Redwood Pharma AB (publ)
Spotlight Stock Market: REDW
The Period January 1 – June 30, 2018
- Net Revenues 0 (0)1 Tkr2
- Operating Loss -7 164 (-8 789) Tkr
- Loss per Share -0,75 (-1,76) kr
Second Quarter, 1 April – 30 June 2018
- Net Revenues 0 (0) Tkr
- Operating Loss -5 622 (-5 085) Tkr
- Loss per Share -0,56 (-1,02) kr
Significant Events During the Period
- Redwood completed a new rights issue that was 126% subscribed and raised 15,8 Mkr.
- Redwood initiated the drawdown of an established credit facility through a 2 Mkr convertible issue.
- During the Annual General Meeting Mats Lidgard was elected to the Board of Directors. Mats brings a wealth of experience within business development. The existing board members were re-elected.
Significant Events After the End of the Period
- Redwood submitted its first national clinical trial application for RP101.
1 Prior year results in parenthesis
2 Tkr = thousand Swedish Kronor
From the CEO
Redwood Pharma is poised to initiate the clinical Phase II trial of RP101, our product candidate for treatment of chronic dry eye in postmenopausal women. This is further an important milestone towards eventually having a product that can generate a revenue stream for Redwood Pharma.
During the last quarter, we intensified our efforts to ensure that the Phase II trial generates valuable data. Meetings with representatives of clinics participating in the trial have been held to optimize patient recruitment and testing procedures, as well as to clarify roles and responsibilities.
Furthermore, we continued to work with all necessary documentation for the approval by ethics committees and national authorities. All of this culminated in the submission in July of our first national clinical trial. Work is continuing to ensure successful national applications in the other countries, which, as planned, will also be included in our Phase II trial.
Redwood also has secured funding that is not only considered sufficient to complete the clinical trial but also to create the opportunity to explore new product opportunities. The company completed a new rights share issue of SEK 15,8 million at the end of April, which was oversubscribed. As no share issue guarantees were obtained, the issue costs could be reduced and the company added approximately SEK 14,8 million in capital. At that point, Redwood Pharma had a credit facility of SEK 15 million from Formue Nord Markedsneutral A/S.
The management team is very grateful for the heavy participation of existing shareholders in the rights issue. The oversubscription sent a strong message to the market that our current shareholders continue to believe in the company’s direction, management team and commercial potential of RP101.
Focusing on the future, growth will depend largely on the opportunities to expand our product portfolio. We intend to accelerate the evaluation of new products where there are large unmet medical needs and commercial potential. Redwood sees significant opportunities to use the IntelliGel platform to improve and deliver medications safely and efficiently. The company continues discussions with various potential partners in industry to make this strategy a reality.
CEO, Redwood Pharma
Redwood Pharma and its Business Case
Redwood Pharma AB is developing new ophthalmic pharmaceutical therapies where there are large and unmet market needs. The Company’s lead project is the development of RP101, a therapy based on a biological active substance for the treatment of moderate-to-severe dry eye disease (DED) in postmenopausal women. RP101 uses the IntelliGel® drug delivery platform to control the slow release of the active pharmaceutical ingredient. By incorporating the product with IntelliGel, Redwood Pharma can improve current prescription therapies on the market by improving dosing regimens. The Company’s focus is on clinical development. Revenues will be generated through licensing agreements with other pharmaceutical firms with interest in RP101 and IntelliGel.
RP101 – Redwood Pharma’s Treatment of Dry Eye Disease
The Company is developing a topical eye therapy with a known biological molecule to treat chronic dry eye disease in postmenopausal women. Currently there are no adequate therapies to help females suffering from moderate-to-severe DED. RP101 will be the first therapy targeting a specific underlying biological mechanism that increases the production of tearfilm. With the help of IntelliGel, a new formulation is being developed to increase patient convenience by allowing for once or twice daily administration.
IntelliGel® – Drug Delivery Platform
Redwood Pharma has acquired the exclusive global rights for the use of IntelliGel within ophthalmology. It can help reduce the number of drops administered daily. This drug delivery platform can control the release of active substance thereby prolonging a desired medical effect. Expanding the number of commercial opportunities, the platform can be used to improve existing drugs on the market by possibly enhancing convenience, medical efficacy and safety for patients.
The Market for Moderate-to-Severe DED
The size of the existing global market for prescription medicines to treat DED is estimated at USD 2 billion and is expected to grow to USD 2.6 billion by 2022.
There are several factors causing the market to grow. The primary drivers are the lack of an effective medicine creating an increasing demand for new treatments, in combination with an ageing population where the incidence of DED increases. DED is a multi-factor disease where there is today no single medical solution that can treat all sufferers. There are several products currently being developed most of which are focused on the treatment of inflammation. As new therapies become available, the size of the existing market will further increase to fulfill unmet medical needs.
Redwood Pharma’s core competence lies within pharmaceutical development and product formulation. Vital to the development of RP101 and other new products within ophthalmology, is the companies broad network of experts within pre-clinical & clinical work, manufacture, ophthalmology, endocrinology and women’s health.
The primary goal of the Company is to further develop RP101 through Phase II clinical trials (Proof of Concept) where after Redwood Pharma will seek to out-license the product and consequently generate cashflow. After publication of the toxicology results, the company has accelerated discussions with other pharmaceutical firms regarding significant licensing agreements.
Through various licensing agreements with larger pharmaceutical firms the Company will generate cashflow through development milestone and royalty payments. Such licensing agreements can be structured so that an initial payment can be made to Redwood Pharma upon signing of the agreement, while future payments can be received upon reaching milestones such as completion of Phase III clinical trials, market authorization and/or initial sales. Subsequently, royalty payments by the Company’s commercial partner will be paid to Redwood Pharma until the license agreement is terminated or related patents have expired.
The Company has not generated any revenues during the first two quarters of 2018. The Company’s expenses have been primarily development, project-related and administrative costs.
Profit and Loss
An operating loss for the period January 1 – June 30, 2018 of -7 164 (-8 789) Tkr was accrued. An operating loss for the period April 1 – June 30, 2018 of -5 622 (-5 085) Tkr was accrued as costs surrounding the clinical trial have begun to impact the Profit and Loss Statement.
Financial Position and Liquidity
Redwood Pharma’s liquid assets were 12 018 (6 280) Tkr as of June 30, 2018. The convertible loan issue further capitalized the company with an additional 2 Mkr after the end of the reporting period. The ratio of Shareholder Equity to Total Assets (SWE: Soliditet) was 82 (67)%. The Company’s Shareholder Equity reached 15 709 (10 985) Tkr.
Cash flow from operating activities reached -10 766 (-6 344) Tkr during the period.
After the cash issue which was registered during the second quarter, the Capital Stock reached 2 337 581 kronor. With the rights issue the Non-Restricted Equity reached 14 450 Tkr. The number of outstanding shares as of June 30, 2018 was 11 687 908.
During the period January 1 – June 30, 2018, the Company acquired intangible assets valued at 5 124 Tkr from CapaVision (UK). The intangible assets are comprised of a patent and patent applications, certain pre-clinical and clinical data, as well as know-how regarding estrogen used as a therapy against dry eye. These intangible assets encompass a patent and patent applications in the US and Europe. The acquisition results in protection from possible competitors, expanding the Company’s freedom to operate.
This Interim Report is based on Swedish law surrounding Annual Reporting (1995:1554) and the Swedish Accounting Standards Board’s (BFN) guideline BFNAR 2016:10, Annual Reporting and Corporate Auditing (K3).
Risks and Uncertainties
In conjunction with the rights issue which was completed in April of 2018, a Prospectus was compiled that rigorously accounted for those risks associated with the Company and its operations. No new risks have been identified. The Prospectus can be found on Redwood Pharma’s website, www.redwoodpharma.com
For more information:
Martin Vidaeus, CEO Redwood Pharma AB (publ.)
Tel: +46 (0) 70 232 29 29
This information is information that Redwood Pharma AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, August 29, 2018.