ValiRx signs letter of intent in a bid to fund VAL401

14 January 2020

(Sharecast News) - Clinical-stage biotechnology company ValiRx updated the market on its subsidiary joint venture, ValiSeek, and its cancer therapeutic, VAL401 on Tuesday.
The AIM-traded firm said ValiSeek and its own joint venture partner, Tangent Reprofiling, had entered into a letter of intent with Black Cat Bio, which is a newly-incorporated special purpose vehicle to raise up to £5m towards commercialising VAL401, in order to progress it through the next clinical trial.

It said Black Cat Bio had entered into, and would fund, a service agreement with Zenith Partners - a private investment, corporate advisory and business transformation enterprise, to source the funding.

ValiSeek currently had a worldwide exclusive licence granted from Tangent to progress VAL401 to commercialisation.

ValiRx said ValiSeek is a 55.5% subsidiary joint venture, with the objective to develop VAL401 in the treatment of late-stage non-small cell lung cancer and potentially other indications.

The letter of intent provided that, subject to Black Cat raising a minimum, "commercially sensitive" amount, ValiSeek would revoke its license for the VAL401 patent portfolio and Tangent would execute a new intellectual property licence with Black Cat, with Black Cat being responsible for funding and executing future clinical development of VAL401.

It was proposed, subject to a successful fund raise, that ValiSeek would enter into an agreement with its shareholders to undertake a corporate reorganisation, whereby existing shareholders in ValiSeek would become shareholders in Black Cat.

Thus, following any reorganisation, ValiRx said it would hold a proportional shareholding directly in Black Cat, and would benefit from future commercial upside.

Black Cat would use the co-financing agreements outlined in the letters of Intent announced on 26 March, in order to deliver the clinical trial in an effective and cost efficient manner.

ValiRx said VAL401 is the reformulation of a generic drug that had more than 20 years of clinical use for the treatment of a chronic non-oncology disease in an oral capsule.

It said the re-formulation allowed the drug to access previously unexploited anti-cancer activity.

VAL401 had completed a clinical phase 2 trial for the treatment of late-stage non-small cell lung cancer, with data from the completed trial indicating a palliative effect and an improvement of quality of life in the patients treated.

"I am pleased to be able to announce that ValiSeek has come to an agreement with Black Cat to secure the future development of VAL401, to the advantage of all parties," said chief executive officer Dr Satu Vainikka.

At 1432 GMT, shares in ValiRx were down 6.76% at 0.1p.