Advaxis and Ayala Pharmaceuticals announced Wednesday they have entered into a reverse merger deal to focus on two clinical-stage cancer therapies: AL102 for desmoid tumors and ADXS-504 for prostate cancer.
In a conference call, Kenneth A. Berlin, president and CEO of Advaxis, said that Advaxis had been looking for a deal with a clinical-stage asset, and after the merger, they will “have $20 million in cash and a highly skilled team.”
The companies will reprioritize the pipeline and focus on Wilmington, Delaware-based Ayala’s lead asset, AL102, which is currently in a Phase II/III RINGSIDE trial in desmoid tumors. They have also seen promising interim data from the trial with tumor shrinkage in the majority of patients that appears to be deepening over time.
AL102 has received Fast Track Designation from the FDA.
Roni Mamluk, Ph.D., president and CEO of Ayala, referred to the interim data presented in Sept. 2022 as having a “very intriguing therapeutic index,” adding that, “altogether the early data was considered promising … for the treatment of desmoid tumors.”
Desmoid tumors are noncancerous growths in the connective tissue. They tend to be a disease of the young, affecting people between the ages of 15 and 60. They are more common in females than males. Although benign, they can be very painful and are difficult to completely remove with surgery. According to the National Cancer Institute, two to four people out of every one million worldwide are diagnosed each year.
The companies will continue working on another Ayala compound, AL101, being developed for recurrent/metastatic adenoid cystic carcinoma.
The company is expecting a data readout on Rehovot, Israel-based Ayala, ADXS-504 in 2023, with additional data readouts for AL102.
A "Truly Transformational Deal"
Berlin said the merger offered “a number of big opportunities to advance Advaxis to a clinical-stage company.” He added it would be a “stronger oncology company with a strong pipeline and a global presence” in a “better position to trade on the Nasdaq.”
Mamluk noted that “the rationale for the merger for Ayalas is very clear — we were looking to advance our clinical programs and strengthen our U.S. presence. This merger accomplishes both goals.”
Berlin will remain president, CEO and director of the merged company. Andres Gutierrez, M.D., Ph.D., current CMO of Advaxis, will continue in that role, and Igor Gitelman, will remain Interim CFO.
Mamluk and Yossi Maim, CFO of Ayala, will both resign and assist with the transition. Gary Gordon, M.D, CMO of Ayala, is also stepping down, but plans to remain in an advisory role for some time.
The board of directors of the merged companies will consist of seven members, two from Advaxis, four designated by Ayala, and Berlin. They intend to keep operations in Israel, where most of the Ayala team is based.
Ayala shareholders will own 62.5% of the combined company’s outstanding common stock. Advaxis stockholders will own about 37.5%.
Berlin described the merger as a “truly transformational deal “with “near-term commercial potential.”
He added that they see AL102 as having the “potential to have a competitive advantage and a decent place for the compound in the commercial market.
Although “cash is a critical component to the deal, it’s not the whole picture,” Berlin noted. They expect “some key milestones in 2023, and we believe we can modulate spending if needed in a tough capital market and not unduly delay the A102 program if we do.”
