Trinity Delta Rezurock approval has positive read across for Redx

Rezurock approval has positive read across for Redx

Lighthouse | 19 July 2021

Share this note

The FDA has approved Kadmon’s Rezurock (belumosodil) for chronic graft-versus-host disease (GVHD). The approval is six weeks ahead of the revised PDUFA date of 30 August and marks the first authorisation of a ROCK2 inhibitor globally. Rezurock is a 200mg once daily oral treatment for cGVHD, a common and often fatal complication following hematopoietic stem cell transplantation, after failure of at least two prior lines of systemic therapy.
Rezurock’s approval is based on impressive clinical results that demonstrated efficacy and, importantly, is supported by additional safety data (the reason underlying the original delay as FDA reviewed the new data). Rezurock is also in Phase II trials for the treatment of systemic sclerosis (SSc), where it has Orphan Drug Designation. Kadmon is developing a second ROCK inhibitor, KD045, with positive preclinical results in lung, kidney, and liver fibrosis models; but this is a pan-ROCK inhibitor, raising concerns about possible hypotension due to inhibiting ROCK1 and ROCK2 simultaneously.
Redx Pharma is one of only two other companies with a ROCK inhibitor in clinical development. RXC007 is a particularly promising programme that offers the prospect of being best-in-class. It is a novel and highly specific small molecule that selectively targets the ROCK2 (Rho Associated Coiled-Coil Containing Protein Kinase 2) receptor. The ROCK pathways modulate inflammatory responses and fibrotic processes and play a key role in many immune and fibrotic diseases.
RXC007 is completing its first Phase I study, with results expected in H122. These data will guide the dosing and structure of the Phase II programme. Future development will initially be for idiopathic pulmonary fibrosis (IPF), a progressive lung condition with a notably poor prognosis. This will likely be followed by broader fibrotic indications, potentially including liver fibrotic indications such as Non-Alcoholic Steatohepatitis (NASH).

Trinity Delta view: Redx Pharma has established a notable reputation for its medicinal chemistry expertise which it is exploiting through a combination of in-house developed programmes and partnerships (with AstraZeneca and Jazz Pharmaceuticals). The lead programme is RXC004, a porcupine inhibitor poised to enter Phase II studies in a selection of genetically selected solid tumours. RXC007 is the second in-house compound and Rezurock’s approval creates a clear regulatory pathway and, in our view, materially de-risks RXC007’s development process. Our rNPV model, employing conservative assumptions, generates a £350.7m valuation, equivalent to 128p/share (86p fully diluted).

Lighthouse

19 July 2021


Price	57.5p
Market Cap	£158m
Primary exchange	AIM London
Sector	Healthcare
Company Code	REDX

Corporate client	Yes

Company description

Redx Pharma specialises in the discovery and early clinical development of small molecule therapeutics, with an emphasis on oncology and fibrotic disease. Typically, these are progressed through proof-of-concept studies and then partnered for further development. The strategy has been validated by several collaborations.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Franc Gregori
fgregori@trinitydelta.org
+44 (0) 20 3637 5041

Disclaimer

Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.