Summary: NLS Pharmaceutics shared updates on its dual orexin receptor agonist (DOXA) platform, reporting promising preclinical findings for narcolepsy treatment, progress in financial restructuring, and plans for a merger with Kadimastem Ltd. The merger is expected to integrate NLS’ research into a broader pipeline of treatments for neurodegenerative and metabolic disorders while offering shareholders potential financial benefits through its legacy assets.
Key Takeaways:
- Advancements in Narcolepsy Research – NLS’ DOXA platform has shown promising preclinical results, including improved wakefulness stability and reduced sleep fragmentation in narcolepsy models.
- Financial Restructuring Secures Nasdaq Compliance – The company addressed financial challenges by eliminating debt, raising capital through private placements, and extending its operational runway to 18 months.
- Merger with Kadimastem Progresses – The planned merger will integrate NLS’ DOXA program into Kadimastem’s clinical pipeline, with NLS shareholders retaining rights to potential revenue from legacy assets.
NLS Pharmaceutics’ CEO Alex Zwyer has issued a letter to shareholders highlighting the company’s progress with its dual orexin receptor agonist (DOXA) platform being developed for the treatment of narcolepsy and neurodegenerative disorders, financial restructuring, and the anticipated merger with Kadimastem Ltd.
Zwyer notes in the letter that the company has made progress with its DOXA platform over the last several months. The company recently detailed its preclinical program evaluating two candidates, AEX-41 and AEX-2, first-in-class non-sulfonamide DOXAs designed to target both orexin-1 (OX1R) and orexin-2 (OX2R) receptors while concurrently inhibiting cathepsins.Â
“This unique approach aims to address the unmet therapeutic needs in narcolepsy and related neurological disorders,” Zwyer says in the letter.Â
The preclinical study is being conducted at the Centre for Neurological Research of Lyon in France and aims to evaluate the potential superiority of AEX compounds over existing therapies by using an internationally validated orexin knockout (ORX-KO) mouse model of narcolepsy.
“While existing selective OX2R agonists have demonstrated efficacy in managing narcolepsy symptoms, DOXA are expected to surpass these benchmarks. By engaging both OX1R and OX2R receptors and addressing broader neurological pathways, AEX-41 and AEX-2 offer the potential for enhanced therapeutic outcomes, including greater wakefulness stability and improved sleep quality under real-world conditions,” Zwyer says in the letter.Â
The company also shared preliminary results from this ongoing study of AEX-41 in narcolepsy models, “which suggested that the compound shows promise as a therapeutic agent for managing narcolepsy-related sleep-wake disturbances.”
Zwyer notes that key findings from the study included:
- Wakefulness: Increased stability with fewer interruptions.
- Slow-Wave Sleep: Reduced fragmentation and improved continuity.
- REM Sleep: Significant reduction in pathological episodes.
Final top-line results from the ongoing study are expected to be shared by the end of the year.Â
Overcoming Obstacles
Zwyer notes in the letter that, despite recent challenges, NLS has taken steps to secure its Nasdaq compliance and improve its financial position through strategic restructuring efforts.
“After a period of risk regarding our Nasdaq listing, we are pleased to have regained full compliance with all Nasdaq continued listing requirements,” Zwyer writes. “This achievement was a result of our successful efforts to improve our balance sheet, including settlement agreements with vendors, and successfully fundraising from private as well as institutional investors. Full compliance allows us, and eventually the combined company, continued access and exposure to the US capital markets.”
Additionally, Zwyer writes that the company has made strides in eliminating debt and strengthening its balance sheet. NSL closed a $3.2 million private placement in October and, this month, announced a second private placement raising up to $1 million at a price of $3.10, representing a 15% premium to the market, subject to certain closing conditions including shareholder approval.Â
“The two private placements together (if closed), with our existing cash position, extends our runway to approximately 18 months. This new influx of capital also gives us flexibility to execute our strategy including the development of the DOXA compounds and complete the merger process smoothly,” Zwyer says in the letter.Â
Merger with Kadimastem Ltd.
NLS also recently announced a potential merger with Kadimastem. “Kadimastem’s expertise in the development of innovative cell-based therapies will allow the DOXA program to thrive, and once the merger is finalized, these programs will become part of the merged company’s broader pipeline of neurodegenerative and diabetes candidates,” Zwyer says in the letter.
He continues, “While Kadimastem will assume ownership of the active pipeline assets, including the DOXA program, NLS shareholders will retain an exclusive opportunity to benefit financially from the potential sale of our legacy assets, including Mazindol, through the contingent value rights (CVR) agreement associated with the merger.
“Mazindol, which has long been part of our portfolio, is a key asset that received significant attention from private companies, and therefore we believe holds significant potential for future value generation post-merger. We remain committed to maximizing this opportunity.”
The merger is expected to close by the end of January 2025.
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