Two public biotechs seek to merge, focusing on desmoid tumors. But Nasdaq is not guaranteed
Two biotechs are looking to merge early next year, and as negotiations are ongoing, investors still need to sign off on the deal.
Oncology-focused Advaxis is in the early stages of merging with Ayala, a biotech incorporated in Delaware that has its primary operations located in Israel.
Advaxis CEO Ken Berlin told investors and analysts in a conference call Wednesday morning that he had reviewed “a number of business development opportunities to determine how best to advance Advaxis to a later stage company,” adding that the biotech believes the merger with Ayala is the best way to go about it.
Berlin tells Endpoints News that the plan is to have everything sorted out within 90-120 days, or the end of January — and the merger still depends on whether Ayala’s shareholders sign off on the deal.
How it will work with having two companies on Nasdaq, under tickers $ADXS and $AYLA, is that Ayala, a penny stock biotech and down 24% Wednesday morning, would delist. While it will list on the OTCQX once the merger is effective, the final goal is for the combined company to be listed on Nasdaq. However, the companies noted that going onto Nasdaq is not guaranteed.
Shares of Advaxis, a penny stock territory biotech with shares over $2 each, shot up 16% Wednesday morning before tempering back down to an 8% increase.
Ayala shareholders will get a combined 62.5% of the new company, while Advaxis shareholders get the remaining 37.5%. Berlin says these things are all negotiated.
“So they think they’re bringing a great asset — and they are — and they should get value for that,” Berlin noted, adding that part of the negotiation included asking what it would have taken for Ayala to raise the $20 million Advaxis already had on hand.
What the combined company will be going after, once everything is all said and done, is AL102, a lead program Ayala is bringing to the table to treat desmoid tumors. It’s also the same type of tumor SpringWorks is targeting, recently raising $225 million via private placement and presenting info at ESMO earlier this year.
Ayala CEO Roni Mamluk added on the conference call that Ayala’s drug is currently in a Phase II/III registrational trial called RINGSIDE. And that once the proposed merger is complete, Ayala will keep its operations in Israel.
As for how the merger came about, Berlin remained mum, telling Endpoints it was coming in the proxy statement and “that will take time to draft.”
Another drug that will be considered an option for the new proposed entity, Berlin told Endpoints, is ADXS-504, an Advaxis vaccine for prostate cancer, which is currently being looked at in a Phase I investigator-sponsored trial, or IST, at Columbia University. Berlin added that the investigator, Mark Stein, has worked with Advaxis programs before, when the biotech had previously partnered with Merck.
Berlin added in the meantime that in order to predominantly focus on AL102, Advaxis is winding down ADXS-503, a candidate that was being investigated for NSCLC. Other candidates are options, says Berlin, but AL102 is the primary focus.
Advaxis has been in trouble of its own over the years. after securing a $540 million deal with Amgen back in 2016, the FDA put a clinical hold on a Phase I/II trial after a patient death in 2018. Amgen then backed out of the deal later that year.
A proposed merger was initially voted on and passed by shareholders with Israeli biotech Biosight, but Advaxis said a second vote for the reverse split portion did not pass with shareholders.