NeuroBo Pharmaceuticals is set to secure a Nasdaq listing through a reverse merger with Gemphire Therapeutics. The move comes as NeuroBo gears up to start a phase 3 trial of nerve growth factor (NGF) therapy NB-01 in patients with diabetic neuropathic pain.
Gemphire has been on the ropes since long-standing concerns about the safety of gemcabene were exacerbated by the discovery of liver tumors in animals treated with the drug, leading the FDA to ask the biotech to conduct additional studies before entering phase 3. In the wake of the news, Gemphire cut its headcount and began looking into strategic alternatives.
Management settled on a merger with NeuroBo as the best of the available alternatives. The deal will see NeuroBo subsume Gemphire. Investors in NeuroBo will own 96% of the combined company.
The split reflects the balance of power. The combined company will take NeuroBo’s name and focus on advancing its lead asset, NB-01. NeuroBo will gain rights to gemcabene but has committed to put just $1 million into its development through the end of March. If the drug makes any money in the coming years, 80% of the net proceeds will go to current Gemphire shareholders.
While NeuroBo will put most of its money into its existing programs, Beijing SL Pharmaceutical could give gemcabene a new lease of life. The company paid Gemphire $2.5 million for the Chinese rights to the drug in a deal that features up to $6 million in development and regulatory milestones.
Gemphire CEO Steve Gullans thinks the combined investments of NeuroBo and Beijing SL could get the program out if its current predicament.
“Together, these relationships will enable us to continue to advance gemcabene toward a FDA partial clinical hold decision and potentially lead to a beneficial outcome for Gemphire shareholders,” Gullans said in a statement.
The fate of NeuroBo will be more closely tied to that of NB-01, though. NeuroBo plans to start a phase 3 trial of the NGF therapy in the fourth quarter using the proceeds from a $24.2 million series B round executed in conjunction with the merger. The amount raised to date is the minimum required under the terms of the merger agreement.