Adial Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company focused on developing therapies for the treatment and prevention of addiction and related disorders, announced it has entered into an option agreement for the sale of the assets of Purnovate, Inc. (“Purnovate”), a wholly owned subsidiary of Adial, to Adenomed, LLC (“Adenomed”), a new company formed by Purnovate CEO, William Stilley, founder and former CEO of Adial.
Under the terms of the agreement, Adenomed will have 120 days to exercise the option with the right to purchase two 30-day extensions. Upon exercise of the option Adial would receive $450,000, and then be reimbursed for any Purnovate expenditures incurred and paid after December 1, 2022. Under the acquisition agreement, the Company would also be eligible to receive up to approximately $11 million in development and approval milestones for each compound (up to $33 million in total development and approval milestones for the first three compounds alone), as well as a total of $50 million in additional commercial milestones, for a total consideration of up to $83 million with potential milestone payments on additional compounds. Additionally, the Company would receive a low, single-digit royalty and acquire a 19.9% equity stake in Adenomed. Through this transaction, Adenomed would assume all current Adial obligations related to Purnovate.
Cary Claiborne, President and Chief Executive Officer of Adial, stated, “Our focus for Adial is on the late-stage development and approval program for AD04 for the treatment of alcohol use disorder (AUD). To maximize the value of the early-stage assets in Purnovate, we believe they are best suited in the hands of a separate company. If Adenomed exercises the option as expected, Adial would receive upfront non-dilutive funding and maintain meaningful downstream economics. Additionally, this would significantly reduce our current burn rate and extend our cash runway. With regards to AD04, we will soon provide an update on our detailed strategic plan as we continue discussions with potential pharmaceutical partners both in the US and in Europe.”
Mr. Stilley commented, “The set-up of the new company and this option agreement represent an opportunity for me to help maximize the value of Purnovate’s drug candidates for Adial shareholders. Adenosine is a critical neurotransmitter that is known to be involved in a host of different medical conditions. Our bioavailability technology is expected to enable the use of best-in-class adenosine-based therapies in numerous applications across a variety of important unmet medical needs. My focus going forward will be the new company. While I expect to depart Adial at the executive level upon Adenomed’s exercise of the option, I will continue to work with the company as a collaborator and remain a board member and significant shareholder.”
Purnovate is focused on inventing and developing best-in-class adenosine receptor agonists and antagonists. The adenosine receptors have been associated with a broad range of disease classes, including pain, oncology, addiction, pulmonary, inflammation and others. Historically, the majority of historical adenosine compounds have been limited to a nonclinical setting due in part to inadequate solubility profiles that limit their distribution to the target tissue (bioavailability). The Purnovate technology is designed to address this limitation by delivering substantially improved biodistribution. These next-generation compounds have already demonstrated preclinical efficacy and are being advanced towards clinical studies.
The proposed transaction was independently evaluated and unanimously approved, first by the Audit Committee of the Board of Directors, and then by the full Board of Directors, with Mr. Stilley, a current board member, abstaining from the vote.