Redwood Pharma AB: Quarterly Report January – September 2019

REDWOOD PHARMA AB (PUBL)
Spotlight Stock Market: REDW 
redwoodpharma.com

1 January – 30 September 2019

  • The company’s net revenue for the period was TSEK 0 (0). 
  • Operating loss for the period was TSEK -11,679 (-10,949). 
  • Loss per share for the period was SEK -0.94 (-1.05).

Third quarter, 1 July – 30 September 2019

  • The company’s net revenue for the period was TSEK 0 (0).
  • Operating loss for the period was TSEK -4,053 (-3,785).
  • Loss per share for the period was SEK -0.34 (-0.31).

Important Events During the Period

  • The final patient was recruited in the RP101 Phase II clinical trial.
  • Redwood Pharma carried out a preferential rights issue which was subscribed to 591 percent. The company raised 11.5 MSEK before issue costs, with the majority replacing the credit facility from Formue Nord.

Important Events After the End of the Period

  • The final patient completed treatment in the RP101 Phase II clinical trial. 
  • The company carried out a private issue of 3 MSEK for offsetting bridge loans from two private investors. The 1.5 MSEK bridge loan from Formue Nord was repaid in cash.

From the CEO

I am pleased that we recently announced that Redwood Pharma is nearing the end of the Phase II clinical trial of our product candidate RP101. The last patient has completed treatment and we are now beginning to compile data, ensure its integrity and analyze the results. This will evaluate the safety and efficacy of RP101. Management’s goal is to publish topline results during the first quarter of 2020. 

I would also like to take this opportunity to thank the patients and clinics who participated in the trial. Their participation contributes to the development of new treatments for the treatment of chronic dry eye disease in post-menopausal women. My hope is that we can ultimately create a new drug to help millions of sufferers worldwide. 

In September, a preferential rights issue was completed which was greatly oversubscribed, despite it not being guaranteed. The interest exceeded management’s expectations and we are grateful for the confidence that old and new shareholders have shown. We also carried out a smaller private issue for the purpose of repaying the bridge loans. Together, these measures have enabled us to replace the previous credit facility. We are now entering 2020 with a strengthened financial position.

I can promise that the next six months will be at least as exciting for Redwood Pharma and our shareholders. We will learn more about RP101 and its therapeutic effects, but also about IntelliGel’s potential for controlling the delivery of medicine to the front of the eye. The hope is that we will now be able to further develop RP101 with the help of a commercial partner. Intensive work is underway to find the right partner to launch RP101 onto the market. 

In order to ensure increased value development in the company, we will also continue to evaluate new products that may fit in our portfolio. 

I look forward to our next update.

Martin Vidaeus
CEO Redwood Pharma

Redwood Pharma and its Market

Redwood Pharma AB is developing ophthalmic drugs where there are large and unmet medical needs. The company’s lead project is the development of RP101, a biological active pharmaceutical substance for the treatment of moderate-to-severe chronic dry eye disease in post-menopausal women. The pharmaceutical uses the drug delivery platform IntelliGel, which controls the release of active substances. By using IntelliGel, Redwood Pharma can also very likely improve the dosing of other established and new drugs. Redwood Pharma focuses on formulation and early clinical development. Revenue is generated through licence agreements with pharmaceutical companies with interest in Redwood Pharma's pharmaceutical projects and in IntelliGel.

RP101 – Redwood Pharma’s product for the treatment of dry eye disease 

The Company is developing a topical eye therapy with a known biological substance to treat chronic dry eye disease in post-menopausal women. Currently there are no adequate therapies to help women suffering from moderate-to-severe symptoms. The product under development will be the first to affect a basic biological mechanism and thereby increase the production of tear fluid. Using the IntelliGel formulation, it is believed that the treatment can be reduced to once or twice a day and thus be more comfortable and easier to take for the patient.

IntelliGel – Drug Delivery Platform

Redwood Pharma has the global rights for the use of the IntelliGel platform within the field of ophthalmology. The platform is expected to make it possible for eye drops for the treatment of dry eye to be administered fewer times a day. IntelliGel is a drug delivery platform that can control the release of a drug so that it can have an effect for a longer period of time. The platform also creates more business opportunities through several ophthalmic drugs hopefully being reformulated and dosed more efficiently and in a way. It may be perceived as more comfortable and while also increasing patient safety.

The Market for Moderate-to-Severe Symptoms DED (dry eye disease)

The size of the existing global market for prescription medicines to treat DED is estimated at USD 3.1 billion.

Market Drivers

There are several factors causing the market to grow. The main causes are the lack of effective drugs that can help patients suffering from chronic dry eye and an aging population where chronic dry eye occurs more frequently. There are several types of chronic dry eye and a common medical solution for all types of problems does not exist today. There are several new products under development - with new approaches for different types of dry eye, but these are mainly aimed at the inflammation in the eye which can be a consequence of too little tear fluid. Product development is also expected to contribute to the total market growth.

Important Collaborations

The company’s core competence lies within pharmaceutical development and product formulation. In order to develop RP101 and other new ophthalmic drugs, the company uses a broad network of experts in manufacturing, pre-clinical and clinical development as well as experts in ophthalmology, endocrinology and women's health.

Business Goals

The primary goal of the Company is to further develop RP101 through Phase II clinical trials (Proof of Concept) whereafter Redwood Pharma will seek to out-license RP101 and consequently generate cashflow.

Business/Revenue Model

Through licence agreements with major pharmaceutical companies, the company will receive payments for reaching milestones and future royalties. Such licence agreements can be structured so that an initial payment can be made upon signing the agreement and then on reaching goals such as completion of Phase III clinical trials, market authorization and/or initial sales. Subsequently, the company will receive royalties on the sales achieved by the licensee until the agreement or patent expires.

Financial Developments

Revenues and Expenses

The company did not generate any revenue between 1 January – 30 September 2019. 

Reported Other Operating Income refers to Exchange Rate Gains. The company’s expenses have been primarily development, project-related and administrative costs.

Operating profit

Operating loss for the period 1 January – 30 September 2019 was TSEK -11,679 (-10, 949). Operating loss for the period 1 July – 30 September 2019 was TSEK -4,053 (-3,785).

Financial Position and Liquidity

The company’s liquid assets were TSEK 14,140 (11,998) as of 30 September 2019. The ratio of shareholder equity to total assets was 78 (73) %. The company’s shareholder equity reached TSEK 16,025 (13,924).

Cash flow from operating activities during the period amounted to TSEK -10,598 (-12,786).

In January 2019, the company exchanged convertible bonds for 184,636 shares. The total number of outstanding shares as of 30 September is 12,684,510 and the share capital is SEK 2,536,902.

In September 2019, a decision was taken to carry out an offset issue increasing the share capital by SEK 85,724 and 428,620 new shares were registered in October 2019. In addition, a preferential rights issue was subscribed and cash paid-in in September. The new shares were also registered in October and the number of new shares amounted to 1,585,563. The share capital for these shares amounts to SEK 317,112.60. After the issues, the number of shares amounts to 14,698,693 and the share capital amounts to SEK 2,939,738.60.

Investments

During the period 1 January – 30 September 2019, the company did not invest in intangible or tangible fixed assets.

Accounting Principles

This interim report is based on the Annual Accounts Act (1995:1554) and the Swedish Accounting Standards Board’s (BFN) guideline BFNAR 2012:1, Annual Accounts and Corporate Auditing (“K3”).

Risks and Uncertainties

In conjunction with the preferential rights issue which was completed in October of 2019, a prospectus was compiled which describes the risks and other uncertainties associated with the company's operations. No new risks have been identified. The prospectus can be found on Redwood Pharma’s website, www.redwoodpharma.com.

Changes in the Number of Outstanding Shares

Opening number 01-01-2018                         8,825,327

Offset issue in March                                           525,000 

Rights issue registered in May                         2,337,581 

Rights issue registered in July                             132,722 

Subscription for shares exchange in July            176,962 

Subscription for shares exchange in September  201,766 

Subscription for shares exchange in October       154,988 

Subscription for shares exchange in November   145,528 

Closing number 31-12-2018                          12,499,874 

Subscription for shares exchange in January       184,636 

Closing number 30-09-2019                           12,684,510 

For more information:
Martin Vidaeus, CEO Redwood Pharma AB (publ.) Tel: +46 (0) 70 232 29 29
E-mail: martin.vidaeus@redwoodpharma.com

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, November 19, 2019.

About Redwood Pharma
Redwood Pharma develops ophthalmic products for unmet medical needs. The Company’s first project is the development of drug candidate RP101 with a known active substance against chronic dry eye in postmenopausal women who have moderate to severe symptoms. With the drug delivery platform IntelliGel the release of active substances is controlled. Through the use of IntelliGel, Redwood Pharma can also improve dosing of other established drugs. Redwood Pharma’s strength lies in formulation and early clinical development.  Revenues will be generated through licensing agreements with pharmaceutical companies that have capabilities to manufacture and sell commercial products worldwide.

Redwood Pharma AB (publ.) is listed on Spotlight Stock Market (Ticker: REDW.ST, ISIN: SE008294789).

For more information visit: www.redwoodpharma.com

About Us

The firm is a pharmaceutical company focused on development of new ophthalmic therapies where there are clear and unmet clinical needs. Redwood Pharma’s lead product in development is a new eye drop designed to treat an underlying cause of chronic Dry Eye Disease in post-menopausal women. Through the IntelliGel® drug delivery platform, a technology developed for controlled release, the company creates exciting opportunities to improve existing therapies and also to develop new ones.