December 28, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Earlier this month, Buffalo Grove, Ill.-based RestorGenex Corporation and Charlottesville, Va.-based Diffusion Pharmaceuticals, LLC, announced they would merge into a newly formed subsidiary of RestoreGenex.
The deal will be an all-stock transaction. Diffusion will be a wholly-owned subsidiary of RestorGenex and Diffusion equity holders will receive shares of RestorGenex common stock. As a result, current Diffusion equity owners will own about 83 percent of the combined company’s outstanding shares, with current RestorGenex shareholders controlling about 17 percent.
“We have chosen to combine with Diffusion in order to add a clinical-ready product to our oncology portfolio,” said Stephen Simes, RestorGenex’s chief executive officer in a statement. “Specifically, the key Diffusion product is scheduled to enter a Phase III clinical trial in 2016, thereby accelerating our product development dramatically.”
RestorGenex has a market cap of $24.2 million and focuses on developing drugs in the oncology, ophthalmology and dermatology space. Its lead product is a PI3K/Akt/mTOR pathway inhibitor. It has been through two Phase I clinical trials for age-related macular degeneration, and is in preclinical development for GBM.
The company’s pipeline also has a “soft” anti-androgen therapeutic to treat acne vulgaris.
Diffusion Pharmaceuticals is a privately-held company that focuses on prolonging the life of cancer patients by improving current treatments, including radiation therapy and chemotherapy. Its lead drug, TSC, is being developed for cancers in which oxygen deprivation is shown to reduce the effectiveness of current treatments.
A Phase II trial for TSC was completed in the second quarter of 2015 in patients newly diagnosed with GBM, an aggressive form of primary brain cancer. Patients received TSC combined with standard care showed improvement with a positive safety profile.
The two companies’ board have approved the merger which is expected to close in the first quarter of 2016.
“We expect to be positioned to move forward with a pivotal Phase III trial of TSC in newly diagnosed GBM patients, with plans to begin enrollment in 2016,” said David Kalergis, Diffusion’s chief executive officer, in a statement. “We also are planning to commence a Phase II/III trial in pancreatic cancer in 2016 with a Phase II/III study in brain metastases to follow. The merger between Diffusion and RestorGenex will provide improved access to the capital markets, in order to obtain the resources necessary to accelerate development of TSC in multiple clinical programs and continue to build an oncology-focused company.”
RestorGenex’s current directors and executive officers will resign after the merger closes, and the combined company will be led by Diffusion’s current executive management team with David Kalergis as chief executive officer. The new board of directors will be made up of six members, all designated by Diffusion. The combined corporate headquarters will be located in Charlottesville, Va. The newly combined company will then be renamed Diffusion Pharmaceuticals, Inc.
RestorGenex has been on a steady decline this year until recently, when it started to climb. The company’s 52-week high was $3.75 per share, and its low was $0.40 per share. It is currently trading for $1.22 per share.
