Adial Pharmaceuticals, Inc. (Nasdaq: ADIL) (“Adial” or the “Company”) today announced that it has acquired Azora Therapeutics, Inc. (“Azora”), a biopharmaceutical company developing treatments for serious inflammatory diseases. The acquisition brings Azora’s lead asset AT177, a proprietary colon‑targeted aryl hydrocarbon receptor (AhR) agonist designed to enable localized activation with limited systemic exposure, into Adial’s pipeline.
Concurrent with the acquisition, Adial entered into a definitive agreement for a concurrent private placement of up to $64 million in gross proceeds to Adial, before deducting placement agent and other offering expenses. The private placement is composed of (i) an initial upfront financing of approximately $32 million in gross proceeds (including the conversion of outstanding notes assumed in the acquisition) in exchange for pre-funded warrants to purchase 11,780,948 shares of Adial’s common stock, representing a purchase price of $2.7489 for each pre-funded warrant sold at the initial closing and (ii) the potential for up to an additional $32 million in gross proceeds upon Phase 1 clinical study initiation in exchange for (x) pre-funded warrants to purchase up to 11,780,948 shares of common stock and (y) common warrants to purchase up to 11,780,948 shares of common stock at a combined purchase price of $2.7489 for each pre-funded warrant and accompanying common warrant sold at milestone closings. The financing was led by Coastlands Capital with participation from Boxer Capital Management, Stonepine Capital Management, AuGC BioFund and other biotech specialists and institutional investors along with insiders and management. The combined company expects to use the proceeds from the private placement primarily to advance Azora’s AT177 lead colon‑targeted AhR program through key clinical milestones, including IND-enabling studies and the Phase 1a and Phase 1b studies in ulcerative colitis (“UC”).
“AhR is now a validated target in the treatment of ulcerative colitis. Azora’s data support a uniquely differentiated, colon‑targeted approach that is designed to minimize systemic exposure in ulcerative colitis. The quality of the investor syndicate supporting this transaction reinforces our conviction in Azora’s thesis and the AT177 program,” said Cary Claiborne, president and chief executive officer of Adial. “With these proceeds, we believe the combined company will be well capitalized to execute through key clinical milestones to address a significant unmet need in ulcerative colitis.”
“AhR signaling is a key regulator of gut homeostasis, and clinical experience has helped establish both the therapeutic relevance of this pathway in ulcerative colitis and the importance of controlling systemic exposure. Systemic AhR activation may be associated with immunosuppression, which creates the potential for long-term safety risks. AT177 was engineered to address this challenge directly. It is a rationally-designed, fully-synthetic, patented compound intended to concentrate pharmacologic activity at the site of inflammation in the colon while minimizing systemic exposure,” said Matt Davidson, PhD, co-Founder of Azora Therapeutics and incoming chief development officer and newly appointed director of Adial. “By starting from fundamental UC biology and robust clinical data, we built what we believe has the potential to be a best-in-class therapy that avoids the risks associated with systemic AhR circulation. For the many UC patients who still do not achieve durable remission on currently available therapies, AT177 represents a potentially meaningfully differentiated option with a safety profile designed to support long-term use.”
In addition, Adial is pleased to announce the appointment of Wendy Young, Ph.D., to its Board of Directors. Dr. Young brings more than 32 years of drug discovery and biopharma leadership experience, including senior leadership roles at Genentech, where she served as senior vice president, small molecule drug discovery. She currently serves as, senior advisor to GV (Google Ventures), and an independent board director and scientific advisor to multiple life sciences companies. The Company believes Dr. Young’s deep expertise in small-molecule drug discovery, company building and strategic R&D leadership will be highly valuable as the Company advances its next phase of growth.
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