RedX to quit AIM to seek broader range of investment
Pharma research business RedX has told the stock market this morning (2 April 2024) that it is latest capital hungry business to quit the market, in order to make quicker decisions, raise private funds and save costs.
Last week Byotrol and Manchester-based drug discovery business C4X made similar announcements citing the cost of a stock market listing and the lack of liquidity in their ailing shares.
Dr. Jane Griffiths, chair of the board of directors, Redx Pharma, said: “Following an extensive review, the Board has unanimously concluded that it is in the best interests of the company and our shareholders to delist from AIM and re-register as a private limited company.
“Redx has a strong track record: over the last five years we have delivered six molecules that are in the clinic and established four major partnering deals, validating our scientific and partnering capabilities. Despite completing some of the largest AIM capital raises for biotech companies in recent years, Redx is still liquidity constrained on AIM. As a result, we believe our current market valuation is not reflective of our track record or future potential and is not conducive to raising the level of capital required for our growing clinical portfolio.
“The board believes that as a private company we can access a broader universe of specialty investors and, accordingly, a larger quantum of future funding required to execute our strategy and maximise our value in the interests of all our shareholders.
“Although we are delisting from AIM, we continue to believe that the UK is an excellent hub for scientific discovery and drug development and remain committed to being part of the UK life sciences community retaining our facility based at Alderley Park.”
In a detailed statement to the stock market this morning outlined a timetable that subject to shareholder approval will see RedX become a private company by the last day of April 2024 if a 75% of shareholders vote to delist on 19 April.
The poor liquidity has had a “significant impact” on the market valuation of the business, which in turn has had a materially adverse impact on RedX’s ability to seek financing.
The board has concluded that as a private limited company it will have “broader access to specialty investors” and enhance the ability of the company to raise the capital required to increase the value of its product portfolio for the benefit of all Shareholders.
But the board also believes they can take and implement strategic decisions more quickly as a private company.
In an echo of the reasons given by both Byotrol and C4X last week, the statement also cited the costs and regulatory burden of a stock market listing as a reason to quit.
“The considerable cost and management time and the legal and regulatory burden associated with maintaining the company’s admission to trading on AIM is, in the board’s opinion, disproportionate to the benefits of the company’s continued admission to trading on AIM, particularly given the limited and inconsistent liquidity in the Ordinary Shares as described above. Given the lower costs associated with private limited company status, the cancellation and re-registration will reduce the company’s recurring administrative and adviser costs which the board believes can be better spent supporting and investing in the group’s business,” the strategic statement concluded.
UPDATE: 1pm UK time, Redx shares have dropped to just 6.20 a fall of
