Processa Pharmaceuticals has made significant strides in reshaping its pipeline by announcing the acquisition of Vidya Therapeutics, a clinical-stage biotechnology firm. Vidya’s principal asset includes a molecule that holds broad potential for treating immune-mediated disorders, ranging from rare inflammatory skin diseases to common food allergies.
The agreement, disclosed on Wednesday, is an all-stock transaction. In conjunction with this acquisition, Processa, based in Vero Beach, Florida, revealed a concurrent private placement of $200 million aimed at supporting clinical development plans for Vidya’s drug over the coming months.
The drug in question, VT-7208, is an oral small molecule designed to inhibit Bruton’s tyrosine kinase (BTK), an enzyme that plays a critical role in the activation of B-cells. Initially utilized to treat certain cancers, BTK inhibitors have expanded into immunology, as B-cells are essential components of the immune system.
Notably, Novartis’ remibrutinib, branded as Rhapsido, became the first BTK inhibitor approved by the FDA for an immunological indication in October, specifically for the treatment of chronic spontaneous urticaria (CSU). Phase 3 trials are ongoing for this medication in pediatric CSU patients and for various rare skin disorders, including hidradenitis suppurativa, as well as in multiple sclerosis. A Phase 2 trial for food allergies is also underway.
Processa has categorized Vidya’s medication as a next-generation BTK inhibitor, designed for once-daily dosing. Preclinical and Phase 1 data suggest that it may allow for lower dosing, thereby potentially offering advantages over Rhapsido. Additionally, the molecule is engineered to minimize off-target effects, which Vidya claims could mitigate the risk of liver complications associated with Novartis’ treatment.
At the end of the first quarter of this year, Processa reported cash reserves of $1.7 million, insufficient to sustain operations for an entire year. However, the new private placement is expected to provide sufficient funds to support operations through the second half of 2029, facilitating multiple Phase 2 trials for VT-7208 simultaneously, rather than sequentially as initially planned.
The company intends to initiate a Phase 2 study for food allergies in the second half of this year, with results anticipated in late 2027. Another Phase 2 trial for CSU is also scheduled to commence in the second half of 2026, with results expected in early 2028. Additionally, the drug has been formulated with brain penetration capabilities that could be advantageous in treating neuroinflammation, with an intermediate study for recurrent multiple sclerosis set to begin in early 2027 and results expected in late 2028.
Investors in the private placement include notable firms such as Bain Capital Life Sciences, Janus Henderson Investors, RA Capital Management, and others. The transaction is projected to be finalized Friday, at which point these investors will hold 52.6% of Processa’s common stock. Pre-acquisition shareholders are expected to retain around 0.9% of the common shares, while Vidya shareholders will acquire approximately 46% of the merged entity.
“This transaction with Vidya represents a unique opportunity to create significant value for our shareholders by acquiring a differentiated clinical-stage BTK inhibitor program that has the potential to address substantial unmet needs in multiple pathological areas,” said George Ng, CEO of Processa, in a prepared statement.
The journey of Processa Pharmaceuticals began with a reverse merger in 2017 with a company called Heatwurx, which developed asphalt equipment. Until last week, its most advanced program was a breast cancer drug that had reached mid-stage clinical development. In a regulatory filing on Wednesday, Processa announced its decision to terminate its license agreement for this breast cancer drug, reverting rights back to Elion Oncology, with an associated payment of $650,000 for legal fees and other expenses.
According to the regulatory document from Wednesday, Processa plans to continue developing another asset, PCS499, which the company believes may hold promise for kidney diseases such as focal segmental glomerulosclerosis and IgA nephropathy—both immune-mediated disorders aligning with Processa’s new immunological focus. This small oral molecule was previously licensed from Concert Pharmaceuticals, now part of Sun Pharmaceutical Industries.
The regulatory submission indicates that Processa’s agreement with Elion provides them with a 7.5% interest in any new entity whose assets include PCS499 as well as two other Processa programs, which continue to remain part of the company’s pipeline.
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