Trans-Sodium Crocetinate

Adam Zamecnik @a_zamecnik Diffusion Pharma’s stockholders have agreed to its merger with EIP Pharma, creating a combined company focused on neurodegenerative disorders. Image Credit: Shutterstock / LightField Studios The stockholders of Diffusion Pharmaceuticals have approved a merger with EIP Pharma, which is on track to close on 16 August. Diffusion’s stockholders approved all proposals as part of a special meeting, including the issuance of Diffusion Common Stock and a reverse stock split of outstanding Diffusion Common Stock, based on the 15 August press release . Specifically, 71% of stockholders voted in favour of the transaction, while 73% voiced their support for the Reverse Split. The combined company is expected to have cash runway through the trial until the end of 2024, based on a 30 March press release. If all goes ahead, the soon-to-be merged companies will begin trading as CervoMed under the trading symbol CRVO when NASDAQ opens on 17 August. The merger’s approval marks a further development in Diffusion’s strategic review process. In October 2022, Diffusion authorised the evaluation of additional strategic opportunities, which included joint ventures, licensing, and the company’s sale, in addition to previously announced options. The strategic review was followed by the announcement of a merger between Diffusion and EIP Pharma that would lead to a combined company focused on neurodegenerative diseases , based on the 30 March press release. Diffusion was previously developing its lead candidate trans sodium crocetinate, for patients with conditions such as stroke, which are often complicated by hypoxia. The combined company will now work on developing EIP Pharma’s pipeline and particularly the drug neflamapimod, a small molecule p38MAP kinase alpha (p38a) inhibitor, which plays a major role in inflammation-induced synaptic toxicity that results in synaptic dysfunction. On 14 August, EIP Pharma announced that it dosed the first patient in the Phase IIb RewinD-LB trial (NCT05869669) that studies neflampimod’s use in dementia with Lewy bodies.

EIP is the dominant partner in a merger with Diffusion Pharmaceuticals, with its shareholders taking 77.25% of the combined biotech. EIP Pharma has mapped out a financial freeway to the delivery of phase 2b on an ex-Vertex molecule. By merging with the floundering Diffusion Pharmaceuticals, the biotech is set to secure a Nasdaq listing and enough money to complete a clinical trial in dementia with Lewy bodies (DLB). Boston-based EIP is focused on the development of neflamapimod, a p38 MAP kinase alpha enzyme inhibitor that it picked up from Vertex in 2014. Vertex developed the drug candidate as a treatment for rheumatoid arthritis, taking it as far as a midphase trial in the setting. But EIP spied another application, starting a phase 2a trial in Alzheimer’s disease in 2015. The biotech raised $20.5 million and began a phase 2b study on the back of the Alzheimer’s data but has shifted its focus in recent years. The company wrapped up the phase 2b Alzheimer’s trial in 2019, and, while it still lists early-onset Alzheimer’s as a target indication, it is yet to run further clinical studies in the disease. Rather, after an aborted attempt to go after Huntington’s disease, EIP has settled on DLB as its lead indication. The results from an exploratory midphase clinical trial were strong enough to persuade the U.S. National Institute on Aging to chip in $21 million toward the costs of running a phase 2b. But EIP remained on the lookout for other ways to firm up its financial footing. Enter Diffusion. The publicly traded biotech began looking for strategic alternatives, including a sale, in October after initially focusing on finding a buyer or partner for its trans sodium crocetinate candidate. Diffusion studied the bipolar synthetic carotenoid in indications including glioblastoma multiforme in the belief it could improve outcomes by enhancing the body’s ability to deliver oxygen. Plans were afoot to start a phase 2 clinical trial of the candidate but were paused in connection with the EIP deal. If the EIP-Diffusion merger is completed, the combined company, which will change its name to CervoMed, will focus on the development of neflamapimod and seek a sale or out-licensing transaction for trans sodium crocetinate. EIP is the dominant partner in the merger, with its shareholders taking 77.25% of the combined biotech and whatever is left of the $22.5 million Diffusion had at the end of last year going into development of neflamapimod and the Boston-based business’s other oral stress kinase inhibitors. EIP expects the cash to extend its cash runway out to the end of next year, by when it should have phase 2b data in DLB. The 160-patient study is scheduled to start in the third quarter. Shares in Diffusion rose 6.5% to above $5 in premarket trading. The biotech boosted its share price in a one-for-50 reverse stock split last year in a bid to regain compliance with Nasdaq rules and has a market cap of around $10 million.