Gemphire will enter into the reverse merger following a strategic review of its options.
Shares of beleaguered Gemphire are down slightly in pre-market trading after the Michigan-based company announced this morning that it was entering into a reverse merger with privately-held NeuroBo Pharmaceuticals.
NeuroBo, a company focused on developing therapies for neurodegenerative diseases will merge with Gemphire in an all-stock transaction. When the merger is complete, 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.
Steve Gullans, president and CEO of Gemphire, said NeruoBo represents an ideal merger for Gemphire, which has struggled with a partial clinical hold placed on its lead candidate, gemcabene. That hold has prevented the company from initiating Phase III trials in hypertriglyceridemia. The company hit a major setback with gemcabene last summer after its Phase IIa trial treating mid-stage non-alcoholic fatty liver disease (NAFLD) was halted early due to what has been termed “unanticipated problems.” The first three pediatric patients in the trial all experienced an increase in liver fat content. Following that disappointment, the company initiated a strategic review to assess its options. Gullans said that during Gemphire’s strategic review, leadership evaluated a number of potential merger options but chose NeuroBo for several reasons. He pointed to the company’s Phase III-ready NB-01 and the strong team that has been driving that asset through the clinic as positive examples. Additionally, Gullans said the company has a solid base of investors and the potential to deliver significant value based on its pipeline assets.
The reverse merger is taking place as NeuroBo is poised to take its lead drug candidate NB-01 into Phase III trials for diabetic neuropathic pain indications. NB-01, which was licensed from Korean pharmaceutical company Dong-A ST, hit the mark in Phase II studies in treating diabetic neuropathic pain. The asset demonstrated high efficacy in pain reduction with minimal to no side effects versus placebo – a highly desirable product profile compared to existing approved drugs in the market, the company said in January. The Phase III trial is expected to begin in the fourth quarter of this year. NeuroBo’s second drug candidate, NB-02, also licensed from Dong-A ST, 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. These dysfunctions include Alzheimer’s disease and tauopathies.
John L. Brooks, president and chief executive officer of NeuroBo said he is excited about the opportunities and resources the company will gain through the reverse merger with Gemphire.
“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,” Brooks said in a statement.
As part of its reverse-merger announcement, Gemphire said it signed an out-licensing partnership with Beijing SL Pharmaceutical Co. Ltd. to advance 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.
“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,” Gullans said in a statement.
Brooks will remain CEO of the combined companies and Gullans will transition to a role on the combined companies’ board of directors.
