Penny stock biotech Seneca Biopharma has found a lifeline in privately owned Leading BioSciences as it merges with the biotech.
Under the terms of the deal, the two companies will become known as Palisade Bio and trade on the Nasdaq under the ticker "PALI."
The combined company will focus on advancing LBS's lead pipeline asset, the phase 3-ready LB1148, to see whether it can improve gastrointestinal function following major surgery and reduce certain postoperative complications such as abdominal adhesions.
The drug is an oral formulation of a broad-spectrum serine protease inhibitor designed to neutralize the activity of potent digestive proteases that are released from the gut during surgery
As part of the merger, Altium Capital has agreed to invest $22.5 million at its close.
This comes as Seneca has dipped into penny stock territory since the spring and failed to come back up. The biotech has had a rough few years, with its two leading drugs—NSI-189 (a small molecule) and NSI-566 (a stem cell therapy)—being hit be setbacks.
The former failed a phase 2 three years back in major depressive disorder, while the latter, hoping to treat patients in amyotrophic lateral sclerosis and stroke, simply hasn’t been given the cash needed to move forward and has stalled.
Back in September, its management looked for out-licensing deals for these meds and also announced it was seeking a potential merger. Today, that part has come to fruition, though there was no mention of Seneca’s drugs in the merger announcement.
“This is a transformational event for Leading BioSciences, and a critical next step in the evolution of the Company. Through this merger, the newly formed Palisade Bio will be optimally positioned to advance our lead drug candidate LB1148 through the final phases of clinical development for FDA approval,” said Tom Hallam, Ph.D., chief executive of LBS, who will also lead the new biotech.
“We are excited to commence pivotal studies with LB1148 in our first indication to reduce the time to return to normal postoperative GI function following neonatal open-heart surgery. This oral therapeutic has the potential to be transformative for improving outcomes in multiple surgery indications."
“Following an extensive review of strategic alternatives, we believe that this merger with Leading BioSciences is in the best interest of Seneca's stockholders, and has the potential to deliver both near- and long-term value to the stockholders,” said Kenneth Carter, Ph.D., executive chairman of Seneca.
The company will be headquartered in Carlsbad, California, with its board expected to be composed of eight members, consisting of three from Seneca and five from LBS.