Biovie Inc. Chairman Terren Peizer said Neurmedix Inc. “had been offered a better deal in the shorter term,” but the contract signed by the two firms – which installs entrepreneur Cuong Do the new CEO of Biovie, replacing Peizer – made more sense to both parties.

Santa Monica, Calif.-based Biovie is taking over the assets of Neurmedix Inc., of San Diego, bringing aboard phase III-ready NE-3107, an oral small-molecule therapy designed to inhibit insulin resistance in Alzheimer’s disease (AD).

Biovie will pay Neurmedix, of San Diego, about 8.6 million newly issued shares plus about $3 million in cash at closing. Also included is $7.3 million after all of the planned clinical programs have been funded and NE-3107 (also known as 17α-ethynyl-androst-5-ene-3b,7b,17b-triol) has met its pivotal endpoints. The big money comes later: $350 million is tied to endpoints in pivotal trials; $700 million comes upon FDA acceptance of the NDA filing; $1.2 billion if the FDA approves the NDA; and $750 million upon achieving $1 billion trailing 12-month net sales. The deal is expected to close in June.

Cuong Do, CEO, Biovie

Previously an independent director on the board of Biovie, CEO Do said NE-3107’s potential caused him to “break my own personal promise to myself never to be CEO of a large public company.” In February, Neurmedix said the FDA had given its go-ahead for the pivotal phase III study with the compound in mild to moderate AD. The trial, expected to start in the middle of this year and yield top-line data in the second half of 2022, will enroll 316 adult patients. Biovie will also try the drug in other diseases where insulin resistance and inflammation is implicated, including Parkinson’s disease, multiple myeloma and prostate cancer.

NE-3107 blocks inflammation and insulin resistance specifically in the brain, which could mean an entirely new strategy in such conditions as AD, which affects about 6 million Americans, and PD, which afflicts 1 million. The molecule has demonstrated a wide safety margin, absence of immunosuppression, and the ability to cross the blood-brain barrier in preclinical as well as phase II experiments, Biovie said.

New CEO Do’s background includes the founding of Callidus Biopharma Inc. (sold to Amicus Therapeutics Inc. in November 2013), Lysodel Therapeutics Inc. and M6P Therapeutics Inc. Previously, he worked with Samsung Biologics Co. Ltd., and has served as chief strategy officer for Merck & Co. Inc. “At the end of the first quarter, Biovie had a little north of $11 million on our balance sheet,” Do told investors during a conference call. “That essentially allows us to fully fund the terlipressin phase II program. As NE-3107 joins the portfolio, we need to go back and recast the numbers. We do need to do a raise,” he added, and the firm will “be giving additional guidance on the size of the raise and the runway in the near future.” An R&D day is slated for May 19.

In early March, Biovie began patient screening in the phase II trial with terlipressin, also known as BIV-201, given as continuous infusion for refractory ascites, or accumulation of fluid in the peritoneal cavity. Ascites is common in people with cirrhosis and it usually develops when the liver is starting to fail. The FDA has never approved a drug to treat ascites, and once patients reach the refractory stage the estimated one-year survival rate is only about 50%.

Regarding NE-3107 in AD, Do was asked how the compound fits into the amyloid beta and tau hypotheses. He said that, as part of the due diligence effort, investigators were “assisted by a number of external key opinion leaders. We’ve debated this thing internally quite a little bit.” The trial design is meant to compare how quickly mild to moderate AD patients decline on the drug. “The effect size and so forth – let me save that for R&D day, but rest assured we’re not only using the various surveys,” he said. “We’re also looking at the biomarkers.”

In AD, Cambridge, Mass.-based Biogen Inc. has been stealing the spotlight lately. Three members of the FDA panel who voted against recommending approval of the amyloid beta binder in November went a step further, elaborating their arguments in an editorial published in JAMA on March 31. When Biogen reported its financial results April 22, most of the questions had to do with aducanumab, but not many of the answers. The drug’s PDUFA date is June 7.

“We did not learn too much new [on the earnings call], other than [that] Biogen expects about 600 centers in the U.S. to be ready at launch, if the controversial product is approved,” Canaccord Genuity analyst Sumant Kulkarni said in an April 23 report, noting that “management did not comment on its expectations for any labeling limitations based on genetic status of patients (e. g., APOE4 carrier status, etc.).” The company is not letting on whether it is in labeling discussions, either. “Predicting an outcome on aducanumab remains difficult, and investors remain generally skeptical [about] approval, in our view,” Kulkarni wrote.

Shares of Biovie (NASDAQ:BIVI) closed April 28 at $18.88, down $2.62, or 12.2%.