Conducted meetings with U.S. and select European regulatory agencies
Received Notice of Exercise and upfront cash of $0.45 million from Advocate for the sale of Purnovate assets and business
Ended 2023 first quarter with cash and cash equivalents of $2.3 million
CHARLOTTESVILLE, Va., May 12, 2023 (GLOBE NEWSWIRE) — 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 provided a business update and reported its financial results for the first quarter of 2023.
Cary Claiborne, President and Chief Executive Officer of Adial, stated, “We continue to pursue our highly focused regulatory strategy and have conducted meetings with the U.S. Food and Drug Administration (FDA), the Swedish Medical Product Agency, the Federal Institute for Drugs and Medical Devices (BfArM) in Germany and the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom. We are currently waiting on final meeting minutes from the respective agencies, which receipt varies depending on the country. As we previously expressed, we remain highly confident in our regulatory strategy as we believe these meetings, and the resulting minutes, will provide us with a clearer understanding of the best path forward to approval. Armed with this information, we will be in a much stronger position to advance ongoing partnering discussions. Assisting us in our partnering efforts, we have engaged The Keswick Group. Given their extensive experience and successful track record of identifying, evaluating, and progressing strategic collaborations, we believe we are well positioned to execute on our business strategy and bring AD04 to large markets in the most cost-effective and timely manner.”
“Furthermore, as previously announced, we received an irrevocable notice of exercise on May 8, 2023 from Adovate to acquire the assets and business of our Purnovate subsidiary effective May 16, 2023, which allows us to exclusively focus on advancing AD04 through potential regulatory approval and prioritize our resources accordingly. Additionally, the sale of Purnovate assets provides us with non-dilutive upfront capital while maintaining meaningful equity and downstream economics, including potential development and commercial milestone payments of up to $83 million on the first three compounds. We believe this strategy maximizes the value of both AD04 and Purnovate assets. Overall, we have made significant progress and continue to execute our business strategy and we look forward to providing additional updates in the near-term, including feedback received from the respective regulatory agencies.”
Other Recent Developments
Purnovate
The Company recently announced that Adovate, LLC (formerly known as Adenomed, LLC) (“Adovate”), submitted an irrevocable notice of exercise on May 8, 2023 of its option to acquire the assets and business of our Purnovate subsidiary effective May 16, 2023 under an Option Agreement, dated as of January 27, 2023. The Option Agreement provides that the parties will enter into a final acquisition agreement for the sale of the Purnovate assets under previously agreed financial terms. Adovate was recently formed by William Stilley, co-founder and former CEO of Adial, for the sole purpose of acquiring, funding and advancing the Purnovate assets.
Adial received an upfront payment of $450 thousand on the notification date (May 8, 2023). After a final acquisition agreement is signed Adial will receive approximately $0.9 million for Purnovate expenditures incurred and paid by Adial after December 1, 2022. Any Purnovate expenses incurred subsequent to May 15, 2023, are now the responsibility of Adovate. In addition, the Company will be 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.
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.
Partnering
The Company has engaged The Keswick Group, LLC, a biotech strategic commercial and business development advisory firm, to support the advancement of the Company’s partnering activities. The Keswick Group is led by Tony Goodman, a current member of Adial’s Board of Directors. Mr. Goodman’s career spans over 23 years in the pharmaceutical and biotech industries. Having held senior leadership and business development positions at a variety of pharmaceutical companies, Mr. Goodman brings significant expertise and experience in strategically important partnering transactions and extensive relationships in the healthcare market.
Financing
The Company closed an at-the-market registered direct offering of 1,829,269 shares of common stock at a purchase price of $0.41 per share of common stock with a single institutional investor for gross proceeds of $750 thousand before deducting the placement agent’s fees and other estimated offering expenses payable by the Company.
First Quarter 2023 Financial Results
- Cash Position: As of March 31, 2023, cash and cash equivalents were $2.3 million compared to $4.0 million as of December 31, 2022. The Company believes that its existing cash and cash equivalents, as well as the impact of the recently announced agreement to sell its Purnovate’s Assets and Business, will fund its operating expenses into the first quarter of 2024. Under the agreement, the Company will receive non-dilutive funding and the sale has significantly reduced its current cash burn rate.
- Research and Development expenses increased by $80,000 (13%) for the three months ended March 31, 2023 compared to the three months ended March 31, 2022. This modest increase was primarily due to a favorable impact of an accrual adjustment in the prior year period that decreased R&D expense by $312,000 in the prior year and did not repeat this year. Excluding the impact of the prior year favorable accrual adjustment, research and development expense decreased by $243,000.
- General and Administration expenses decreased by $219,000 (9%) in the three months ended March 31, 2023 compared to the three months ended March 31, 2022.
- Net Loss was $2.9 million for three months ended March 31, 2023, compared to a net loss of $2.9 million for the three months ended March 31, 2022.
