UK-based biotechnology firm Redx Pharma has announced that it will accept a cash offer from American investment group Redmile for the takeover of the company.

The decision comes shortly after Redx revealed that Yesod Bio-Sciences had made a second takeover approach for the company.

Last month, Redx had ended takeover talks with Yesod Bio-Sciences after Yesod’s possible offer substantially undervalued the company and its assets.

Redx had agreed funding from Redmile Group in February

Later, Redmile and Paris-based Sofinnova Partner had agreed to subscribe to 11.5 million of Redx’s new ordinary shares at 11.2 pence each. Redx will receive £26.3m cash injection through a subscription and two loan arrangements.

Meanwhile, Redx’s largest shareholder Moulton Goodies has agreed to sell 74,998,896 shares representing nearly 39.5% of the company to Redmile for 15.5 pence per share.

With the acquisition of the Moulton’s shares, Redmile will hold approximately 45.5% of the total Redx shares.

Under the Takeover Code, Redmile is now required to make a mandatory cash offer for the Redx shares not already held or agreed to be acquired by Redmile, at a price of 15.5p.

Redx directors intend to recommend unanimously that Redx shareholders accept the offer, which values the entire issued, and to be issued share capital of Redx, at approximately £29.45m.

Redx chairman Iain Ross said: “Redx, with its deep expertise in medicinal chemistry, has a proven track record of designing high quality, commercially attractive molecules that have the potential to be effective drugs to treat significant unmet medical conditions.

“As previously announced, the Board has been seeking to secure long-term finance for Redx.

“We believe that this cash offer represents an optimal outcome for shareholders, while securing Redx’s ability to fund its differentiated and exciting research and early development pipeline.”

Redx Pharma is a drug discovery and development company that focuses on cancer and fibrosis.