Vical finds way out of R&D woes via reverse merger with dermatology biotech Brickell
Months after burying its third and final clinical program, Vical has turned to a reverse merger with Brickell Biotech to put an end to its misery.
The new company — in which Vical investors will retain a 40% ownership — will operate under Brickell’s name and agenda, focusing on serious dermatologic disorders like hyperhidrosis, cutaneous T-cell lymphoma and psoriasis. Following the all-stock transaction, NovaQuest Capital Management has pledged $25 million to fund near-term R&D, adding to the $35 million in cash reserve that Vical brings.
For Vical investors, CEO Vijay Samant says, the deal gives them a stake in a potential best-in-class therapy for axillary hyperhidrosis or excessive sweating. A topical soft anticholinergic, sofpironium bromide is now on the cusp of a Phase III after Brickell’s development partner Kaken reported positive late-stage results in Japan.
Brickell CEO Robert Brown, who jumped from Eli Lilly late last year, said to expect topline data for sofpironium bromide in Q4 2020 while his team further develops the pipeline of skin disease treatments.
Samant himself hasn’t had a great track record predicting success for drug development programs — considering he’s axed three clinical-stage programs in less than two years, accompanied with a couple of rounds of layoffs — but he added that Brickell’s exec team brings experience launching drugs for other companies.
The disastrous streak began last January with a Phase III cytomegalovirus vaccine partnered with Astellas, which had already failed a herpes study in 2016. Then Vical scrapped another Phase II bivalent vaccine candidate for herpes simplex virus type 2, turning to an antifungal licensed from Astellas, only to give up this February and go through a final restructuring.
During this time, the biotech saw value steadily leak from its stock, hovering just above $1 (in contrast with a high of $14.8 in 2015). Shares $VICL lifted 31.3% for a final rally pre-market, though that only translated to $1.51 in dollar terms.
The valuation for Vical was $40 million, a premium over its 30-day volume weighted average share price as well as its market cap of $26.25 million.
Brickell, which was valued at $60 million in the deal, has yet to pick out a new ticker on the Nasdaq.