Processa Pharmaceuticals is reshaping its pipeline with the acquisition of Vidya Therapeutics, a clinical-stage biotech whose main asset is a molecule that offers broad potential in immune-mediated disorders ranging from rare inflammatory skin diseases to common food allergies.
The deal announced Wednesday is an all-stock transaction. Concurrent with the acquisition, Vero Beach, Florida-based Processa announced a $200 million private placement to support a clinical development plan for the Vidya drug that will unfold in the months to come.
The drug, VT-7208, is an oral small molecule designed to inhibit an enzyme called Bruton’s tyrosine kinase (BTK). BTK inhibitors first reached patients with certain cancers, as the enzyme plays a role in activating B cells. BTK inhibitors were first approved for treating B cell-driven blood cancers. But B cells are immune cells, so drug research has expanded to bring BTK inhibition to immunology.
Last October, the Novartis drug remibrutinib, brand name Rhapsido, became the first FDA-approved BTK inhibitor for an immunological indication. The approval specifically covered use of the twice-daily pill to treat chronic spontaneous urticaria (CSU), a rare inflammatory skin disorder. Phase 3 tests are underway in pediatric CSU patients; the rare skin disorders hidradenitis suppurativa and chronic inducible urticaria; and multiple sclerosis. A Phase 2 test of the molecule is ongoing in food allergy.
Processa describes Vidya’s drug as a next-generation BTK inhibitor. It’s made for once-daily dosing, and preclinical and Phase 1 data support lower dosing, both of which would offer advantages over Rhapsido. The molecule is also designed to minimize off-target effects, which Vidya believes may reduce the risk of liver complications that is associated with the Novartis drug.
As of the end of the first quarter of this year, Processa reported its cash position was $1.7 million, which the company said was not enough to last for a full year. With the private placement, Processa now expects to have sufficient funds to last into the second half of 2029. That capital will finance multiple Phase 2 tests of VT-7208 concurrently, rather than in sequence as Vidya originally planned.
Process said it will begin a Phase 2 study in food allergy in the second half of this year; data are expected in the second half of 2027. A Phase 2 test in CSU is also expected to start in the second half of 2026 with data expected in the first half of 2028. The Vidya drug was designed with brain-penetrating capabilities that could prove useful in treating neuroinflammation. A mid-stage study in the relapsing form of multiple sclerosis is planned to begin in the first half of 2027; data are expected in the second half of 2028.
The investors in the private placement include Bain Capital Life Sciences, Janus Henderson Investors, RA Capital Management, SilverArc Capital, ADAR1 Capital Management, Cormorant Asset Management, Integral Health Asset Management, Marshall Wace, Octagon Capital, Soleus Capital, a large mutual fund, and other institutional investors. This transaction is expected to close on Friday. When that happens, those investors will own 52.6% of Processa common stock. Stockholders of Processa prior to the acquisition will own about 0.9% of Processa’s common stock while Vidya stockholders will own about 46% of the combined company.
“This transaction with Vidya represents a compelling opportunity to create meaningful value for our shareholders through the acquisition of a differentiated, clinical-stage BTK inhibitor program with the potential to address significant unmet needs across multiple disease areas,” Processa CEO George Ng said in a prepared statement.
The biotech company that would become Processa went public in a 2017 reverse merger with an asphalt equipment company called Heatwurx. Until last week, its most advanced program was a breast cancer drug that had reached mid-stage clinical development. In a Wednesday regulatory filing, Processa said it terminated its license agreement for this drug on July 23, returning those rights to Elion Oncology. Processa will pay $650,000 toward Elion’s attorney fees and other costs.
The filing states that Processa plans to continue development of another asset, PCS499. In its annual report, Processa said it believes this molecule could be developed for kidney diseases such as focal segmental glomerulosclerosis and immunoglobulin A nephropathy. Both indications are immune-mediated disorders, so PCS499 fits with the new immunology focus of Processa. This oral small molecule was licensed from Concert Pharmaceuticals (now a part of Sun Pharmaceutical Industries).
According to the Wednesday regulatory filing, Processa’s settlement with Elion grants that company a 7.5% equity stake of any newly formed company whose assets include PCS499 and two other Processa programs. The filing states that these drugs continue to be part of the Processa pipeline.
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