BOCA RATON, Fla. - Entero Therapeutics Inc. (NASDAQ:ENTO), a late-stage biopharmaceutical company, announced today a binding term sheet for a proposed merger with Journey Therapeutics, Inc., a clinical-stage biopharmaceutical company. The merger aims to form a Nasdaq-listed entity concentrating on advancing innovative cancer and autoimmune disease therapies, alongside gastrointestinal product pipelines.
The merger is predicated on several conditions, including the negotiation of definitive agreements, Entero receiving at least $5 million in equity financing, SEC registration statement effectiveness, and Entero stockholder approval. Upon completion, Journey shareholders will acquire 99% of Entero's equity, with the combined company operating under the Journey Therapeutics name and continuing to trade on the Nasdaq Capital Market.
The merged entity will focus on Journey's proprietary nano-immunoconjugates (NIC (NASDAQ:EGOV)) platform, which employs nanoparticle albumin-bound paclitaxel, a cancer drug, as a therapeutic backbone. This technology is designed to target tumors with precision, offering a potentially more effective and less toxic treatment for various cancers, including end-stage gynecologic tumors and lymphoma.
Journey's NIC platform, exclusively licensed from Mayo Clinic with worldwide rights to sublicense, is reported to deliver a significantly higher drug/antibody ratio to tumors compared to traditional antibody-drug conjugates (ADCs). Early-stage clinical results of various NIC products have shown promising efficacy and safety, and further developments are anticipated shortly.
Entero's existing clinical assets, which will continue their clinical development, include latiglutenase for celiac disease, adrulipase for cystic fibrosis and chronic pancreatitis, and capeserod for metabolic and rare genetic diseases.
James Sapirstein, Chairman and CEO of Entero Therapeutics, expressed enthusiasm for the merger, highlighting the potential to accelerate critical clinical trials and make significant strides in oncology. Henry Ji, Ph.D., President and CEO of Journey Therapeutics, echoed these sentiments, noting the opportunity to advance their NIC portfolio.
The merger is presented as an opportunity to combine Journey's innovative therapies with Entero's clinical assets, potentially addressing unmet medical needs in a multibillion-dollar global market.
This report is based on a press release statement. The completion of the merger is subject to various conditions, and the anticipated results and financial condition of the merged entity may differ from current expectations.
In other recent news, Entero Therapeutics has been making significant strides in its business operations. The company has secured an exclusive global license to use Data Vault's QOLPOM® and FotoDigm® software in its clinical trials, beginning with a Phase 3 study for latiglutenase, a treatment for celiac disease. This agreement involves issuing convertible preferred stock to Data Vault and paying revenue sharing royalties on net sales.
Moreover, Entero Therapeutics has appointed Machias Gini & O’Connell LLP (MGO) as its new independent registered public accounting firm. There are also changes in leadership, with Timothy R. Ramdeen joining the board of directors and Dr. Jack Syage transitioning to the role of Chief Scientific Officer.
On the financial front, the company has secured approximately $1.1 million in a registered direct offering and concurrent private placement, managed by Roth Capital Partners (WA:CPAP). This funding is earmarked for general corporate purposes and working capital.
In terms of analyst coverage, H.C. Wainwright has reinstated its coverage on Entero Therapeutics, shifting their rating from Under Review to Neutral, following the company's recent acquisition of ImmunogenX. Lastly, the company is facing a potential delisting from Nasdaq over share price concerns, but it has a plan in place to regain compliance within the given timeframe.
InvestingPro Insights
As Entero Therapeutics Inc. (NASDAQ:ENTO) prepares for its proposed merger with Journey Therapeutics, investors should consider some key financial metrics and insights from InvestingPro.
The company's market capitalization stands at a modest $2.02 million, reflecting its current position as a late-stage biopharmaceutical company. This relatively small market cap aligns with the company's focus on clinical development and its need for additional financing as part of the merger conditions.
InvestingPro data shows that Entero's stock has experienced significant volatility, with a strong return of 31.36% over the last month and an impressive 113.87% over the last three months. These recent gains contrast sharply with the stock's performance over longer periods, as it has fallen by 79.26% over the past six months and 88.85% over the last year. This volatility underscores the high-risk nature of investing in clinical-stage biopharmaceutical companies.
Two relevant InvestingPro Tips for Entero are that the company is not profitable over the last twelve months and that analysts do not anticipate profitability this year. These tips are particularly pertinent given the merger's focus on advancing clinical trials and developing innovative therapies, which typically require substantial investment before generating revenue.
It's worth noting that InvestingPro offers 11 additional tips for ENTO, providing a more comprehensive analysis for investors interested in this merger and the company's future prospects.
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