and existing shareholders ("Placing"). The Placing, which is subject to certain conditions, has been effected at a price of 35 pence per Ordinary Share and represents a discount of approximately 4.3 per cent. to the Closing Price of 36.5 pence per Ordinary Share on 22 March 2016 (being the end of marketing and, therefore, the last practicable date prior to the announcement of the Placing). Cantor Fitzgerald Europe and WG Partners act as joint bookrunners in connection with the Placing.

The major part of the net proceeds of £9.37 million of the Placing will be used to progress the Company's pipeline, including advancing its Porcupine program towards first-in-human clinical trials, expected in the first quarter of 2017, and further develop Redx's other assets in immuno-oncology, infection and immunology. In addition, the net proceeds will strengthen the Company's balance sheet.

The EIS Placing Shares and Conditional EIS Placing Shares will, upon First and Second Admissions, rank pari passu in all respects with the Ordinary Shares in issue as at that date, and the Further Conditional Placing Shares will, upon Third Admission, rank pari passu in all respects with the Ordinary Shares in issue as at that date; in each case including the right to receive all dividends or other distributions declared, made or paid after the relevant Admission. The Placing Shares will represent approximately 30.5 per cent. of the Company's enlarged issued ordinary share capital immediately following completion of the Placing.

A general meeting of Redx in connection with the Placing will be held at 10.30 a.m. on 13 April 2016 at the offices of DWF LLP, at Scott Place, 2 Hardman Street, Manchester, M3 3AA.

Further details of the Placing are set out below. A copy of a circular to shareholders and a Notice of General Meeting will be posted later today and will also be available from the Company's website at: www.redxpharma.com.

Defined terms in this announcement are deemed to have the same meaning as in the circular to shareholders unless the context requires otherwise.

Neil Murray, Chief Executive of Redx, commented:

 "We are delighted to have successfully raised these new funds with approximately half coming from new institutional investors and also with very strong support from our existing shareholders.

We have made excellent progress in the last 12 months especially with our drug discovery programs, having achieved in-vivo proof of concept in a further three programs and selecting four drug candidates for progression into development. These new funds will support Redx's continuing progress and our existing pipeline. We believe that the assets in our pipeline look extremely promising and offer the potential to deliver significant shareholder value."

For further information:

Introduction

The Board announced on 24 March 2016 that it has conditionally raised £10 million, before expenses, by way of a placing of 28,571,429 new Ordinary Shares at a price of 35 pence per share. The net proceeds of the Placing (expected to be approximately £9.37 million) will allow the Group, inter alia, to continue to progress its pipeline.

The Placing, which has been arranged by Cantor Fitzgerald Europe and WG pursuant to the terms of the Placing Agreement, is conditional, amongst other things, upon Admission. The Placing will comprise a Firm Placing of up to 6,180,197 Firm EIS Placing Shares and a Conditional Placing of up to 22,391,232 Conditional Placing Shares. The Firm EIS Placing Shares are being issued pursuant to the existing share authorities as approved at the Company's 2016 annual general meeting in order to facilitate the use of EIS relief in the 2015/16 UK tax year. The Conditional Placing is conditional upon Shareholders passing Resolutions 1 and 3 at the General Meeting.

Background to and reasons for the Placing

The Company is a drug discovery and development company which was admitted to trading on AIM on 27 March 2015. Since the IPO, Redx has made significant progress with its existing research programs across oncology and infectious disease, and, in May 2015, the Company launched its third area of research, in immunology. On 20 January 2016, Redx announced its final results for the year ended 30 September 2015 and in those results detailed the significant progress that the Group has made in the last 12 months. This included the following highlights:

· "Strong progress with drug discovery programs having achieved in vivo proof of concept in a further three programs and the progression of four drug candidates into formal pre-clinical development

Oncology pipeline

- development candidate selected in SMO program for skin cancer

- development candidate selected in BTK program for blood cancers and autoimmune diseases

- in vivo proof of concept secured in cFMS program for auto-immune diseases

- in vivo proof of concept established in Porcupine program for hard-to-treat cancers

- development candidate selected in Porcupine program

Anti-infectives pipeline

- continued expansion of novel lead series in MRSA program

- development candidate selected in MRSA program

· Launch of immunology research division in May 2015 - focused on developing new therapies for disorders of the immune system

· Cancer research collaboration with Horizon Discovery Group plc, ("Horizon"), the international life science group, focusing on Redx's existing pan-RAF inhibitor program, which treats colorectal cancer, in September 2015"

Looking forward, Redx's focus on commercially "hot" areas of demand with critical unmet need, including tumour immunology, cancer stem cells, autoimmune disease and anti-microbial resistance leaves the Group well placed for ongoing development. In the next 18 months the Company expects to make significant technical progress across its pipeline in oncology, infection and immunology and subject to successful progress, Redx's Porcupine and MRSA programs are expected to be clinic-ready by the end of 2016. The Company is targeting at least one new development candidate by September 2016 and the Board expects to achieve multiple pre-clinical proof of concepts during the coming year. In addition, Redx is seeking to secure at least one commercial partnership with one of its programs before September 2016. The Board also sees further opportunities for inorganic growth with the potential to add complementary assets and capabilities.

In order to support this progression of the pipeline, the Company has conditionally raised approximately £10 million (before commissions and expenses) pursuant to the Placing. The major part of the net proceeds of £9.37 million of the Placing will be used to progress the Company's pipeline, including advancing its Porcupine program towards first-in-human clinical trials, expected in the first quarter of 2017, and further develop Redx's other assets in immuno-oncology, infection and immunology. In addition, the net proceeds will strengthen the Company's balance sheet. The Company is expecting to secure at least one commercial partnership by September 2016. Based on the net proceeds of the Placing and assuming no material cash in-flows from any such commercial partnerships, the Company will have sufficient cash resources to fund it current operations until at least Q1 2017.

The Placing

The Company has conditionally raised, in aggregate, £10 million (before commissions and expenses) through the issue of the Placing Shares at the Placing Price. The Placing Shares will in aggregate represent approximately 30.5 per cent. of the Company's enlarged share capital immediately following Third Admission. The Placing Price represents a discount of approximately 4.3 per cent. to the closing middle market price on 22 March 2016 (being the end of the marketing and, therefore, the last practicable date prior to the announcement of the Placing). The Placing will comprise a Firm Placing of up to 6,180,197 Firm EIS Placing Shares and a Conditional Placing of up to 22,391,232 Conditional Placing Shares. The Firm EIS Placing Shares are being issued pursuant to the existing share authorities as approved at the Company's 2016 annual general meeting in order to facilitate the use of EIS relief in the 2015/16 UK tax year. The Conditional Placing is conditional upon Shareholders passing Resolutions 1 and 3 at the General Meeting.

The EIS Placing Shares will be issued to investors seeking to benefit from the tax advantage pursuant to the EIS legislation. The Company has obtained advance assurance from HM Revenue & Customs that the EIS Placing Shares will satisfy the requirements for tax relief under EIS.

The Placing Shares will be issued subject to the Articles, credited as fully paid, and will rank pari passu in all respects with the existing issued Ordinary Shares from the relevant date of Admission.

Application will be made for the Firm EIS Placing Shares to be admitted to trading on AIM ("First Admission"). It is expected that First Admission will become effective and that dealings in the Firm EIS Placing Shares, will commence on 4 April 2016.

Application will also be made for the Conditional EIS Placing Shares to be admitted to trading on AIM ("Second Admission"). It is expected that Second Admission will become effective and that dealings in the Conditional EIS Placing Shares will commence on 14 April 2016 (being the business day following the General Meeting).

Application will also be made for the Further Conditional Placing Shares to be admitted to trading on AIM ("Third Admission"). It is expected that Third Admission will become effective and that dealings in the Further Conditional Placing Shares will commence on 15 April 2016 (being the business day following Second Admission).

The issue and allotment of the Firm EIS Placing Shares is not conditional on the subsequent issue of the Conditional Placing Shares or on the passing of Resolutions 1 and 3 at the General Meeting. The issue and allotment of the Conditional Placing Shares (being the Conditional EIS Placing Shares and the Further Conditional Placing Shares) is conditional, amongst other things, upon the passing of Resolutions 1 and 3 at the General Meeting. Consequently, if the conditions for the Conditional Placing are not satisfied, or if the Placing Agreement is terminated prior to the issue of the Conditional Placing Shares, the Conditional Placing Shares will not be issued and allotted and the Company will not receive the proceeds of the Conditional Placing.

In addition, the placing of the Conditional EIS Placing Shares is not conditional on the issue and allotment of the Further Conditional Placing Shares or Third Admission. Consequently, if, following the issue and allotment of the Conditional EIS Placing Shares, the conditions relating to the issue and allotment of the Further Conditional Placing Shares are not satisfied, or the Placing Agreement is terminated in accordance with its terms, the Further Conditional Placing Shares will not be issued and allotted and the Company will not receive the proceeds of the placing of the Further Conditional Placing Shares.

In addition to the above, the Placing (which is not underwritten) is conditional, amongst other things, upon the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms by no later than 8.00 a.m. on 15 April 2016 (or such time and date as the Company, Cantor Fitzgerald Europe and WG may agree, being not later than 5.00 p.m. on 22 April 2016).

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Cantor Fitzgerald Europe and WG, as agents for the Company, have agreed conditionally to use their respective reasonable endeavours to place the Placing Shares at the Placing Price.

The Placing Agreement contains certain warranties from the Company in favour of Cantor Fitzgerald Europe and WG in relation to, amongst other things, the accuracy of the information contained in this document and certain other matters relating to the Company and its business. In addition, the Company has agreed to indemnify Cantor Fitzgerald Europe and/or WG in relation to certain liabilities either of them may incur in respect of the Placing. Each of Cantor Fitzgerald Europe and WG has the right to terminate the Placing Agreement in certain circumstances prior to Third Admission, including without limitation, for an event of force majeure or in the event of a material breach of the warranties set out in the Placing Agreement.

Admission and dealings

It is expected that First Admission will become effective and that dealings in the Firm EIS Placing Shares, will commence on 4 April 2016.

It is expected that Second Admission will become effective and that dealings in the Conditional EIS Placing Shares will commence on 14 April 2016 (being the business day following the General Meeting).

It is expected that Third Admission will become effective and that dealings in the Further Conditional Placing Shares will commence on 15 April 2016 (being the business day following Second Admission).

General Meeting

A notice convening the General Meeting to be held at DWF LLP, 1 Scott Place, 2 Hardman Street, Manchester M3 3AA at 10:30 a.m. on 13 April 2016 is set out at the end of this document.

At the General Meeting, resolutions will be proposed to grant the Directors the authority to allot the Conditional Placing Shares without first offering them to existing Shareholders on a pre-emptive basis.

The Placing Shares have not been made available to the public and have not been offered or sold in any jurisdiction where it would be unlawful to do so. The Board strongly believes that raising equity finance using the flexibility provided by a non-pre-emptive placing is the most appropriate fundraising structure for the Company at this time.

Resolution 1 in the Notice of General Meeting is an ordinary resolution and seeks to give the Directors authority to allot shares in the Company up to a maximum nominal amount of £223,912.32 in connection with the Conditional Placing, which represents approximately 34.5 per cent. of the current issued share capital of the Company.

Resolution 2 in the Notice of General Meeting is an ordinary resolution and seeks to give the Directors authority to:

· allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to a maximum nominal amount of £311,843.00, which represents one third of the enlarged issued share capital of the Company immediately following Third Admission; and

· allot equity securities in connection with a rights issue in favour of (i) holders of ordinary shares in proportion to their respective holdings of ordinary shares; and (ii) to holders of other equity securities as required by the rights attached to those securities or as the Directors otherwise consider necessary up to a maximum nominal amount of £311,843.00, which represents one third of the enlarged issued share capital of the Company immediately following Third Admission.

Resolution 3 in the Notice of General Meeting is a special resolution and seeks to empower the Directors generally to allot and issue equity securities for cash in the Company in connection with the Conditional Placing without first offering such securities to existing Shareholders.

Resolution 4 in the Notice of General Meeting is a special resolution and seeks to empower the Directors generally to allot and issue equity securities in the Company for cash up to a maximum nominal amount of £187,105.28, which represents 20 per cent. of the enlarged issued share capital of the Company immediately following Third Admission.

The powers in Resolutions 1, 2, 3 and 4 are in place of the powers given to the Directors pursuant to resolutions 6 and 7 which were passed at the 2016 annual general meeting on 24 February 2016 (to the extent they have not already been used). The authorities conferred by Resolutions 1, 2, 3 and 4 will lapse at the conclusion of the 2017 annual general meeting of the Company or, if earlier, 31 March 2017.

Recommendation

The Directors consider that the Placing and the authorities granted by the Resolutions are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions as they intend to do in respect of their own shareholdings of 6,892,314 Ordinary Shares, representing approximately 10.61 per cent. of the Company's current issued share capital.

Definitions

In addition to the terms defined above in this announcement, the following additional definitions apply throughout this announcement (unless the context requires otherwise):

Important information

The distribution of this announcement and the offering of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, Cantor Fitzgerald Europe ("Cantor") or WG Partners LLP ("WG") (Cantor and WG together, the "Joint Brokers") that would permit an offering of such shares or possession or distribution of this announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and the Joint Brokers to inform themselves about, and to observe such restrictions.

The Placing Shares will not be registered under the United States Securities Act of 1933 (as amended) or under the securities laws of any state of the United States and do not qualify for distribution under any of the relevant securities laws of Canada, Australia or Japan, nor has any prospectus in relation to the Placing Shares been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance. Accordingly, subject to certain exceptions, the Placing Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into the United States, Canada, Australia or Japan. Overseas Shareholders and any person (including, without limitation, custodians, nominees and trustees) who have a contractual or other legal obligation to forward this document to a jurisdiction outside the UK should seek appropriate advice before taking any action.

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's current expectations and projections about future events. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, reflect the directors' beliefs and expectations and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and neither the Joint Brokers nor, except as required by applicable law, the Company assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

The Joint Brokers, which are both authorised and regulated in the United Kingdom by the Financial Conduct Authority, are acting for the Company in relation to the Placing and Admission and are not acting for any other persons in relation to the Placing and Admission. The Joint Brokers are acting exclusively for the Company and for no one else in relation to the matters described in this announcement and are not advising any other person and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Joint Brokers, or for providing advice in relation to the contents of this announcement or any matter referred to in it. The responsibilities of Cantor as the Company's nominated adviser and joint broker under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any director or shareholder of the Company or any other person, in respect of his decision to acquire shares in the capital of the Company in reliance on any part of this announcement, or otherwise.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Joint Brokers or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.