Adial Pharmaceuticals, Inc. (ADIL) is a clinical-stage biopharmaceutical company focused on the development of therapeutics for the treatment or prevention of addiction and related disorders. The company's lead investigational new drug candidate, AD04, is being developed as a therapeutic agent for the treatment of alcohol use disorder (AUD) in patients with certain targeted genotypes.
Business Overview
Adial was converted from a limited liability company formed in 2010 in Virginia to a corporation and reincorporated in Delaware in 2017. The company is presently engaged in the development of medications for the treatment or prevention of addictions and related disorders. In January 2021, Adial expanded its portfolio in the field of addiction with the acquisition of Purnovate, LLC via a merger into its wholly owned subsidiary, Purnovate, Inc. However, in January 2023, Adial entered into an option agreement with Adovate LLC, pursuant to which Adial granted Adovate an exclusive option to acquire all of the assets of Purnovate. This option was exercised in May 2023, and the Purnovate assets were transferred to Adovate effective June 30, 2023.
Adial's lead product candidate, AD04, is being developed for the treatment of AUD in patients with certain target genotypes. In June 2022, Adial released data from its ONWARD™ Phase 3 pivotal trial of AD04, which demonstrated positive results. Both the U.S. Food and Drug Administration (FDA) and European regulatory authorities have indicated they will accept heavy-drinking-day based endpoints as a basis for approval for the treatment of AUD rather than the previously required abstinence-based endpoints. Key patents have been issued in the United States, the European Union, and other jurisdictions for which Adial has exclusive license rights.
Financials
Adial has incurred net losses in each year since its inception, including net losses of approximately $6.5 million and $5.1 million for the three months ended March 31, 2023 and the year ended December 31, 2022, respectively. As of March 31, 2023, the company had an accumulated deficit of approximately $75 million. Adial has funded its operations primarily through the private and public placements of debt, equity securities, and an equity line.
Liquidity
Adial's current cash and cash equivalents are not expected to be sufficient to fund operations for the twelve months from the date of filing its latest Quarterly Report on Form 10-Q and are only anticipated to be sufficient to fund the company's needs into the first quarter of 2025, based on its current projections. Therefore, Adial will need to engage in additional fundraising in the near term as it carries out its development plans.
Recent Developments
In March 2023, Adial received net proceeds of approximately $3.1 million from the exercise of previously issued warrants, including a warrant inducement agreement that resulted in the issuance of new warrants. Additionally, in April 2023, the company entered into an At the Market Offering Agreement with H.C. Wainwright & Co., LLC, providing for the sale of Adial's shares of common stock, from time to time, through the sales agent.
Adial's Alcohol Use Disorder Treatment Candidate
AD04, Adial's lead product candidate, is being developed for the treatment of AUD in patients with certain target genotypes. The active ingredient in AD04 is ondansetron, a serotonin-3 antagonist. Due to its mechanism of action, AD04 has the potential to be used for the treatment of other addictive disorders, such as opioid use disorder, obesity, smoking, and other drug addictions.
In June 2022, Adial released positive data from its ONWARD™ Phase 3 pivotal trial of AD04. The trial met its primary endpoint, demonstrating a statistically significant reduction in heavy drinking days in the target genotype population. The FDA and European regulatory authorities have indicated they will accept heavy-drinking-day based endpoints as a basis for approval for the treatment of AUD, rather than the previously required abstinence-based endpoints.
Adial is now focused on completing the clinical development program for AD04 in the specified genetic subgroups to meet regulatory requirements primarily in the U.S. and secondarily in Europe/UK. The company estimates that two additional Phase 3 trials for AD04 will each require $8-12 million in direct expenses, with up to $5 million in additional other development expenses.
Risks and Challenges
Adial faces several risks and challenges in its pursuit of developing and commercializing AD04. These include:
1. Clinical trial success:
The timing and success of future clinical trials are crucial for the company's progress.2. Regulatory approvals:
Obtaining necessary regulatory approvals in various markets is a significant hurdle.3. Manufacturing challenges:
Scaling up production for commercial use may present difficulties.4. Competition:
Other products in development or on the market could impact AD04's potential success.5. Funding:
The ability to secure sufficient funding to support operations and development efforts is critical.The company's continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing. Without additional funding, Adial will be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the company and its financial statements.
Conclusion
Adial Pharmaceuticals is a clinical-stage biopharmaceutical company focused on the development of therapeutics for the treatment or prevention of addiction and related disorders. The company's lead product candidate, AD04, is being developed for the treatment of alcohol use disorder in patients with certain targeted genotypes.
Adial has reported positive data from its ONWARD™ Phase 3 pivotal trial of AD04, and regulatory authorities have indicated they will accept heavy-drinking-day based endpoints as a basis for approval. The company is now focused on completing the clinical development program for AD04 to meet regulatory requirements.
While Adial faces several risks and challenges, including the need for additional funding, the potential of AD04 and the company's progress in its development program suggest significant upside potential for investors. With the right financing and successful execution of its clinical trials, Adial could be well-positioned to bring a much-needed treatment for alcohol use disorder to market in the coming years.