Vital Therapies & Immunic Therapeutics Announce Transaction to Create Leading Company
Vital Therapies, Inc. and Immunic AG recently announced they have entered into a definitive agreement under which Vital Therapies is expected to acquire all of the outstanding shares in Immunic in exchange for newly issued shares of Vital Therapies in an all-stock transaction. The company will focus on advancing Immunic‘s pipeline of novel and potentially transformative treatments for chronic inflammatory and autoimmune diseases. Upon closing of the transaction, the company is expected to operate under the name Immunic, Inc. and trade on the NASDAQ Global Market.
An investor syndicate including Life Sciences Partners, Omega Funds, Fund+, LifeCare Partners, Bayern Kapital, High-Tech Gründerfonds and IBG Beteiligungsgesellschaft Sachsen-Anhalt has committed to invest approximately EUR 26 million in the company at the closing of the transaction. This financing will help fund the further development of Immunic’s pharmaceutical product candidates and is expected to be consummated before or concurrently with the closing of the transaction, which is contingent upon this financing. The total cash balance of the company following the closing of the transaction and concurrent financing is expected to be between USD 35 to 40 million and would be sufficient to fund development into the third quarter of 2020.
Immunic is a privately held clinical-stage biopharmaceutical company focused on developing best-in-class therapies for the treatment of chronic inflammatory and autoimmune diseases. Immunic’s lead program, IMU-838, is an orally available, next-generation selective immune modulator that inhibits the intracellular metabolism of activated immune cells by blocking the enzyme dihydroorotate dehydrogenase (DHODH). IMU-838 was successfully tested in two Phase 1 clinical trials in 2017 and is currently being tested in a phase 2 trial in patients with ulcerative colitis. Immunic intends to initiate additional Phase 2 trials in patients with Crohn’s disease and multiple sclerosis throughout the course of 2019. Furthermore, the Mayo Clinic plans to start a phase 2 study testing IMU-838 activity in patients with primary sclerosing cholangitis (PSC) in the first quarter of 2019.
Immunic’s second asset is IMU-935, an orally available small molecule inverse agonist of RORγt, a nuclear receptor known to influence the production of cytokines involved in autoimmune disease. The IMU-935 program, currently in preclinical development, is expected to enter clinical phase 1 trials in mid-2019.
In November 2018, Immunic entered into an exclusive global option and license agreement with Tokyo-based Daiichi Sankyo Co., Ltd. for IMU-856, a novel, orally available small molecule currently in preclinical development. IMU-856 targets the restoration of the intestinal barrier function, whose disruption is known to be prominently involved in the initiation of inflammatory bowel diseases like ulcerative colitis and Crohn’s disease, and also in disease relapse. Restoration of the intestinal barrier function may provide an important new therapeutic option by lessening or avoiding the immuno-suppression associated with current therapies. Immunic currently expects IMU-856 to enter clinical trials in the first half of 2020.
“We are truly excited about the opportunity created by this transaction to further advance our three next-generation programs in chronic autoimmune and inflammatory diseases. Our objective has always been to develop new and better options for patients with debilitating diseases, and with this transaction and the compelling data from our programs, we believe that we are well positioned to deliver on this vision,” said Daniel Vitt, PhD, Chief Executive Officer of Immunic. “We believe that the proposed transaction will be transformative for Immunic stockholders and create a company with the potential to generate substantial stockholder value. We expect that the company will have the financial resources and experienced leadership to accomplish our multiple value inflection points and key near-term objectives: first, to deliver Phase 2 read-outs for our lead program IMU-838 in multiple indications; and second, to further advance our preclinical programs, IMU-935 and IMU-856, towards clinical proof-of-concept.”
“Following an extensive and thorough review of strategic alternatives, we believe that this transaction with Immunic is the best path forward and has the potential to deliver significant and near-term value to Vital Therapies stockholders,” said Russell J. Cox, Chief Executive Officer of Vital Therapies. “We believe that the strength and dedication of the Immunic leadership team will provide our company with the capabilities to develop new and much-needed therapies for patients with inflammatory and autoimmune diseases.”
Under the terms of the agreement, on a pro forma basis and after giving effect to the concurrent financing, current Vital Therapies stockholders are expected to own approximately 11% of the company and current Immunic stockholders are expected to own approximately 89% of the company. The actual allocation will be subject to adjustment based on Vital Therapies’ net cash balance at the closing of the transaction. Prior to closing, Vital Therapies will seek stockholder approval to effect a reverse split of its outstanding common stock to satisfy listing requirements of the NASDAQ Global Market.
The company will be led by Daniel Vitt, PhD, Chief Executive Officer and President of Immunic, and will be headquartered in Boston, MA. The board of directors is expected to be composed of five members, including four members of the current Immunic board, Daniel Vitt, PhD, CEO of Immunic, Joerg Neermann, PhD, Life Science Partners, Vincent Ossipow, PhD, CFA, Omega Funds, Jan von den Bossche, Fund+, and Vital Therapies’ current President and member of the management team, Duane Nash, MD, JD, MBA.
With the signing of the Exchange Agreement between the two parties, Russell J. Cox, Vital Therapies’ Chief Executive Officer, will be leaving the company in the near term. “We are tremendously grateful to Russ for his leadership in so quickly and effectively delivering to our stockholders the compelling strategic option of this transaction with Immunic,” said Faheem Hasnain, Chairman of the Board of Vital Therapies. “It has been a privilege to work with the board and management team at Vital Therapies,” said Russell J. Cox. “However, it is important that we maximize cash available for post-closing operations. We believe we are well-positioned for a successful outcome to the transaction, and I, as well as the entire board, have full confidence in our team’s ability to finalize this process.” Upon Russ’ departure, Dr. Duane Nash, Vital Therapies’ current President, will serve as interim Chief Executive Officer.
The transaction has been approved by the board of directors of both companies and the stockholders of Immunic. The transaction is expected to close in the second quarter of 2019, subject to the approval of Vital Therapies stockholders at a special meeting of stockholders, as well as other customary conditions.
Ladenburg Thalmann & Co. Inc. is acting as exclusive financial advisor to Vital Therapies for the transaction and Pillsbury Winthrop Shaw Pittman LLP is serving as legal counsel to Vital Therapies. BMO Capital Markets is acting as exclusive financial advisor to Immunic for the transaction and Dentons is serving as legal counsel to Immunic.
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