Latest biotech-on-biotech merger sees aimless Adamis snapped up by DMK

It’s an increasingly common story in 2023—a publicly traded biotech searching for salvation after a tough set of clinical data is snapped up by a private company that sees an opportunity in the clinical expertise and Nasdaq listing.

This time it’s Adamis Pharmaceuticals, which was left floundering after its sole remaining clinical asset—a COVID-19 antiviral called Tempol—flunked a phase 2/3 trial last September. It sent the biotech on a hunt for “strategic alternatives,” leading it to accept a merger with neurology-focused DMK Pharmaceuticals.

The merged company will be led by DMK’s CEO Eboo Versi, M.D., Ph.D., and will be focused on developing DMK’s pipeline of “endorphin-inspired” candidates. Chief among these is DPI-125, which is in a clinical trial for opioid use disorder.

“I believe by combining Adamis’ commercial products and development infrastructure with DMK’s clinical-stage programs and library of small molecules, under Dr. Versi’s leadership, the new company will have the potential to develop multiple groundbreaking treatments and ultimately grow shareholder value,” said Adamis CEO David Marguglio, who will serve as president of the merged company.

The terms of the agreement will see DMK merge into a subsidiary of Adamis, with DMK shares converted into the right to receive a number of shares of Adamis stock. In order to complete the transaction, Adamis will also ask its shareholders for permission to conduct a reverse stock split—a method for companies facing being kicked off the Nasdaq to increase their share price by reducing their overall number of shares.

Adamis’ shares had been trading well below Nasdaq’s $1 per share limit even before Tempol’s clinical fail. The biotech’s stock closed Monday trading at just 26 cents apiece, although news of the merger sent the shares up to 32 cents in premarket trading this morning.

At the time of Tempol’s flop last fall, Marguglio said Adamis remained “bullish” about the prospects for its approved drugs Zimhi for opioid overdose and Symjepi for anaphylaxis. “Our team is focused on increasing sales and improving manufacturing efficiencies for our commercial products,” he added.

The company went on to lay off staff and liquidate its U.S. compounding business, ending the third quarter with just $2.4 million in cash and equivalents.