EIP Pharma Inc. (EIP Pharma), a privately held clinical-stage
company focused on developing treatments for neurodegenerative
diseases, and Diffusion Pharmaceuticals Inc. (Diffusion or
Diffusion Pharmaceuticals) (NASDAQ: DFFN), today announced
that the companies have entered into a definitive merger agreement
for an all-stock transaction forming a publicly traded, combined
company that will focus on the advancement of EIP Pharma’s
pioneering pipeline of oral stress kinase inhibitors, including its
lead drug candidate neflamapimod, which is currently being
developed for the treatment of dementia with Lewy bodies (DLB).
“With this proposed merger, we are creating a
leading company focused on developing treatments for
neurodegenerative diseases, beginning first with neflamapimod for
the treatment of dementia with Lewy bodies, the second most common
type of dementia after Alzheimer’s disease, and for which there are
currently no approved treatments,” said John Alam, MD, Chief
Executive Officer of EIP Pharma. “We believe neflamapimod is poised
to be the first to market disease-modifying drug therapy for DLB,
with the potential to reverse and possibly slow the progression of
synaptic dysfunction that contributes to the hallmark neurological
decline associated with this devastating disease. The combined
company will leverage an experienced drug development and
leadership team, and we expect it to be well capitalized to advance
neflamapimod through to Phase 2b clinical data.”
“This transaction is the result of a thorough
strategic review process led by Diffusion’s board of directors and
executive team initiated in 2022 to identify and negotiate the most
compelling, value-enhancing transaction for Diffusion stockholders.
From this, EIP Pharma’s clinical programs, management team and
corporate strategy stood out amongst the many bids we received,”
said Robert J. Cobuzzi, Jr., Ph.D., Chief Executive Officer of
Diffusion Pharmaceuticals. “We believe this proposed merger is
opportunistic and exciting for our shareholders, as EIP has built a
robust pipeline of highly needed CNS therapeutic candidates, and we
are highly confident in the capabilities of John and his team to
support the leadership of the combined company. Taken together, we
are thrilled at the prospect of combining our resources and
expertise to join EIP’s unwavering commitment to treat patients
with neurodegenerative diseases.”
Upcoming Anticipated
Catalysts/Milestones
EIP Pharma has several anticipated catalysts and
development milestones for neflamapimod through to the end of 2024,
including:
- Presentation of Phase 2a clinical data in an oral presentation
at the upcoming AD/PD™ 2023 International Conference on Alzheimer’s
and Parkinson’s Diseases and related neurological disorders, being
held March 28 – April 1, 2023, in Gothenburg, Sweden
- Initiate Phase 2b clinical study evaluating neflamapimod in
patients with DLB during the second quarter of 2023
- Closing of the merger with Diffusion in mid-2023
- Publication of additional results from the Phase 2a clinical
study in DLB in a peer-reviewed medical journal in the second half
of 2023
- Completion of enrollment into the Phase 2b clinical study in
DLB in the first half of 2024
- Reporting of data from placebo-controlled portion of the Phase
2b DLB study during the second half of 2024
EIP Pharma was recently awarded a $21 million
grant from the National Institutes of Health’s National Institute
on Aging (NIA) that will fully fund development costs associated
with the planned Phase 2b study. The NIA grant funds will be
disbursed over the course of the study as costs are incurred.
About the Proposed Merger
Under the terms of the merger agreement subject
to approval by EIP Pharma and Diffusion stockholders and
satisfaction of other customary closing conditions, EIP Pharma will
merge with a newly-created subsidiary of Diffusion. Immediately
after the merger, the current equity and convertible debt holders
of EIP Pharma are expected to own, in the aggregate, approximately
77.25% of the total number of outstanding shares of common stock of
the combined company and the current stockholders of Diffusion are
expected to own approximately 22.75%, in each case calculated on a
fully diluted and as-converted basis, subject to adjustment as set
forth in the merger agreement based on, among other things, the
amount of Diffusion net cash (as defined in the merger agreement)
at the closing date.
The combined company is expected to be renamed
“CervoMed” and continue to trade on the Nasdaq Capital Market under
a new ticker symbol, CRVO. The combined company would be
headquartered in Boston, Massachusetts and led by a team with
extensive drug development and leadership expertise, including John
Alam, MD, Chief Executive Officer; Robert Cobuzzi, Jr., PhD, Chief
Operating Officer; William Tanner, PhD, Chief Financial Officer;
Kelly Blackburn, MHA, Senior Vice President, Clinical Development;
and William Elder, General Counsel and Corporate Secretary. Sylvie
Gregoire, PharmD, the current Chair of EIP Pharma, will serve as
Chair of the Board of Directors for the combined company. The
combined company’s Board of Directors is expected to be composed of
seven members, consisting of Dr. Gregoire, Jeff Poulton, currently
EIP Pharma’s Chair of the Audit Committee, Jane Hollingsworth, JD,
currently Diffusion’s Board Chair, Frank Zavrl, Dr. Marwan Sabbagh,
Dr. Alam and Dr. Cobuzzi.
The merger agreement has been approved by the
Boards of Directors of both companies. The merger is expected to
close in mid-2023, subject to approvals by EIP Pharma and Diffusion
stockholders, the effectiveness of a registration statement to be
filed by Diffusion with the Securities and Exchange Commission
(SEC) to register the shares of Diffusion common stock to be issued
to EIP Pharma security holders in connection with the merger, and
other customary closing conditions.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. is serving as legal counsel to EIP Pharma. Canaccord Genuity
is serving as financial advisor to Diffusion, and Dechert LLP is
serving as legal counsel to Diffusion.
Additional information about the transaction
will be provided in a Current Report on Form 8-K that will be filed
by Diffusion with the SEC and will be available at www.sec.gov.
About Neflamapimod
Neflamapimod is an investigational drug that is
an orally administered small molecule brain penetrant that inhibits
p38MAP kinase alpha (p38a). P38a, which is expressed in neurons
under conditions of stress and disease, plays a major role in
inflammation-induced synaptic toxicity, leading to synaptic
dysfunction. Neflamapimod is currently being developed for the
treatment of dementia with Lewy bodies (DLB) and is the first
treatment with the potential to have a positive impact on
cognition, function and motor function.
In preclinical studies, neflamapimod reversed
synaptic dysfunction, including and particularly within the part of
the brain most impacted in DLB – the basal forebrain cholinergic
system. In Phase 1 and Phase 2 clinical studies involving more than
300 participants, neflamapimod has been shown to be generally well
tolerated. Results from the AscenD-LB Phase 2a clinical study
demonstrated that neflamapimod significantly improved dementia
severity compared to placebo and also showed significant
improvement on motor function compared to placebo. At the highest
dose evaluated, neflamapimod improved cognition. The combined
preclinical and clinical data are consistent with neflamapimod
treating the underlying DLB disease process and suggest it has the
potential to be the first disease-modifying treatment for DLB.
Neflamapimod was granted Fast Track status by the U.S. Food and
Drug Administration for the treatment of DLB, and EIP Pharma was
recently awarded a $21 million grant from the National Institutes
of Health’s National Institute on Aging (NIA) to evaluate
neflamapimod in a Phase 2b clinical study in DLB. The NIA grant
funds will be disbursed over the course of study as the costs are
incurred.
About EIP Pharma
EIP Pharma, Inc. is a privately held
clinical-stage biotechnology company advancing CNS-focused
therapeutics to benefit patients with a range of debilitating
neurodegenerative diseases. EIP Pharma is currently developing
neflamapimod, an investigational orally administered small molecule
brain penetrant that inhibits p38MAP kinase alpha (p38a).
Neflamapimod has the potential to treat synaptic dysfunction, the
reversible aspect of the underlying neurodegenerative processes
that cause disease in dementia with Lewy bodies (DLB) and certain
other major neurological disorders. Current institutional investors
in EIP Pharma include Access Industries, Adage Capital Management,
Mossrock Capital and Rock Springs Capital.
For more information, please visit
www.eippharma.com or engage with us on Twitter and LinkedIn.
About Diffusion Pharmaceuticals
Inc.
Diffusion Pharmaceuticals Inc. is a
biopharmaceutical company that has historically focused on
developing novel therapies that may enhance the body’s ability to
deliver oxygen to areas where it is needed most. Diffusion’s most
advanced product candidate, trans sodium crocetinate (TSC), has
been investigated and developed to enhance the diffusion of oxygen
to tissues with low oxygen levels, also known as hypoxia, most
recently as an adjuvant treatment to standard of care therapy for
GBM and other hypoxic solid tumors. In connection with the proposed
merger with EIP, and pending its conclusion, Diffusion previously
paused the initiation of the previously announced Phase 2 study of
TSC in newly diagnosed GBM patients and will continue to attempt to
identify sale or out-licensing transactions.
For more information, please visit
www.diffusionpharma.com or engage with us on Twitter and
LinkedIn.
No Offer or Solicitation
This communication does not constitute an offer
to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No public offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Important Additional Information and
Where to Find It
In connection with the proposed transaction
between Diffusion Pharmaceuticals and EIP Pharma, Diffusion
Pharmaceuticals intends to file relevant materials with the SEC,
including a registration statement that will contain a proxy
statement and prospectus related to a special meeting of its
stockholders. Diffusion Pharmaceuticals will mail the definitive
proxy statement and prospectus to Diffusion Pharmaceuticals’
stockholders as of the record date to be established for voting on
the merger and any other matters to be voted on at the special
meeting. BEFORE MAKING ANY VOTING DECISION, DIFFUSION
PHARMACEUTICALS URGES INVESTORS AND STOCKHOLDERS TO READ THESE
MATERIALS – INCLUDING THE DEFINITIVE PROXY STATEMENT, ANY
AMENDMENTS OR SUPPLEMENTS THERETO, AND ANY DOCUMENTS INCORPORATED
THEREIN – CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
DIFFUSION PHARMACEUTICALS, EIP PHARMA, THE PROPOSED TRANSACTION AND
RELATED MATTERS. This communication is not a substitute for the
registration statement, definitive proxy statement/prospectus or
any other documents that Diffusion Pharmaceuticals may file with
the SEC or send to Diffusion Pharmaceuticals’ stockholders in
connection with the proposed transaction. Investors and
stockholders will be able to obtain free copies of the proxy
statement, prospectus and other documents filed by Diffusion
Pharmaceuticals with the SEC (when they become available) through
the website maintained by the SEC at www.sec.gov. In addition,
investors and stockholders will be able to obtain free copies of
the proxy statement, prospectus and other documents filed by
Diffusion Pharmaceuticals with the SEC by contacting Diffusion
Pharmaceuticals by mail at 300 East Main Street, Suite 201,
Charlottesville, VA 22902, Attn: Corporate Secretary.
Participants in the
Solicitation
Diffusion Pharmaceuticals and EIP Pharma, and
each of their respective directors and executive officers and
certain of their other members of management and employees, may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transaction. Information regarding
these persons and their interests in the transaction will be
included in the prospectus and proxy statement relating to the
transaction and other relevant materials to be filed with the SEC.
Additional information regarding Diffusion Pharmaceuticals’
directors and officers is included in Diffusion Pharmaceuticals’
Annual Report on Form 10-K for the year ended December 31, 2022,
which was filed with the SEC on March 24, 2023. These documents can
be obtained free of charge from the sources indicated above.
Forward-Looking Statements
This press release includes express and implied
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, regarding
management’s intentions, plans, beliefs, expectations or forecasts
for the future, including, but not limited to, the timing and
potential outcome of the proposed transaction between Diffusion
Pharmaceuticals and EIP Pharma; the therapeutic potential of
neflamapimod; anticipated milestones related to the development of
the combined company’s clinical programs and reporting of data; the
expected ownership percentages of the combined company; and the
expected management team and board of directors of the combined
company. Terms such as “believes,” “estimates,” “anticipates,”
“expects,” “plans,” “intends,” “may,” “could,” “might,” “will,”
“should,” “approximately,” or other words that convey uncertainty
of future events or outcomes may identify these forward-looking
statements. Although there is believed to be reasonable basis for
each forward-looking statement contained herein, forward-looking
statements by their nature involve risks and uncertainties, known
and unknown, many of which are beyond the parties’ control and, as
a result, actual results could differ materially from those
expressed or implied in any forward-looking statement. Particular
risks and uncertainties include, among other things, those related
to the completion of the proposed transaction, including the need
for stockholder approval and the satisfaction of closing
conditions; the cash balances of the combined company following the
closing, if completed, of the proposed transaction; the ability of
Diffusion Pharmaceuticals to remain listed on the Nasdaq Capital
Market, as well as comply with any Nasdaq rules and regulations
related to the proposed transaction; the price of Diffusion
Pharmaceuticals’ securities, which may be volatile due to a variety
of factors, including changes in the competitive and highly
regulated industries in which Diffusion Pharmaceuticals and/or EIP
Pharma operates; variations in operating performance across
competitors; changes in laws and regulations affecting Diffusion
Pharmaceuticals’ or EIP Pharma’s business; the ability to implement
business plans, forecasts, and other expectations after the
completion of the proposed transaction; general economic,
political, business, industry, and market conditions, inflationary
pressures, and geopolitical conflicts; and the other factors
discussed under the heading “Risk Factors” in Diffusion
Pharmaceuticals’ most recent Annual Report on Form 10-K and other
filings with the SEC. Any forward-looking statements in this press
release speak only as of the date hereof (or such earlier date as
may be identified). New factors emerge from time to time, and it is
not possible for us to predict all such factors, nor can we assess
the impact of each such factor on the businesses or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements. These risks, as well as other risks
associated with the merger, will be more fully discussed in the
proxy statement/prospectus that will be included in the
registration statement that will be filed with the SEC in
connection with the proposed transaction and, except as required by
applicable law, rule, or regulation, neither Diffusion
Pharmaceuticals nor EIP Pharma undertakes any obligation to update
any such statements after the date hereof.
Contacts
EIP Investors & Media: Argot
Partners 212.600.1902 EIP@argotpartners.com
Diffusion Investors: Tiberend
Strategic Advisors, Inc. Daniel Kontoh-Boateng
dboateng@tiberend.com
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