SAN FRANCISCO, December 1, 2017 /PRNewswire/ --
- Recapitalization plan to use funding mechanisms created under the JOBS Act
- Elto Pharma, Inc. preparing to re-start Eltoprazine Phase 2b PD-LID clinical trial
- Cutanogen Corporation focusing on identifying new cGMP manufacturer for ESS
Amarantus Bioscience Holdings, Inc. (OTCPK: AMBS), a US-based biotechnology holding company with wholly-owned subsidiaries developing first-in-class orphan neurologic, regenerative medicine and ophthalmic therapies, today provided a comprehensive corporate update to shareholders. The Company is focused on its capital restructuring efforts and restarting operations in Q1 2018.
Completion of Holding Company Structure / Termination of SED Biomedical Agreement
In Q2 2017, the Company completed the formation of two wholly-owned subsidiaries, Elto Pharma, Inc. and MANF Therapeutics, Inc. to focus on the development of Eltoprazine and MANF, respectively. These new subsidiaries are in addition to its wholly-owned Cutanogen Corporation subsidiary, acquired from Lonza Group in July 2015 to advance Engineered Skin Substitute (ESS) for the treatment of life-threatening severe burns. These actions created a clear segmentation between our therapeutic verticals that now allows for the sourcing of direct financing via product-specific corporate entities. This corporate structure is similar to emerging growth companies such as Roivant Sciences and Fortress Bio, and opens innovative funding possibilities for the holding company and its operating subsidiaries.
In Q3 2017, Amarantus and Singapore eDevelopment Biomedical, Inc. (SeD Biomedical), a wholly-owned subsidiary of Singapore eDevelopment (SeD) agreed to terminate the letter of intent the companies executed in Q1 2017 (the "SED LOI"). The SED LOI contemplated the contribution of one or more biotechnology assets from SeD Biomedical into Amarantus in exchange for a significant equity ownership. In light of the Q3 2017 FDA approval of Gycovri® for the treatment of Parkinson's Disease Levodopa-Induced Dyskinesia (PD-LID), Amarantus believes the termination of the SED LOI will limit dilution for shareholders by allowing the Company to focus on building value in its existing subsidiaries, initially focusing on Elto Pharma.
As the Company moves forward, we are working closely with our financial advisors to determine the best path forward for funding of each of our subsidiaries that will allow Amarantus to rebuild shareholder value as quickly as possible. One key element of our recapitalization plan is centered on the Company's secured debt, convertible preferred stock, and warrants (Legacy Convertible Securities). The plan focuses on placing a moratorium on the ability of the Legacy Convertible Securities to convert into Amarantus common stock so that the Company's stock can be valued without being subjected to the imminent dilution risk created by the "discount to market" aspects of the Legacy Convertible Securities.
The Company took a major step forward in achieving its recapitalization goals on November 17th, 2017 when it announced the completion of Forbearance and Capital Restructuring agreements with holders of a controlling majority of the Legacy Convertible Securities. Under the terms of those agreements, Legacy Convertible Securities conversions into common stock have ceased. The Company is required to achieve certain restructuring milestones by January 10, 2018 to complete the exchange of the Legacy Convertible Securities into new securities with more favorable terms (the "Tender Exchange") in order to extend the moratorium. Upon completing the Tender Exchange, Amarantus will have into July 2018 to complete an up-listing of the Amarantus common stock to a national stock exchange (the "Uplist") and further extend the moratorium. Upon the Uplist, there will be a further 9-month (until April 2019) moratorium on liquidating the securities issued in the Tender Exchange, followed by a highly restricted 'leak-out' arrangement that will significantly limit the Tender Exchange holders' ability to convert.
Upon finalizing the Tender Exchange, the Company intends to employ capital raising mechanisms created under the recently-implemented JOBS Act to complete the capitalization of the subsidiaries, as well as an Uplist of the Amarantus common stock. Several private companies have successfully completed national exchange listings using these newly created mechanisms, and the Company believes these funding mechanisms are particularly well-suited for Amarantus and its subsidiaries given Amarantus' large legacy shareholder base. The JOBS Act allows companies to use 'general solicitation' marketing efforts, as well as provides 'Blue Sky' exemptions that allow companies to more easily raise funding from retail investors.
One caveat to the JOBS Act is that significant portions of its advantages are not available to fully-reporting companies. While there is currently legislation circulating Capitol Hill to allow fully-reporting companies to utilize certain key funding mechanisms created under the JOBS Act, such legislation has not yet been passed into law. As a result, Amarantus must become an 'Alternate Reporting' company in order to utilize these key funding mechanisms. To become an Alternate Reporting company, Amarantus must file a Form 15 with the Securities & Exchange Commission (SEC) to deregister the Company from its 1934 Securities Act ('34 Act) reporting obligations. Despite the pending Form 15 filing, the Company intends to disclose material events to shareholders on a voluntary basis during the capital restructuring process. The Company is preparing to file the Form 15 in the near future.
As part of the Form 15 filing process, Amarantus will file current financial information with OTC Markets, allowing the company to be deemed up to date in its reporting obligations under the Alternate Reporting standard. Over the next several months, the Company intends to raise sufficient capital (approximately $1.5 million) to complete the Tender Exchange and prepare its audited financial statements for fiscal years 2016 and 2017 so that Amarantus can be prepared to again become a 'Fully Reporting' company under the '34 Act in conjunction with the Uplist.
Near-term focus on Elto Pharma
Elto Pharma is developing the oral, small molecule drug candidate Eltoprazine for the treatment of symptoms associated with central nervous system (CNS) disorders. Eltoprazine is a selective 5HT1a/1b partial agonist that was originally developed by Solvay (now Abbvie). The Company currently has an approved Investigational New Drug (IND) application on file with the neurology division of the U.S. Food and Drug Administration (FDA) for Eltoprazine in the treatment of Parkinson's Disease Levodopa-Induced Dyskinesia (PD-LID). Amarantus began enrolling subjects into a Phase 2b PD-LID clinical study in Q2 2015, which was put on hold in Q4 2015 due to funding constraints. Eltoprazine has a well-established safety profile, having been dosed in over 680 human subjects to date in various CNS clinical trial settings.
Phase 2b clinical trial for PD-LID
In Q1 2015 Amarantus published positive results from a Phase 2a clinical study of Eltoprazine in PD-LID in the peer-reviewed medical journal Brain. Results from the clinical study demonstrated a statistically significant improvement in severity of dyskinesia for the Eltoprazine treated group vs. placebo (p=0.004) according to the Clinical Dyskinesia Rating Scale (CDRS).
In August 2017, the US FDA approved the first-ever treatment specifically for PD-LID: Gycovri® from Adamas Pharmaceuticals. This approval mitigates a key regulatory risk for Eltoprazine by validating that the Unified Dyskinesia Rating Scale (UDysRS) is viewed by the FDA as an acceptable rating scale on which to base approval in PD-LID. The UDysRS contains the primary measures incorporated in the CDRS, as well as additional measures on which the Company believes Eltoprazine is likely to have a favorable impact, based on historical clinical data. In addition, Eltoprazine received orphan drug designation (ODD) in PD-LID in Q1 2016, which improves Eltoprazine's net present value due to tax and other incentives. The FDA reaffirmed Gycovri's ODD post-approval, giving the Company a high-degree of confidence that Eltoprazine will be afforded similar consideration.
Elto Pharma is redesigning the Phase 2b clinical trial for PD-LID as a result of these market developments. Amarantus believes the positive reception by the market for CNS companies such as Adamas Pharmaceuticals, Acadia Pharmaceuticals and Acorda Therapeutics signals significant investor optimism for symptomatic neurological treatment companies, and Amarantus believes Elto Pharma compares favorably.
Eltoprazine in Agitation in Dementia (Alzheimer's) and Adult ADHD
Eltoprazine has also successfully completed Phase 2 trials in Agitation in Dementia and in Adult ADHD. The initial efficacy data generated in Agitation in Dementia demonstrates a statistically significant effect on the Social Dysfunction and Aggression Scale (p<0.05) in the most severely agitated patient population. The next step in Agitation in Dementia is to execute a robust Phase 2 clinical program. The efficacy data generated in Adult ADHD demonstrates positive effects in the ADHD Rating Scale IV (p=0.03), including positive benefits in both the inattention (p=0.003) and hyperactivity (p=0.008) subscales. The next step in Adult ADHD is to execute a pivotal Phase 3 clinical development program.
Market Opportunity for Eltoprazine in PD-LID and Agitation in Dementia (Alzheimer's)
In 2014, there were approximately 188,000 patients suffering from PD LID in the US. Adamas priced Gycovri at $28,000 per year. Taken together, these metrics imply a $3B+ annual market opportunity for Eltoprazine in PD-LID in the US alone.
Alzheimer's disease accounts for between 60 and 80% of the estimated 5.5 million people in the U.S. with dementia, costing over $250B annually to the US healthcare system. Behavioral symptoms develop in the majority of Alzheimer's patients, and many of these symptoms are clinically diagnosed as "agitation." Agitation is often a determining factor in deciding to place loved-ones in nursing homes. Agitation symptoms affect 50-80% of patients with Alzheimer's disease, including nearly 100% of end-stage patients. The Company estimates the market opportunity for Elto Pharma in Agitation in Dementia (Alzheimer's) is $5B+. In December 2015, Otsuka Pharmaceuticals acquired AVANIR Pharmaceuticals for $3.2B shortly after the publication of positive clinical data for AVP-786 in Agitation in Alzheimer's disease.
Cutanogen Corporation and MANF Therapeutics
The Company continues to strongly believe in its biologics programs being developed at Cutanogen Corporation (ESS) and MANF Therapeutics (MANF).
In Q3 2016, data was published demonstrating that a non-cGMP version of ESS reduced mortality (death) by 75%+ in a 16-subject investigator initiated clinical trial conducted at the Shriner's Hospital in Cincinnati when compared to historical patient survival data. Due to capital constraints, the Company was forced halt the initiation of a Phase 2 clinical trial it had planned with the US Army for the treatment of adults, including soldiers, who had been injured with stage 3 and 4 burns covering over 50% of the body. While this was a major disappointment for Amarantus, the US Army and the burn community at large, this hiatus has allowed the Company to re-prioritize its pipeline for the dual-layer ESS product candidate. Considering the FDA's decision to expand the label of Vericel's single-layer burn product, EpiCel, to include pediatric patients, the Company believes the fastest path to market for ESS is in the pediatric burn patient population, and we are evaluating the feasibility or pursuing this development strategy as ESS' lead indication. ESS has received ODD from the FDA for the treatment of full thickness burns covering 50%+ of the body. The next major operational steps for Cutanogen is to identify a new cGMP manufacturer for ESS and plan pivotal studies in pediatric severe burn patients. The Company previously requested rare pediatric disease designation (RPDD) from the FDA for ESS in the treatment of Giant Congenital Melanocytic Nevus (GCMN), which was not accepted; Cutanogen intends to appeal that decision. The Company believes ESS has the potential to receive RPDD for ESS in the treatment of pediatric severe burns.
Amarantus was originally founded to develop MANF, the Company's internally-discovered neurotrophic factor that could have important and unique uses as both a therapeutic protein, gene therapy, and cell therapy product in ophthalmology, Parkinson's disease, cardiovascular disease, and several other high-value indications. The scientific validation for MANF's potential role as a disease modifying therapy across these indications continues to grow, and the Company has been diligent in continuing to solidify its intellectual property position to protect MANF from competition. The Company continues to be the leader in intellectual property covering the therapeutic use of MANF. The next major operational step for MANF is to complete cGMP manufacturing and select the indication in which first-in-man studies will be conducted. MANF has received ODD for the treatment of Retinitis Pigmentosa (RP) and ODD for the treatment of Retinal Artery Occlusion. The Company previously requested RPDD with the FDA for MANF in RP, which was not accepted.
About Amarantus Bioscience Holdings, Inc.
Amarantus Bioscience Holdings (AMBS) is a biotechnology company developing treatments and diagnostics for diseases in the areas of neurology, regenerative medicine and orphan diseases through its subsidiaries. AMBS' wholly-owned subsidiary Elto Pharma, Inc. has development rights to eltoprazine, a Phase 2b-ready small molecule indicated for Parkinson's disease levodopa-induced dyskinesia, Alzheimer's aggression and adult ADHD. AMBS acquired the rights to the Engineered Skin Substitute program (ESS), a regenerative medicine-based approach for treating severe burns with full-thickness autologous skin grown in tissue culture that is being pursued by AMBS' wholly-owned subsidiary Cutanogen Corporation. AMBS' wholly-owned subsidiary MANF Therapeutics, Inc. owns key intellectual property rights and licenses from a number of prominent universities related to the development of the therapeutic protein known as mesencephalic astrocyte-derived neurotrophic factor (MANF). MANF Therapeutics, Inc. is developing MANF-based products as treatments for brain and ophthalmic disorders. MANF was discovered by the Company's Chief Scientific Officer John Commissiong, PhD. Dr. Commissiong discovered MANF from AMBS' proprietary discovery engine PhenoGuard. AMBS also owns approximately 80 million shares of Avant Diagnostics, Inc. via the sale of its wholly-owned subsidiary Amarantus Diagnostics, Inc. that occurred in May 2016.
About Elto Pharma, Inc.
Eltoprazine is a small molecule 5HT1A/1B partial agonist in clinical development for the treatment of Parkinson's disease levodopa-induced dyskinesia (PD-LID), Alzheimer's aggression and adult attention deficit hyperactivity disorder (adult ADHD). Eltoprazine has been evaluated in over 680 human subjects to date, and has a well-established safety profile, with statistically significant efficacy results across multiple central nervous system indications.
Eltoprazine was originally developed by Abbott Pharmaceuticals in aggression-related indications. The eltoprazine program was out-licensed to PsychoGenics, Inc. (PGI). PGI licensed eltoprazine to Amarantus in 2014 after a successful proof-of-concept trial in PD-LID.
In April 2017, Amarantus incorporated the wholly-owned subsidiary Elto Pharma, Inc. to focus on the clinical development of Eltoprazine.
About Cutanogen Corporation
Engineered Skin Substitute (ESS) is a tissue-engineered skin prepared from autologous (patient's own) skin cells. It is a combination of cultured epithelium and a collagen-dermal fibroblast implant that produces a skin substitute which contains both epidermal and dermal components. This model has been shown in preclinical studies to generate a functional skin barrier. Most importantly, because ESS is composed of a patient's own cells, it is less likely to be rejected by the immune system of the patient, unlike with porcine or cadaver grafts in which immune system rejection is a possibility. A non-GMP version ESS has been used in investigator-initiated and compassionate-use clinical settings in over 150 human subjects, primarily pediatric patients, for the treatment of severe burns up to 95% of total body surface area. The non-GMP version has also been used in the treatment of two patients with Giant Congenital Melanocytic Nevi (GCMN).
In July 2015, Amarantus' acquired Lonza Walkersville's wholly-owned subsidiary Cutanogen Corporation, the sole licensor of intellectual property rights to ESS from Cincinnati's Shriner's Hospital for Children and the University of Cincinnati. Cutanogen Corporation is a wholly-owned subsidiary of Amarantus.
About MANF Therapeutics, Inc.
MANF (mesencephalic-astrocyte-derived neurotrophic factor) is believed to have broad potential because it is a naturally-occurring protein produced by the body to reduce/prevent apoptosis (cell death) in response to injury or disease, via the unfolded protein response. By administering exogenously produced MANF the body, Amarantus is seeking to use a regenerative medicine approach to assist the body with higher quantities of MANF when needed. Amarantus is the front-runner and primary holder of intellectual property around MANF, and is initially focusing on the development of MANF-based protein therapeutics.
MANF's lead indication is retinitis pigmentosa, and additional indications including Parkinson's disease, diabetes and Wolfram's syndrome are envisioned. Further applications for MANF may include Alzheimer's disease, traumatic brain injury, myocardial infarction, antibiotic-induced ototoxicity and certain other orphan diseases.
In April 2017, Amarantus incorporated the wholly-owned subsidiary MANF Therapeutics, Inc. to focus on progressing preclinical and clinical development of MANF.
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Amarantus Investor and Media Contact:
Ascendant Partners, LLC
SOURCE Amarantus Bioscience Holdings, Inc.