Adial Pharmaceuticals has acquired Azora Therapeutics, a biopharmaceutical company developing treatments for serious inflammatory diseases, positioning the combined entity to advance its pipeline through key clinical milestones in ulcerative colitis. The acquisition brings Azora's lead asset AT177, a proprietary colon-targeted aryl hydrocarbon receptor (AhR) agonist designed to enable localized activation with limited systemic exposure, into Adial's portfolio. Concurrent with the acquisition, Adial entered into a definitive agreement for a private placement of up to $64 million in gross proceeds to fund the development of AT177 through IND-enabling studies and Phase 1a and Phase 1b studies.

The private placement is structured in two tranches. The initial upfront financing totals approximately $32 million in gross proceeds, including the conversion of outstanding notes assumed in the acquisition, in exchange for pre-funded warrants to purchase 11,780,948 shares of Adial's common stock at a purchase price of $2.7489 per warrant. An additional $32 million in gross proceeds is available upon Phase 1 clinical study initiation, exchangeable for pre-funded warrants and common warrants to purchase up to 11,780,948 shares of common stock each at a combined purchase price of $2.7489. The financing was led by Coastlands Capital with participation from Boxer Capital Management, Stonepine Capital Management, AuGC BioFund and other biotech specialists and institutional investors.

Transaction Structure and Ownership

The acquisition of Azora was structured as an asset acquisition where all of Azora's outstanding equity interests were exchanged for a combination of 437,474 shares of Adial common stock and approximately 12,930 shares of Adial Series A non-voting convertible preferred stock. The Series A preferred stock represents 12,930,617 shares on an as-converted-to-common basis. The approval of Adial's stockholders is required for the conversion of the Series A preferred stock into common stock and for the warrants to become exercisable.

As a result of the transactions, and without giving effect to the funding of the milestone tranche, equity holders of Adial immediately prior to the acquisition will own approximately 7.7% of Adial's common stock. Equity holders of Azora will own approximately 51.0% of Adial's common stock, while investors in the private placement financing will own approximately 41.3%. These figures are calculated on a fully-diluted, as-converted-to-common basis using the treasury stock method.

Strategic and Clinical Outlook

Adial's management highlighted the validation of the AhR target in ulcerative colitis and the differentiated nature of Azora's colon-targeted approach, which is designed to minimize systemic exposure. "The quality of the investor syndicate supporting this transaction reinforces our conviction in Azora's thesis and the AT177 program," said Cary Claiborne, president and chief executive officer of Adial. The company believes the proceeds will allow it to execute through key clinical milestones to address unmet needs in ulcerative colitis.

Matt Davidson, PhD, co-founder of Azora Therapeutics and incoming chief development officer and newly appointed director of Adial, emphasized the engineering of AT177 to concentrate pharmacologic activity at the site of inflammation while minimizing systemic exposure. "AT177 represents a potentially meaningfully differentiated option with a safety profile designed to support long-term use," Davidson stated. AT177 is currently in IND-enabling studies, with a proof-of-concept clinical trial planned for 2027.

Board Appointment and Advisors

Adial announced the appointment of Wendy Young, Ph.D., to its Board of Directors. Dr. Young brings over 32 years of drug discovery and biotech leadership experience, including former roles as senior vice president of small molecule drug discovery at Genentech. The company also disclosed that Oppenheimer & Co. Inc. is serving as financial advisor to Adial, with Blank Rome LLP as legal counsel. Lucid Capital Markets acted as the exclusive placement agent for the financing and financial advisor to Azora, while TD Cowen served as capital markets advisor to Azora.