Essa Pharma is set to buy floundering Realm Therapeutics. The deal effectively sees Essa trade its shares for Realm’s cash, giving it the financial means to advance its pipeline of cancer drugs.
Realm was laid low by two midphase failures that sunk drugs against allergic conjunctivitis and atopic dermatitis and persuaded the company to halt investment in its development programs. Since then, Realm’s management has stripped down the business, offloading a royalty stream to Urgo Medical and dropping a London listing to generate cash and cut costs.
The failures and changes left Realm with little more than a Nasdaq listing and its cash reserves with which to attract a buyer. Essa, which already trades on Nasdaq, has swept in to get Realm’s money.
Realm is expected to have $20.5 million in cash when the deal closes around the middle of 2019. The all-stock deal values Realm at about $21.5 million, a premium of 5% over the money Essa is set to receive through the takeover.
The money will add to the $8.6 million Essa had as of the end of March, moving it a step closer to its goal of having the means to execute its R&D strategy.
“We believe that the current transaction, which is intended to be supplemented by an equity financing involving insiders and other investors, will deliver sufficient financial resources to Essa to achieve multiple value-inflection points and key near-term objectives in the coming two years,” Essa CEO David Parkinson said in a statement.
The top item on Essa’s list of near-term objectives is to run a phase 1 trial of its lead drug, androgen receptor inhibitor EPI-7386. Essa selected EPI-7386 as its lead clinical candidate in metastatic castration-resistant prostate cancer in March and is aiming to enter human testing early in 2020.
Parkinson and his colleagues are also planning to test EPI-7386 in combination with anti-androgens in prostate cancer patients, as well as to work on preclinical programs in the treatment of breast cancer.