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Gemphire Flirts With $1 Level As Struggling Biotech Strikes Reverse Merger Deal

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Gemphire Flirts With $1 Level As Struggling Biotech Strikes Reverse Merger Deal

Gemphire Therapeutics Inc (NASDAQ: GEMP) stock — which has been on a broader downtrend since mid-2017 — was advancing strongly Thursday. 

The stock has been under pressure amid some clinical trial setbacks, and has been trading in penny stock territory since late May. The company laid off one-third of its workforce last year and initiated a strategic review process in December. 

Resuscitation Deal

Gemphire, a clinical-stage biopharma that's developing gemcabene, an investigational asset that is being evaluated for cardiovascular diseases as well as non-alcoholic fatty disease, or NAFLD, announced an agreement Wednesday to reverse merge with NeuroBo Pharma in an all-stock deal.

NeuroBo is a Boston-based, privately held clinical-stage biotech focusing on therapies for neurodegenerative diseases. Its lead asset NB-01 is in a Phase 3 trial for diabetic neuropathic pain; it also has an IND-ready candidate for Alzheimer's disease. Both products were licensed from the Korean pharma company Dong-A ST.

Upon completion of the merger, Gemphire would change its name to NeuroBo Pharma and the combined company's shares would trade on the Nasdaq under the ticker symbol "NRBO."

Based on the number of shares Gemphire plans to issue for the merger, Gemphire shareholders will own about 4.06% of the combined company and NeuroBo shareholders will own the rest.

Gemphire shareholders of record as of immediately prior to the effective time of merger will receive non-transferable contingent value rights that will make them eligible to receive 80% of net proceeds from a potential sale or licensing of gemcabene after the retention of $500,000 by the combined company and certain other reductions.

Shifting Focus To Neurology

For NeuroBo, the transaction will help create a Nasdaq-listed biotech focused on advancing its clinical pipeline.

John Brooks III, CEO of NeuroBo will be appointed as the CEO of the combined company after the merger, and the board is likely to have six directors, including Steve Gullans, the Gemphire CEO, the companies said.

Chinese Gemcabene Deal

Gemphire also said in Wednesday's announcement that it has struck an out-licensing agreement with Beijing SL Pharmaceutical to advance its pipeline asset gemcabene into the Chinese market, receiving an upfront gross payment of $2.5 million in the process.

The deal also provides for the combined company receiving some back-end milestone and royalty payments upon achievement of certain development and commercialization milestones.

Gemphire shares were trading higher by 37.79% to 96 cents at the time of publication Thursday. 

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