Redwood Pharma AB: Year-end report January – December 2019

1 January – 31 December 2019

• Net revenue for the period was SEK 0 (0).
• Operating loss for the period amounted to SEK -15.758 million (-13.969 million).
• Loss per share for the period was SEK -1.07 (-1.25).

Fourth quarter, 1 October – 31 December 2019

• Net revenue for the period was SEK 0 (0).
• Operating loss for the period amounted to SEK -3.834 million (-3.019 million).
• Loss per share for the period was SEK -0.30 (-0.25).

Important events during the period

• Redwood Pharma completed the treatment phase of Phase II clinical trials of R101. The first patient was recruited to the study in January with the last patient being treated in November. Results from the study are expected to be published during the first quarter of 2020.

• In September, the company conducted a preferential rights issue that was 591 per cent subscribed. The company raised SEK 11.5M before administration costs, with most of the proceeds replacing a preexisting credit facility.

• In September, the company conducted a SEK 3M private share issue to offset bridge loans from two private investors.

Important events after the end of the period 

• The China National Intellectual Property Administration (CNIPA) issued preliminary approval to grant a new patent in the portfolio licensed to Redwood Pharma from Broda International LLC.

Comments from the CEO

’’ Redwood Pharma marked the end of 2019 with the completion of the treatment phase of Phase II clinical trials of RP101 ’’

Redwood Pharma marked the end of 2019 with the completion of the treatment phase of Phase II clinical trials of RP101, our drug candidate for the treatment of chronic dry eye disease in postmenopausal women. Patient recruitment proceeded as planned with the treatment of the first patient starting at the beginning of the year. It was very encouraging to report at the beginning of November that the last patient was treated and that the clinical phase of the trial was completed shortly afterwards. This means that the company expects to be able to keep to the timetable previously communicated and deliver top-line results during the first quarter of 2020.

Just prior to the publication of this report, the China National Intellectual Property Administration (CNIPA) granted preliminary approval for a new patent in the portfolio licensed to Redwood Pharma from Broda International LLC. A new patent, when granted, will provide patent protection in China for the IntelliGel platform which is used, for example, in the development of Redwood Pharma’s product RP101. This means that RP101 is better protected from competition in China, which engages us further to penetrate this substantial market.

We are now entering a new phase during which we will focus on developing the potential of RP101 for our shareholders and future commercial partners. If the results of the Phase II clinical trials are positive, our shareholders invested capital and Redwood Pharma’s hard work will shift to a development program intended for a commercial partner to take over.

In a growing market RP101, will be well positioned in comparison to rival dry eye therapies thanks to its unique mechanism – targeting estrogen deficiency as a cause of illness. Contrary to most existing products on the market, or under development, which treat inflammation symptoms after the onset of the condition, RP101 is designed to stop the disease at its source. As dry eye presents itself in many different forms, a variety of therapeutic methods are needed. By focusing on a significant proportion of those affected – postmenopausal women – with a new therapy, we want to improve the quality of life for a large patient group.

Redwood Pharma is currently discussing the RP101 program and our strategic plans with international firms to outlicense RP101 given positive results. Based on feedback from successful meetings at BIO-Europe in Hamburg and the JPMorgan Healthcare conference in San Francisco, we will intensify our discussions at BIO-Europe in Paris in March 2020.

Martin Vidaeus, CEO Redwood Pharma

Redwood Pharma and its market

Redwood Pharma AB develops ophthalmic drugs in areas where considerable medical demand exists. The company’s lead project is the development of a RP101, an active biological pharmaceutical for the treatment of moderate to severe chronic dryness of the eye in post-menopausal women. The drug uses the IntelliGel drug delivery platform that controls the release of active substances. By using IntelliGel, Redwood Pharma can also very likely improve dosages of other established and new drugs. Redwood Pharma focuses on formulation and early-stage clinical development. The company generates revenue through license agreements with pharmaceutical companies that are interested in Redwood Pharma’s pharmaceutical projects and in IntelliGel.

RP101: Redwood Pharma’s product for dry eyes

The company is developing a topical eye therapy with a known biological substance that can help post-menopausal women who suffer from chronically dry eyes. Currently, no sufficiently reliable treatments exist for women with moderate to severe symptoms. The product under development will be the first to target the basic biological mechanism and thereby increase production of tear fluid. Using the IntelliGel-formulation, it is anticipated that treatment can be reduced to once or twice a day and therefore be easier and more comfortable for patients to take.

IntelliGel drug delivery platform

Redwood Pharma owns the global rights to the IntelliGel platform within ophthalmology. The platform is expected to make it possible to administer eye drops to treat dry eyes fewer times a day. IntelliGel is a drug delivery platform that controls the release of a drug so that its effects are longer lasting. The hope is that the platform will also create additional business opportunities by enabling the reformulation and more efficient dosing of several ophthalmic drugs so taking them is experienced as being more comfortable by patients and improves patient safety.

Market for moderate-to-severe DED (Dry Eye Disease)

The total global market for prescription drugs for DED is estimated at USD 3.1 billion.

Market drivers

There are several factors that lead us to believe that the DED market is set to grow. The main reasons are the lack of effective drugs that provide patients with effective relief from chronic dry eyes and an aging population in which chronic dry eye occurs more frequently. There are several types of chronic dry eye and a common medical solution for all types of these problems does not currently exist. There are several new products that are under development – with new approaches for different types of dry eye. However, these are directed at inflammation in the eye that can be a consequence of too little tear fluid. Product development is also expected to contribute to overall market growth.

Key collaborations

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

Business goals

The company’s primary goal is to develop RP101 through to the conclusion of Phase II clinical trials (Proof of Concept), at which point RP101 will be out-licensed to generate cash for the business.

Business/revenue model

Through licensing agreements with major pharmaceutical companies, the company will receive payments for achieving milestones and future royalties. Such license agreements may mean that the company receives an initial payment upon signing an agreement and subsequently for achieved milestones such as completion of Phase III clinical trials, market authorizations and initial sales. The company will subsequently receive royalties on sales that licensees achieve until the agreement or patent expires.

Financial results

Revenues and expenses

The company did not generate any income between 1 January and 31 December 2019. Reported Other Operating Income refers to exchange rate gains. The company’s expenses have primarily been related to development, project-related and administrative costs.

Operating profit

Operating loss for the period 1 January – 31 December 2019 was SEK -15.758 million (-13. 969 million). Operating loss for the period 1 October – 31 December 2019 was SEK -3.834 million (-3,019 million).

Financial position and liquidity

As of 31 December 2019, the company’s liquid assets amounted to SEK 8.162 million (10.694 million). The ratio of shareholder equity to total assets was 84% (76). The company’s shareholder equity amounted to SEK 12.151 million (12.905 million).

Cash flow from operating activities during the period was SEK -16.536 million (-16.087 million).

In January 2019, the company exchanged convertible bonds for 184,636 shares.

An offset issue conducted in October 2019 resulted in an increase in share capital of SEK 85,724 and 428,620 new shares being registered. In addition, a preferential rights issue was conducted and subscribed in October. The number of new shares amounted to 1,585,563 and share capital increased by SEK 317,112.60.

After these share issues, the number of shares totals 14,698,693 and share capital amounts to SEK 2,939,738.60.

Investments

During the period 1 January – 31 December 2019, the company did not invest in tangible or intangible fixed assets.

Dividend

The Board of Directors of Redwood Pharma proposes that no dividend be paid.

Accounting principles

This year-end report has been prepared in line with the Annual Accounts Act (1995:1554) and Swedish Accounting Standards Board’s BFNAR 2012:1 guideline, Annual Accounts and Corporate Auditing (“K3”).

Risks and uncertainty

In conjunction with the preferential rights issue that was completed in October 2019, a detailed review of the risks associated with the company’s operations was carried out. No new risks have subsequently been identified. Risks and uncertainty are reported in the information memorandum produced in conjunction with the issue and has been published on the Redwood Pharma website, redwoodpharma.com.

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, February 14, 2020.

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 the Spotlight Stock Market  (Ticker: REDW.ST, ISIN: SE008294789).

For more information visit: www.redwoodpharma.com