Struggling Hepion: Israeli Biotech Eyes IPO Before FDA Approval

Hepion Pharmaceuticals, having faced financial struggles that forced it to abandon its liver disease research, has decided to merge with Israeli biotech company, Pharma Two B. Despite efforts to cut operating costs by half towards the end of last year, Hepion announced in April it would halt a phase 2 trial of its leading cyclophilins inhibitor for metabolic dysfunction-associated steatohepatitis (MASH) due to resource limitations.

Throughout the challenges, the Nasdaq-listed company explored various strategic options before settling on a merger with the privately held Pharma Two B. The combined entity will adopt the Pharma Two B name and will list its shares on Nasdaq under the ticker “PHTB.” The central focus of the new company will be Pharma Two B’s late-stage asset, P2B001, a pramipexole-rasagiline fixed-dose combination for Parkinson’s disease.

Dan Teleman, the CEO of Pharma Two B, expressed confidence in the timing of the move to public equity markets, citing the completion of a successful phase 3 clinical trial for P2B001. “Our company is in a stage that we believe meets the public market and investors' expectations,” Teleman added, emphasizing that the company is ready for the next phase of growth, which includes an NDA submission set for the first half of 2026, to make the treatment available to patients.

John Brancaccio, the executive chairman of Hepion’s board, explained that the merger is the result of a thorough review of strategic alternatives aimed at providing value to stockholders. According to Brancaccio, the transaction presents an excellent opportunity for Hepion shareholders to be part of a company poised to file an NDA in a therapeutic area with significant unmet medical needs.

The merger is projected to have a pro-forma equity value of approximately $58.5 million. Pharma Two B’s management will lead the merged company, though there was no mention of whether Hepion’s workforce would be retained by the Israel-based biotech company.

In conjunction with the merger, which is expected to finalize in the fourth quarter of 2024, Pharma Two B has agreed to sell $11.5 million worth of its ordinary shares and accompanying series A and B warrants to a group of new and existing investors. The funds raised will support the development of P2B001 and cover up to $2.9 million of Hepion’s outstanding senior unsecured notes.

Following the financing, Pharma Two B’s shareholders will own about 44.5% of the merged company, Hepion’s shareholders will hold 7.8%, and the participating investors will possess the remaining 47.7%.

P2B001 aims to combine low doses of pramipexole, a dopamine agonist, and rasagiline, a monoamine oxidase-B inhibitor, to achieve improved safety and efficacy outcomes compared to either drug used alone. Pharma Two B’s method is based on the belief that these drugs have complementary mechanisms of action, potentially leading to better treatment results for Parkinson’s patients.

The merged company’s leadership and strategic direction indicate a promising future, as it prepares to bring an innovative Parkinson’s treatment to the market, addressing a significant unmet medical need.