A month after Vallon Pharmaceuticals' one and only clinical-stage asset failed its first phase 1 test, the company is looking for an escape route to save the business.
Vallon has tapped a law firm and investment bank to help with a strategic review, with the goal of finding any and all opportunities to stay afloat, according to an announcement Friday. That includes a potential merger, acquisition or purchase of assets. In the meantime, the company will be “streamlining its operations.”
The strategic review is an aftershock of the company’s dismal phase 1 results revealed in March. Vallon’s lead asset, ADAIR, failed to show it was less addictive than dextroamphetamine for patients with ADHD, which sent shares plummeting from $7.44 to $2.31. The company is also testing the drug for patients with narcolepsy. Virtually all the company’s chips are pushed towards to ADAIR, with just one other asset, ADMIR, in the formulation stage.
In an interview Friday, Vallon CEO David Baker said the company needed to “go through very serious evaluation” about the future of ADAIR.
The reality is that Vallon’s future has seemed murky even before the trial failure. According to an annual report, the company had only three full-time employees and six consultants. And in 2020, ADAIR was offered up to Medice for exclusive licensing and manufacturing rights in Europe. Medice is “affiliated” with the company’s principal shareholder, and represented by one member on the company’s board of directors.
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Baker defended the structure of the company, saying that top brass and outside consultants are experienced.
“Since the very beginning, Vallon has always been staffed either with few full-time employees or with retained consultants—and very seasoned consultants—by relying on people who’ve got a lot of industry experience,” he said. The company’s chief medical officer, Tim Whitaker, M.D., is a consultant, according to Baker. Whitaker is simultaneously the CMO of Seelos Therapeutics.
Baker says the company prides itself on running in a “very, very lean and efficient way.” When asked how Vallon has been able to pursue R&D efforts with current staffing levels, Baker said the company first relied on a Canadian firm to assist with formulation development. Then it signed with contract development and manufacturing company Catalent, which took the baton on development work.
“I don’t think it’s an altogether different process than a lot of small companies,” he said. Baker noted that Vallon’s two assets are reformulations of known active pharmaceutical ingredients, which means the company doesn’t rely on a “deep team of bench scientists.”
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In this interim phase, Vallon is not initiating any new clinical studies or new non-clinical studies. Baker also says that the company is saving cash by winding down clinical studies that would have proceeded had ADAIR been successful in phase 1.
In terms of the future of its assets, specifically ADMIR, Baker said the company has received “inbound” interest since announcing the therapy's development and that’s continued, saying “there are some possibilities there.” Because ADMIR is a reformulation of Ritalin, which is more commonly prescribed outside the U.S. for ADHD than Adderall, there may be more market interest than ADAIR.
“Ever since we talked about even the possibility of ADMIR, we have had inbound interest and we have had early stage discussions with potential partners,” he said.