Redag secures multi-million funding for demerger

Redag secures multi-million funding for demerger

Dr Neil Murray chief executive of Redx Pharma
Dr Neil Murray chief executive of Redx Pharma

 

Redag Crop Protection – the agrochemical arm of biotech business Redx Pharma – has demerged from its parent company after securing a seven-figure investment.

The new company will operate from laboratories in Alderley Park, Cheshire and will create 20 scientific research posts in its first three years of operation.

“There is a large product innovation requirement within the agrochemical industry”

 

The demerger has been facilitated by a substantial fundraising package arranged by Manchester-based corporate finance boutique Acceleris Capital. The North West Fund for Venture Capital, which is managed by Enterprise Ventures, has invested alongside existing Redx shareholders and new private investors.

Redag was established two years ago as a subsidiary of Redx under the leadership of Bill Thompson, who now becomes CEO of the newly demerged business. Redag will focus on developing products for the global agrochemical market, which is worth some £50 billion a year, in particular new fungicides, herbicides, insecticides and nematicides – products which play a vital role in controlling the pests and diseases that threaten our global food supply.

Redag uses the Redox Switch™ platform to adapt existing crop protection products to create novel intellectual property. It aims to achieve revenues by entering into licensing and development agreements with agrochemicals companies for the most promising compounds.

Neil Murray, chief executive of Redx Pharma, said: We wish Bill and his team every success in taking Redag forward. Redx itself has taken the decision to focus on human health as we have an intensely busy development pipeline for the coming years. It follows that agrichem has become non-core for our business.

Redag CEO Bill Thompson said: We’ve achieved very promising results since our inception and have proof of concept in a range of areas. The investment we’ve received and the move to Alderley Park will help us take the development of the business to the next level.

The Crop Protection industry typically spends US$250m over a nine year period testing up to 140,000 candidate compounds in order to bring a single new product to market. Our approach will help secure fast and efficient access to an extensive pipeline of new candidates at lower cost. We are going to be the discovery engine for the agrochemical industry.

Acceleris Capital advised Redag on the fundraising. Norman Molyneux, chief executive officer of Acceleris Capital, has been involved in multiple fundraising rounds for Redx Pharma and now Redag Crop. He said: There is a large product innovation requirement within the agrochemical industry and a ready base of customers seeking novel compounds to register and commercialise in the crop protection market. Through the exploitation of the Redox Switch™ platform, in a dedicated laboratory for Redag Crop, the company can go from strength to strength. Acceleris is delighted to work alongside Redx Pharma, Redag Crop and The North West Fund for Venture Capital in securing this successful fundraising package.

“Novel agrochemical compounds are as important as the development of the novel antibiotics”

 

Doug Stellman of Enterprise Ventures, which manages The North West Fund for Venture Capital, said: Enterprise Ventures were involved in the initial funding round with Redx Pharma in 2010, and it is a pleasure to participate in this latest round to establish Redag at Alderley Park. We wish Bill and his team all the very best as they move to the next phase of commercialisation. Novel agrochemical compounds are as important as the development of the novel antibiotics and other pharmaceuticals that was the driver behind the original funding of the Redx technology.

Nicola Frost of DWF provided legal advice to the company while Andrew O’Mahony from Brabners acted for The North West Fund for Venture Capital.

Launched in 2010, The North West Fund for Venture Capital is part of the £155m North West Fund, which provides funding for SMEs in the region and is financed jointly by the European Regional Development Fund and the European Investment Bank.

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    • The most likely way to get your money back is if the business is bought by another business or is wound
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  4. This is a complex investment
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  5. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

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Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If the business you invest in fails, you are likely to lose 100% of the money you invested.
    • Many of the loans ultimately financed by your investment are made to borrowers who can’t borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying back their loan.
    • Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay back their loan as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Some of the loans financed by your investment will last for several years. You may need to wait for your money to be returned even if the borrower repays on time.
    • Some Managers may give you the opportunity to sell your investment early through a ‘secondary market’, but there is no guarantee you will be able to find someone willing to buy.
    • Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your shares or the company in which you are invested has sufficient available capital to buy them from you. If no one wants to buy, it could
      take longer to get your money back.
    • If you are investing for growth, you should not expect to get your money back through dividends as the Service is not designed to pay dividends to investors seeking growth. If you are investing for income, it will take at least 25 years to get your money back purely through dividends.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on the basis on which these new shares are issued.
    • If these new shares have additional rights that your shares don’t have, such as the right to receive a fixed dividend, this could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If a business you invest in fails, you are likely to lose 100% of the money you invested in that business. Most start-up businesses fail. Please see page 14 of the Information Memorandum for an overview of the types of businesses this fund invests in.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    • The most likely way to get your money back is if the business is bought by another business or your shares are sold on the Alternative Investment Market. The latter can only occur if there is a willing buyer.
    • If you are investing in a start-up or EIS qualifying business, you should not expect to get your money back through dividends. Such businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    • These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart

Risk summary

(Estimated reading time: 2 minutes)

Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.

What are the key risks?

  1. You could lose all the money you invest
    • If a business you invest in fails, you are likely to lose 100% of the money you invested in that business. Most start-up businesses fail. Please see page 14 of the Information Memorandum for an overview of the types of businesses this fund invests in.
  2. You are unlikely to be protected if something goes wrong
    • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker at https://www.fscs.org.uk/check/investment-protection-checker/.
    • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection at https://www.financial-ombudsman.org.uk/consumers.
  3. You won’t get your money back quickly
    • Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
    • For companies whose shares are not listed on any exchange (‘unquoted’ or ‘private’ companies), the most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
    • For companies whose shares are listed on an exchange (such as the AQSE or AIM), the most likely way to get your money back is if the business is bought by another business or your shares are sold on that exchange. The latter can only occur if there is a willing buyer.
    • If you are investing in a start-up or EIS qualifying business, you should not expect to get your money back through dividends. Such businesses rarely pay these.
  4. Don’t put all your eggs in one basket
    • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
    • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. (See https://www.fca.org.uk/investsmart/5-questions-ask-you-invest).
  5. The value of your investment can be reduced
    • The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
    • These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.

If you are interested in learning more about how to protect yourself, visit the FCA’s website at www.fca.org.uk/investsmart