Adial Pharmaceuticals has announced that Adovate, LLC, formerly known as Adenomed, LLC, has exercised its option to acquire the assets and business of Purnovate, Inc., a wholly owned subsidiary of Adial. Adovate, formed by William Stilley, co-founder and former CEO of Adial, will acquire and advance Purnovate’s drug development platform. As part of the agreement, Adial will receive an upfront payment of $450,000, expense reimbursement of approximately $0.9 million, potential milestone payments totaling up to $83 million, a single-digit royalty, and a 19.9% equity stake in Adovate. The transaction allows Adial to focus on advancing its priority asset, AD04, while reducing cash burn rate and maintaining equity and downstream economics.
Adial Pharmaceuticals, Inc. (NASDAQ: ADIL; ADILW) (“Adial” or the “Company”) a clinical-stage biopharmaceutical company focused on developing therapies for the treatment and prevention of addiction and related disorders, today announced that Adovate, LLC (formerly known as Adenomed, LLC) (“Adovate”), has provided irrevocable notice of exercise of its previously announced option to acquire the assets and business of Purnovate, Inc., a wholly owned subsidiary of the Company, under the terms previously agreed. Adovate was recently formed by William Stilley, co-founder and former CEO of Adial, for the sole purpose of acquiring, funding and advancing Purnovate’s business. The option exercise is effective May 16, 2023.
With the notice, Adial received a non-refundable option exercise fee and upfront payment of $450,000, and, after a final acquisition agreement is signed, will receive expense reimbursement of approximately $0.9 million for Purnovate expenditures incurred and paid by Adial after December 1, 2022 through and including May 15, 2023. Any Purnovate expenses incurred on and subsequent to May 16, 2023, will become the responsibility of Adovate. In addition, the Company is entitled 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 will receive a single digit royalty and receive a 19.9% equity stake in Adovate.
Cary Claiborne, President and Chief Executive Officer of Adial, stated, “We believe this is another significant milestone for Adial as it demonstrates our commitment to maximizing the value of our assets, as well as advancing our assets in the most cost-efficient way possible. By executing this agreement with Adovate, we will effectively reduce our cash burn rate, receive upfront non-dilutive capital, and maintain meaningful equity and downstream economics. In addition, this will enable us to focus exclusively on advancing AD04 which remains our top priority through potential regulatory approvals and prioritize our resources accordingly. Given recent positive developments as it relates to AD04, we believe it is an ideal time for us to sell the Purnovate assets and business in order to maximize the value of both AD04 and Purnovate for our shareholders.”
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Mr. Stilley commented, “I’m proud to support Adial through this partnership and look forward to advancing Purnovate’s drug candidates to meaningful developmental milestones as we build Adovate around Purnovate’s drug development platform. These next-generation compounds have already demonstrated preclinical efficacy and are well-positioned for clinical translation, further validating our belief in their potential to address important unmet medical needs. I believe that by allocating distinct and separate resources to the Purnovate assets, we can accelerate development to important inflection points and maximize the value of these assets for both Adovate and the Adial shareholders. Moving forward my primary focus will be on Adovate and I am departing from my active management role with Adial. I will, however, continue to lend my support, and look forward to ongoing collaboration as both a significant Adial shareholder and member of the board.”
Using the Purnovate adenosine drug development platform, Adovate intends to focus 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 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 transaction was independently evaluated and unanimously approved, first by the Adial Audit Committee of the Board of Directors, and then by its full Board of Directors, with Mr. Stilley, a current board member, abstaining from the vote.
Source: BioSpace
