Virios Therapeutics and Wex Pharmaceuticals to Merge into Dogwood Therapeutics

Virios Therapeutics, Inc. and Wex Pharmaceuticals, Inc., a subsidiary of CK Life Sciences Int’l., (Holdings) Inc., announced a definitive share exchange agreement, combining the companies under a new name, Dogwood Therapeutics, Inc. Dogwood Therapeutics will focus on the development of three key assets: Halneuron®, IMC-1, and IMC-2.

Halneuron® is a non-opioid, NaV1.7 inhibitor, currently in Phase 2b development for treating chemotherapy-induced neuropathic pain (CINP). The program has received FDA Fast Track Designation, and an interim readout of the Phase 2b study is expected in the second half of 2025. IMC-2, a combination of valacyclovir and celecoxib, is in Phase 2 development for Long-COVID, with top-line results expected in early fourth quarter 2024. IMC-1, a combination of famciclovir and celecoxib, is ready for Phase 3 development for fibromyalgia and has also received Fast Track Designation from the FDA.

To fund these developments, Dogwood Therapeutics has secured $19.5 million in debt financing from an affiliate of CK Life Sciences, to be disbursed in two tranches: $16.5 million at closing and an additional $3 million in the first quarter of 2025. This funding is expected to support research and operations through key milestones, including the Halneuron® interim analysis scheduled for the second half of 2025.

Greg Duncan, the Chief Executive Officer, emphasized the strategic importance of this transaction, highlighting the enhanced pipeline and the opportunity for existing Virios stockholders to benefit from future cash payments tied to potential licensing partnerships for IMC-1 and IMC-2.

The new Dogwood Therapeutics leadership team includes Greg Duncan as CEO, Mike Gendreau as Chief Medical Officer, Ralph Grosswald as Senior Vice President of Operations, Angela Walsh as Chief Financial Officer, and Meng Zhou as Vice President of Manufacturing. The Board of Directors will consist of Rick Keefer, John Thomas, Richard Whitely, Abel De La Rosa, Alan Yu, Melvin Toh, and Chairman Greg Duncan.

In conjunction with the combination, a 25-for-1 reverse stock split of Virios Therapeutics' common stock will take effect on October 9, 2024. This will result in the conversion of every twenty-five shares of current stock into one new share, with any fractional shares being compensated in cash. The company's stock will begin trading under the ticker symbol "DWTX" on the Nasdaq Capital Market starting October 9, 2024.

Dogwood Therapeutics' pipeline includes Halneuron®, which modulates pain transmission as a sodium channel inhibitor. This drug has been shown to effectively treat pain without the side effects commonly associated with opioids. It has been tested in over 700 people across multiple clinical trials, demonstrating significant pain reduction without addiction or tolerance.

IMC-2 aims to suppress herpes virus replication to alleviate Long-COVID symptoms. Previous studies have indicated that the combination of valacyclovir and celecoxib can improve various symptoms like fatigue and pain. IMC-1 targets fibromyalgia by using a similar antiviral combination approach and has received Fast Track Designation from the FDA.

The share exchange agreement stipulates that Sealbond Limited, the sole stockholder of Wex and an indirect wholly-owned subsidiary of CK Life Sciences, will receive 211,383 shares of common stock and 2,108.3854 shares of non-voting convertible preferred stock. This arrangement will give Sealbond approximately 94% ownership on a fully diluted basis, while pre-combination Virios stockholders will hold about 6%. The fully diluted equity value of the combined entity is estimated to be around $105 million, excluding transaction fees.

Additionally, a non-transferable contingent value right (CVR) will be distributed to Dogwood stockholders, allowing them to benefit from potential future milestone payments related to corporate partnerships for IMC-1 and IMC-2. The company expects stockholder approval for the issuance of shares upon conversion of the Preferred Stock, as required by Nasdaq rules.

This strategic move positions Dogwood Therapeutics to leverage its assets and advance its clinical programs efficiently, aiming for significant progress in its pipeline developments and potential market approvals.