Upon completion of the merger, Gemphire will change its name to NeuroBo Pharmaceuticals, Inc., and plans to change its ticker symbol on the Nasdaq Capital Market to “NRBO.”
The merged company will focus on the development of NeuroBo’s clinical-stage drug candidates for the treatment of neurodegenerative diseases.
NeuroBo is focused on the development of a treatment for diabetic neuropathic pain (DNP), with its lead drug candidate, NB-01, in Phase 3 clinical development as a first-line, disease-modifying therapy.
NeuroBo’s second drug candidate, NB-02, is in development for the treatment of neurodegenerative diseases associated with the pathological dysfunction of the amyloid-beta and tau proteins in the human brain, which include Alzheimer’s disease and tauopathies.
NeuroBo believes that leveraging the therapeutic properties of its natural product-based platform will drive a paradigm shift in the treatment of DNP and other neurodegenerative diseases where drug safety combined with efficacy is a strong unmet need.
NeuroBo licensed NB-01 from Korean pharmaceutical company Dong-A ST. NB-01 has successfully completed Korean and U.S. Phase 2 proof-of-concept clinical trials, showing that NB-01 provided significant relief of diabetic neuropathic pain with minimal side effects, compared to placebo. Phase 3 clinical trials are expected to begin in the fourth quarter of 2019. NeuroBo acquired NB-02 outright from Dong-A ST.
“We are excited about the opportunities and resources that will become available to NeuroBo and its therapeutic pipeline as a result of the merger,” explained John L. Brooks III, president and chief executive officer, NeuroBo Pharmaceuticals. “As we move towards developing both NB-01 and NB-02, we believe that having shares publicly traded on Nasdaq will provide greater opportunity to advance our therapeutic pipeline and corporate strategy.”
Today, Gemphire also announced that the company has signed an out-licensing partnership with Beijing SL Pharmaceutical Co. Ltd. to advance its drug candidate, gemcabene, into the Chinese market. This partnership is expected to provide an upfront gross payment of $2.5 million to Gemphire and back end milestone and royalty payments to the combined company if certain development and commercialization milestones are met.
“NeuroBo represents an ideal merger partner for us,” stated Dr. Steve Gullans, president and chief executive officer of Gemphire.
“NeuroBo has a compelling Phase 3 program with NB-01 in diabetic neuropathic pain and a strong team to advance its pipeline. We evaluated numerous potential merger partners and recognized that NeuroBo has a solid base of investors and the potential to deliver significant value based on its pipeline assets. The NeuroBo merger complements our partnership with Beijing SL Pharmaceutical Co., and together, these relationships will enable us to continue to advance gemcabene toward a Food and Drug Administration (FDA) partial clinical hold decision and potentially lead to a beneficial outcome for Gemphire shareholders who will hold contingent value rights.”
On a pro forma basis and based upon the number of shares of Gemphire common stock to be issued in the merger, the pre-merger Gemphire shareholders will own approximately 4.06% of the post-merger combined company and the pre-merger NeuroBo investors will own approximately 95.94% of the post-merger combined company on a fully-diluted basis.
The actual allocation will be subject to adjustment based on Gemphire’s net cash balance at the time of the closing of the merger as well as any additional Series B capital above the minimum required amount and up to a total of $50 million that NeuroBo may secure at or before the closing of the merger. The transaction has been approved by the board of directors of both companies. The merger is expected to close in the second half of 2019, subject to the approval of the stockholders of each company, as well as other customary closing conditions.
In addition, Gemphire stockholders of record as of immediately prior to the effective time of the merger will receive non-transferable contingent value rights (CVRs) entitling the holders to receive in the aggregate, after the retention of $500,000 by the combined company and certain other permitted deductions, 80% of the net proceeds, if any, received during the 15-year period following the merger from transactions entered into during the 10-year period following the merger involving the sale or license of gemcabene.
Ladenburg Thalmann & Co. Inc. is acting as financial advisor to Gemphire for the transaction and Consilium Partners Inc. is acting as financial advisor to NeuroBo for the transaction. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is serving as legal counsel to NeuroBo. Honigman LLP is serving as legal counsel to Gemphire.
Source: Company Press Release