Rafael merges with Cyclo as FDA reviews Zevra's rare disease drug

Rafael Holdings is set to merge with Cyclo Therapeutics as the two companies strive to advance the approval of a groundbreaking treatment for Niemann-Pick disease type C1 (NPC). This rare genetic condition severely hampers the body’s ability to process and utilize cholesterol and other lipids, resulting in their accumulation in organs such as the liver, spleen, and lungs. Cyclo Therapeutics’ key asset in this battle is Trappsol Cyclo, a hydroxypropyl beta cyclodextrin-based formulation currently undergoing phase 3 clinical trials.

The merger is anticipated to conclude by late 2024, at which point Rafael Holdings has committed to funding the ongoing phase 3 trial of Trappsol Cyclo through its 48-week interim analysis. Enrollment for this study wrapped up in May, and Cyclo has projected that top-line results will likely be available in the first half of 2025. Cyclo’s leadership is optimistic that this phase 3 data will provide the necessary evidence to secure FDA approval for Trappsol Cyclo, which is urgently needed as a treatment option for NPC1.

Rafael Holdings' involvement with Cyclo Therapeutics began in March 2023 with an initial investment. This was followed by a purchase of $5 million worth of Cyclo’s stock in June 2023, and further participation in a $2.4 million private stock offering in October. Now, the merger agreement stipulates that Rafael will issue shares of its class B common stock to Cyclo’s shareholders, valuing Cyclo’s shares at 95 cents each. Despite this valuation, Cyclo’s shares, which closed at $1.26 the previous day, saw a decline of approximately 17% in pre-market trading following the announcement.

Bill Conkling, CEO of Rafael, described the merger as a crucial advancement in their strategy to invest in and commercialize clinical-stage assets addressing areas of high unmet medical need. On the other side, Cyclo Therapeutics’ CEO, N. Scott Fine, emphasized that their collaboration with Rafael over the past year and a half has been instrumental in reaching their current milestone. Fine expressed confidence that Rafael’s financial strength and experienced management team will enhance their ability to deliver successful outcomes from the TransportNPC trial.

Rafael Holdings’ interests extend beyond Cyclo Therapeutics. The company has a significant investment in Cornerstone Pharmaceuticals, which focuses on cancer metabolism, and a majority equity interest in LipoMedix Pharmaceuticals, a company developing liposome-based oncology therapies.

Currently, no treatments for NPC are approved by the FDA. However, Johnson & Johnson’s Zavesca is available in Europe, Japan, and several other countries. The competition has intensified recently, especially after an FDA advisory committee recommended Zevra Therapeutics’ arimoclomol for approval. Zevra first submitted arimoclomol to the FDA in July 2020, but it was rejected nearly a year later due to concerns about the supporting clinical trial data. Zevra revisited the FDA in December 2023 with a rescored scale and additional data from an open-label expansion phase, which appears to have bolstered their case.

In summary, the merger between Rafael Holdings and Cyclo Therapeutics marks a significant step forward in the quest to find a treatment for NPC. The combined resources and expertise of the two companies could potentially advance Trappsol Cyclo through the final stages of clinical trials and towards meaningful therapeutic outcomes for patients suffering from this rare genetic disorder.