AzurRx BioPharma To Acquire First Wave Bio In Transformative $229 Million Deal; Significantly Expands GI and IBD Treatment Pipeline (NASDAQ: AZRX)

AzurRx BioPharma, Inc. (NASDAQ: AZRX) just got bigger. Much bigger. On Monday, AZRX announced entering a definitive agreement to acquire First Wave Bio, Inc. in a stock and cash transaction valued at $229 million, including certain development, regulatory and sales milestones. The deal significantly adds to the AZRX asset portfolio and development pipeline, leveraging First Wave Bio’s IP and clinical-stage programs to develop novel, gut-targeted, small molecule therapies for auto-immune inflammatory bowel diseases (IBD) and other severe conditions.

AzurRx will change its corporate name to “First Wave BioPharma, Inc.” as part of the transaction and trade its common shares on Nasdaq under the new ticker symbol, “FWBI,” anticipated to be effective on or about Thursday, September 23, 2021. AZRX will launch a new website with the following address: AzurRx’s management team, including James Sapirstein, Chairman, President, and Chief Executive Officer, will continue to lead the renamed company.

For both AZRX and investors, the deal can be a substantial value driver. It immediately brings under management significant assets that expand AZRX’s GI development pipeline and positions the company for multiple growth opportunities in the inflammatory bowel disease therapeutic space. First Wave Bio assets also strengthen an impressive portfolio by adding treatment candidates targeting new indications for several IBDs that represent multi-billion dollar commercial market opportunities. In the U.S. last year, more than 850,000 ulcerative colitis diagnoses and 625,000 Crohn’s disease diagnoses were made, and these patient populations and markets are expected to grow substantially over the next decade. That growth, while unfortunate for patients, puts AZRX in the right markets at the right time.

AZRX is already advancing its proprietary formulations of niclosamide, with its novel anti-inflammatory mechanism of action, non-systemic absorption, and safety benefits, showing potential to treat significant unmet clinical needs for IBD patients, especially in the mild-to-moderate disease categories.

Now, with its pipeline expanded and new IBD indications in play, the company appears to be in its best position ever to develop and bring to market meaningful drugs that will do more than treat substantial market needs- they can create significant shareholder value in the process.

Specifics of the deal provide AzurRx wholly-owned rights to First Wave Bio’s proprietary formulations of niclosamide, a small molecule drug that features anti-viral and anti-inflammatory properties that are designed to address multiple GI conditions, and sole ownership of First Wave Bio’s robust intellectual property (IP) portfolio, which covers the method of use and delivery of these formulations as treatments for various auto-immune, inflammatory and viral conditions.

The deal follows an agreement made at the start of 2021 when AzurRx in-licensed from First Wave Bio the exclusive global rights to develop two niclosamide therapeutic indications – for COVID-19-related GI infections and for immune checkpoint inhibitor-associated colitis and diarrhea (ICI-AC) in advanced-stage cancer patients. Once the acquisition closes later this month, AzurRx’s internal development pipeline will include three new clinical IBD indications in ulcerative proctitis (UP) and ulcerative proctosigmoiditis (UPS), ulcerative colitis (UC), and Crohn’s disease (CD).

Commenting on the deal, James Pennington, M.D., Chief Medical Officer of AzurRx, said, “There is a wealth of clinical data that supports the anti-viral and anti-inflammatory capabilities of niclosamide. More recently, data generated by First Wave Bio in ulcerative proctitis supported the broader potential for niclosamide in multiple inflammatory bowel diseases where we believe our niclosamide formulations could offer significant advantages over other currently available treatments including steroids, 5-ASAs, and biologics – especially in the mild-to-moderate disease stage. Specifically, our niclosamide formulations are orally delivered, are targeted specifically to the areas of the GI tract where the disease-causing inflammation occurs, and avoid the risk of steroid-related immunosuppressant complications. Additionally, the manufacturing process for our niclosamide products can be scaled up to supply large populations quickly.”

Mr. Sapirstein added, “I’m excited about our expanded pipeline as we move into the IBD therapeutic space. We will now be advancing a pipeline that spans six indications and includes several clinical-stage programs. These programs are all built around our two proprietary technologies — niclosamide, and adrulipase (MS1819), which we are continuing to develop as a treatment for exocrine pancreatic insufficiency (EPI), a life-threatening digestive disorder seen in patients with cystic fibrosis and chronic pancreatitis. With multiple clinical trials advancing and others to soon initiate, along with a strong portfolio of long-lasting patents protecting niclosamide’s use for COVID-19 GI infections, ICI-AC and the IBDs, the next several years should be rich in milestones as we continue to advance our development programs, generate data, and bring new assets into the clinic.”

Keep in mind, before this announcement, AZRX presented a compelling value-investment opportunity. With this $229 million deal expected to close in roughly two weeks, that proposition is even better. Here’s why.

Advancing Clinical-Stage Trials

First, AZRX announced last week that the independent Data Monitoring Committee (DMC) approved initiating patient enrollment in Part 2 of its ongoing RESERVOIR clinical trial evaluating FW-1022 as a treatment for COVID-19-related gastrointestinal (GI) infections. FW-1022 is a proprietary, oral tablet formulation of micronized niclosamide developed to remove SARS-CoV-2 (SARS2), the virus that causes COVID-19, from the GI tract.

That recommendation is a milestone reached and comes after the DMC review of safety data collected from 9 patients enrolled in Part 1 of its RESERVOIR trial. Part 2 of the trial will get significantly bigger, enrolling up to 150 patients at clinical trial sites in the U.S., Ukraine, and India intending to demonstrate the efficacy of FW-1022 in clearing the COVID virus from the GI tract and expanding previous safety observations. Topline study data is expected during the first quarter of 2022 and could show that relief is near for the millions of COVID-19 patients fighting the debilitating discomforting gastrointestinal symptoms caused by the virus that often continue even after the initial impact of the virus is cleared.

And more than a confirmation of safety and promise to patients worldwide, the DMC recommendation also puts a potentially massive catalyst in play in the coming weeks as the relatively short-term trial could indicate whether niclosamide treatment has the potential to improve “long haul” COVID-19 symptoms.

If so, AZRX could be positioned to deliver a blockbuster drug to market that, at the same time, places them to earn grant funding, expedited review, and potential fast-track approval with no approved treatments available to patients.And while news from FW-1022 puts a potential near-term catalyst in sight, AZRX has more firepower in its pipeline. They, too, are reaching new milestones.

AZRX Submits IND For Its PASSPORT Trial

Also, last week, AZRX announced its submission of an Investigational New Drug (IND) Application seeking permission from the U.S. Food and Drug Administration (FDA) to begin a clinical trial evaluating proprietary formulations of niclosamide for Grade 1 and Grade 2 colitis and diarrhea in oncology patients receiving treatment with immune checkpoint inhibitors (ICIs).

The planned Phase 1b/2a PASSPORT clinical trial intends to determine the safety and potential efficacy of niclosamide, also known as FW-420, administered as an oral, immediate-release tablet and a topical rectal enema foam formulation. This study adds to AZRX’s advancing its proprietary formulation of micronized niclosamide in its Phase 2 RESERVOIR trial noted above. It also puts a second shot on treatment and revenue-generating goals by leveraging the expected power of niclosamide as a front-line drug to treat multiple conditions.

Moreover, the clinical development of FW-420 as a safe, effective, and non-systemic treatment addressing immune checkpoint inhibitor-associated colitis (ICI-AC) could tap into another unmet medical need. And with checkpoint inhibitors more mainstream in treating cancers, a drug to treat the potentially dangerous side effects involving immune checkpoint inhibitors could benefit from a substantial market need. Further, the study is timely.

According to AZRX, as many as 30% of patients treated with checkpoint inhibitors develop diarrhea that can develop into colitis. This condition can be debilitating and even life-threatening due to the compromised health of the patient.

Targeting that population, AZRX is positioned to create niclosamide as the first drug specifically designed to treat ICI-AC. Thus, it, too, can fill a substantial need by becoming a critical component to the treatment regimen for cancer patients receiving immune checkpoint inhibitors.Still, in addition to the promise of the trials above, AZRX’s ongoing Phase2b study could be the near-term charm.

Lead Program MS1819 Targets EPI In Patients With Cystic Fibrosis

AZRX’s lead program is MS1819. And there is compelling data to support a robust drive in shareholder value. In August, AZRX published topline Phase2a MS1819 trial results that were nothing short of exceptional. That study is evaluating MS1819 in combination with the current standard of care, porcine-derived pancreatic enzyme replacement therapy (PERT), to treat severe exocrin pancreatic insufficiency (EPI) in patients with cystic fibrosis (CF). As noted, the data to date is excellent.

In fact, the data is about as good as it can get. AZRX reported that 100% of treated patients reached both primary and secondary endpoints. Better still, data showed clinically meaningful improvement in Coefficient of Fat Absorption (CFA) endpoints, and most importantly, showed that its combination therapy may benefit cystic fibrosis patients with severe EPI. In short, the results are a robust validation of AZRX’s MS1819 platform.

Specifically, data collected from 20 patients showed that MS1819 combined with PERT led to clinically meaningful improvements in the primary efficacy endpoint, the Coefficient of Fat Absorption. Further, the results are clinically significant. Patients showed an average gain of more than six percentage points from baseline, compared to the five-point improvement in CFA cited by the clinical literature as clinically significant. Also, data indicated positive improvements in weight gain and other secondary endpoints, an advantage over current treatments.

That efficacy profile is pushing AZRX to take its next steps toward marketing approval by finalizing the development of a new enteric-coated microbead formulation they believe can enable more medication to reach the small intestine and enhance its therapeutic potential. The more excellent news is that, like its other clinical-stage programs, this trial, too, is relatively short in treatment duration.

Unlike trials and data collection that can take years to compile, AZRX expects its formulation work to be completed by the end of this year. That combines well with an MS1819 treatment cycle that lasts roughly six weeks, with an evaluation conducted and completed during the next thirty days. The takeaway- the current efficacy data combined with the relatively short treatment cycle make this lead program one to watch. Multiple points of interest could be shared in the coming weeks.

Even better, with its healthy balance sheet and support from First Wave Bio assets, AZRX is positioned to accelerate the pace of program development.

A Strong 2H 2021 And A Transformative 2022

Indeed, 2021 has already produced some excellent clinical development. And the news of its planned acquisition puts a transformative period of growth into the crosshairs. Moreover, while investors were already primed for substantive updates in Q3 and Q4, the purchase of First Wave Bio is likely to add significantly more fuel to its prospects starting as early as this month. Next year, however, with full integration of its new assets, shares could be well on pace to recapture 52-week highs.

Thus, in addition to its three programs set up to reach new milestones in the coming weeks, the news on Monday creates a new dynamic that could add exponential value from current levels. Keep in mind, it’s a $229 million deal. Hence, as analysts evaluate the assets, expect some revisions to PPS models to get published.

In any case, the value proposition in AZRX just got stronger. And the entirely of the AZRX package makes its stock a compelling consideration for those that like to take ground floor positions in potentially sector-changing companies.


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