Adial (NASDAQ: ADIL) acquires Azora and lines up up to $64M for UC drug
Rhea-AI Filing Summary
Adial Pharmaceuticals completed the acquisition of Azora Therapeutics in an all-stock transaction and shifted its focus to Azora’s lead ulcerative colitis program, AT177. Azora holders received 437,474 shares of common stock and 12,930.617 shares of Series A non-voting convertible preferred stock, each convertible into 1,000 common shares after stockholder approval.
Before the related financing and note exchange, former Azora equityholders hold about 86.9% of Adial’s fully diluted common stock, while pre-merger Adial holders retain about 13.1%. Adial also arranged up to $64 million in private placement financing, including approximately $32 million upfront via pre-funded warrants, to fund IND-enabling work and Phase 1 studies for AT177 in ulcerative colitis. The deal includes new governance, leadership appointments, inducement equity awards, amended executive employment terms, and a detailed registration rights framework for future resale of the new securities.
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Insights
Adial reverses control to Azora holders and raises sizable UC funding.
Adial Pharmaceuticals acquired Azora Therapeutics in a stock-for-stock merger that effectively hands majority ownership to Azora’s former equityholders. Consideration includes 437,474 common shares plus 12,930.617 Series A non-voting preferred shares, each convertible into 1,000 common shares after stockholder approvals.
Alongside the deal, Adial arranged up to $64 million in private placement financing anchored by specialist biotech investors. An initial ~$32 million tranche comes via pre-funded warrants to purchase 11,780,948 common shares at $2.7489 per warrant, with a second tranche tied to Phase 1 initiation triggers in ulcerative colitis.
Post-transaction, and assuming conversion and warrant exercises outlined in the filing, legacy Adial holders own a significantly reduced stake compared with Azora holders and PIPE investors. The filing emphasizes using proceeds to advance AT177 through IND-enabling work and early clinical studies in ulcerative colitis, while extensive lock-ups, ownership caps, and registration rights define how and when new shares can enter the market.
8-K Event Classification
Key Figures
Key Terms
Series A Non-Voting Convertible Preferred Stock financial
Pre-Funded Warrants financial
Milestone Incentive Warrants financial
Beneficial Ownership Limitation financial
Registration Rights Agreement financial
IND-enabling studies medical
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 - Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On June 11, 2026, Adial Pharmaceuticals, Inc., a Delaware corporation (the “Company” or “Adial”), acquired Azora Therapeutics, Inc., a Delaware corporation (“Azora”), in accordance with the terms of the Agreement and Plan of Merger, dated June 11, 2026 (the “Merger Agreement”), by and among the Company, Adial Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), Adial Second Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and Azora. Pursuant to the Merger Agreement, First Merger Sub merged with and into Azora, pursuant to which Azora was the surviving corporation and became a wholly owned subsidiary of the Company (the “First Merger” and the effective time of the First Merger, the “First Effective Time”). Immediately following the First Merger, Azora merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity and a wholly owned subsidiary of the Company (together with the First Merger, the “Merger”). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
Under the terms of the Merger Agreement, upon the consummation of the Merger (the “Merger Closing”), in exchange for the outstanding shares of capital stock of Azora immediately prior to the effective time of the First Merger, the Company issued to the stockholders of Azora an aggregate of (i) 437,474 shares of its Common Stock, par value $0.001 per share (the “Common Stock”), and (ii) 12,930.617 shares of its Series A Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) (as described below), each share of which is convertible into 1,000 shares of Common Stock, subject to certain conditions described below.
Reference is made to the discussion of the Series A Preferred Stock in Item 5.03 of this Current Report on Form 8-K (this “Current Report”), which is incorporated into this Item 1.01 by reference.
Shares of Common Stock held by the holders thereof immediately prior to the First Effective Time remain outstanding and unaffected by the Merger. Immediately following the consummation of the Merger, but prior to giving effect to the Financing (as defined below) and the Azora Note Exchange (as defined below), assuming the conversion of all of the shares of Series A Preferred Stock issued pursuant to the Merger Agreement into shares of Common Stock (without giving effect to any beneficial ownership limitations), pre-Merger equityholders of the Company hold approximately 13.1% of the issued and outstanding shares of Common Stock and former equityholders of Azora hold approximately 86.9% of the issued and outstanding shares of Common Stock, on a fully diluted basis.
Pursuant to the terms of the Merger Agreement, each option to purchase Azora common stock that was outstanding immediately prior to the First Effective Time was assumed by the Company and was converted into an option to purchase shares of Common Stock (collectively, the “Assumed Options”). No portion of the Assumed Options will be exercisable unless and until the Assumed Option Exercise Proposal (as defined below) is approved by the Company’s stockholders. Once exercisable, the Assumed Options will be exercisable for an aggregate of 1,177,782 shares of Common Stock.
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Pursuant to the Merger Agreement, the Purchase Agreement (as defined below) and the Exchange Agreements (as defined below), the Company has agreed to hold a stockholders’ meeting to submit the following matters to its stockholders for their consideration (i) the approval, in accordance with certain of the rules of the Nasdaq Stock Market, LLC (“Nasdaq”) of the conversion of the Series A Preferred Stock into shares of Common Stock (the “Conversion Proposal”); (ii) the approval in accordance with certain of the rules of Nasdaq of the exercise of the Assumed Options (the “Assumed Option Exercise Proposal”); (iii) the approval in accordance with certain of the rules of Nasdaq of the exercise of the pre-funded warrants to purchase up to an aggregate of 11,780,948 shares of Common Stock (collectively, the “Initial Closing Pre-Funded Warrants”) issued to the PIPE Investors (as defined below) and the Azora Noteholders (as defined below) at the initial closing of the Financing and Note Exchange into shares of Common Stock (the “Initial Closing Proposal”); (iv) the approval in accordance with certain of the rules of Nasdaq of the exercise of the pre-funded warrants to purchase up to an aggregate of 11,780,948 shares of Common Stock (the “Milestone Pre-Funded Warrants”) and common warrants to purchase up to 11,780,948 shares of Common Stock (collectively, the “Milestone Incentive Warrants” and, together with the Initial Closing Pre-Funded Warrants and the Milestone Pre-Funded Warrants, the “Warrants”) that may be issued to PIPE Investors and the Azora Noteholders at the milestone closings pursuant to the terms of the Purchase Agreement and the Note Exchange Agreements, respectively, if any, into shares of Common Stock (the “Milestone Closing Proposal”); (v) the approval of a “change of control” under Nasdaq Listing Rules 5110 and 5635(b) (the “Change in Control Proposal”); (vi) if deemed necessary or appropriate, the amendment of the Company’s certificate of incorporation to authorize sufficient shares of Common Stock for the conversion of the Series A Preferred Stock and exercise of the Assumed Options issued pursuant to the Merger Agreement and the exercise of the Warrants to the PIPE Investors and the Azora Noteholders pursuant to the Purchase Agreement and Note Exchange Agreements (the “Charter Amendment Proposal” and, together with the Conversion Proposal and the Change in Control Proposal, the “Company Stockholder Matters”); (vii) to the extent deemed necessary, the amendment of the Company’s certificate of incorporation to effectuate a reverse stock split of all outstanding shares of Common Stock at a reverse stock split ratio to be reasonably determined by the Company for the purpose of maintaining compliance with Nasdaq listing standards; and (viii) the approval of a new 2026 Equity Incentive Plan of the Company, which will provide for new awards for a number of shares of Common Stock not exceeding 10% of the fully diluted shares of capital stock of the Company outstanding immediately after the Financing, and subject to approval by the board of directors of the Company (the “Board”), and which will include an annual increase pursuant to an “evergreen” provision providing for an annual increase of up to 5% of the total number of fully diluted shares of capital stock of the Company outstanding as of the day prior to such increase, and the approval of a new 2026 Employee Stock Purchase Plan, with a total pool of shares of Common Stock not exceeding 1% of the fully diluted shares of capital stock of the Company outstanding immediately after the Financing, and which shall include an annual increase pursuant to an “evergreen” provision providing for an annual increase of up to 1% of the total number of fully diluted shares of capital stock of the Company outstanding as of the day prior to such increase (matters contemplated in items (i) to (viii) collectively, the “Meeting Proposals”); and (ix) to make such other changes as may be mutually agreed by the Company and Azora. In connection with these matters, the Company intends to file with the Securities and Exchange Commission (the “SEC”) a proxy statement and other relevant materials.
The Board unanimously approved the Merger Agreement and the related transactions and agreements, and the consummation of the Merger did not require the approval of the Company’s stockholders.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report and is incorporated herein by reference.
The issuance of the shares of Common Stock and Preferred Stock issued to Azora stockholders pursuant to the Merger Agreement was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), promulgated thereunder, as a transaction by an issuer not involving a public offering.
The Merger Agreement has been included as an exhibit to this Current Report to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company or Azora. The Merger Agreement contains representations, warranties and covenants that the Company and Azora made to each other as of specific dates. The assertions embodied in those representations, warranties and covenants were made solely for purposes of the Merger Agreement between the Company and Azora, and may be subject to important qualifications and limitations agreed to by the Company and Azora in connection with negotiating its terms, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to investors or securityholders, or may have been used for the purpose of allocating risk between the Company, on the one hand, and Azora on the other hand, rather than establishing matters as facts. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information at the time they were made or otherwise.
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Support Agreements
In connection with the execution of the Merger Agreement, the Company and Azora entered into stockholder support agreements (the “Support Agreements”) with certain of the Company’s officers and directors (solely in their capacity as stockholders). The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of Common Stock owned by such stockholder in favor of the Meeting Proposals at the Company stockholders’ meeting to be held in connection therewith, subject to and in accordance with the terms of the Support Agreements.
The foregoing description of the Support Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Support Agreement, which is provided as Exhibit D to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report and incorporated herein by reference.
Lock-up Agreements
Concurrently and in connection with the execution of the Merger Agreement, certain of the officers, directors and stockholders of Azora as of immediately prior to the Merger, and certain of the directors and officers of the Company as of immediately prior to the Merger entered into lock-up agreements (the “Lock-up Agreements”) with the Company and Azora, pursuant to which each such officer, director and stockholder will be subject to a 180-day lockup on the sale or transfer of shares of Common Stock, or any securities convertible, exercisable or exchangeable for Common Stock, held by each such officer, director or stockholder at the Merger Closing (other than in accordance with the terms of the Merger Agreement).
In addition to the foregoing, the Certificate of Designation of Preferences, Rights and Limitations of the Series A Preferred Stock (the “Certificate of Designation”) contains additional lock up restrictions with respect to the shares of Series A Preferred Stock issued to Azora stockholders as consideration in the Merger and the shares of Common Stock issuable upon conversion thereof, which restrictions are discussed in further detail below.
The foregoing description of the Lock-up Agreements does not purport to be complete and is qualified in its entirety by reference to the form of the Lock-up Agreement, which is provided as Exhibit B to the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report and incorporated herein by reference.
The Financing
On June 11, 2026, in connection with and as a condition to closing of the Merger, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers named therein (the “PIPE Investors”), pursuant to which the Company agreed to issue and sell to the PIPE Investors, in a private placement transaction, (i) at the initial closing (the “Initial Closing”) Initial Closing Pre-Funded Warrants to purchase an aggregate of 9,749,345 shares of Common Stock, at a price of $2.7489 per Initial Closing Pre-Funded Warrant (the “Purchase Price”), for an aggregate purchase price of $26.8 million; and (ii) at one or more subsequent closings (each, a “Milestone Closing”), Milestone Pre-Funded Warrants to purchase up to 9,749,345 an aggregate of shares of Common Stock and Milestone Incentive Warrants to purchase up to an aggregate of 9,749,345 shares of Common Stock, at a combined price equal to the Purchase Price per Milestone Pre-Funded Warrant and Milestone Incentive Warrant, for an aggregate purchase price of up to $26.8 million (collectively, the “Financing”).
The Initial Closing is expected to close on or about June 12, 2026. The net proceeds to the Company from the Initial Closing is expected to be approximately $25.3 million, after deducting placement agent fees and the payment of other offering expenses associated with the Financing that were payable by the Company.
Pursuant to the Purchase Agreement, upon achievement of either of the following events (each, a “Milestone Event), the Company shall provide written notice to each of the PIPE Investors of such Milestone Event (the “Milestone Event Notice” and the date the Milestone Closing Notice is delivered, the “Milestone Event Notice Date”):
| 1. | the Company’s public announcement, via a press release on a nationally recognized news wire or the filing of a Current Report on Form 8-K with the SEC, that the first human has been dosed with AT177 in a Phase 1 clinical trial (in an SAD/MAD study)or acceptance of the IND (meaning 30 days past IND submission with no clinical hold); or |
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| 2. | the achievement of a VWAP per share of the Common Stock equal to or greater than 400% of the Purchase Price (subject to appropriate, proportional adjustment for any stock splits or combinations of the Common Stock occurring after the date of the Agreement) measured during any 10 consecutive Trading Days during any 30 Trading Day period. |
Regardless of whether a Milestone Event has occurred, each PIPE Investor shall have the right to complete one or more additional purchases of Milestone Pre-funded Warrants and Milestone Incentive Warrants at additional closings (each such additional closing, a “Milestone Closing”) at any time following the Initial Closing Date and prior to the date that is 30 calendar days following the Milestone Event Notice. Pursuant to the Purchase Agreement (the “Milestone Funding Period Expiration”), at a Milestone Closing, the Company agreed to sell, and each such participating PIPE Investor, severally and not jointly, has the right, but not the obligation to purchase, a number of Milestone Pre-funded Warrants and Milestone Incentive Warrants (collectively, the “Milestone Warrants”) based on the pro rata amount of their investment in the Initial Closing; provided, however, that in the event a PIPE Investor exercises, prior to such PIPE Investor completing a Milestone Closing, any of the Initial Closing Pre-funded Warrants for shares of Common Stock, such PIPE Investor will only be eligible to participate in a Milestone Closing to purchase that percentage of Milestone Warrants that is equal to the quotient obtained by dividing (i) the number of such PIPE Investor’s Initial Closing Pre-funded Warrants that remain unexercised and held by the PIPE Investor by (ii) the total number of such PIPE Investor’s Initial Closing Prefunded Warrants.
Each Initial Closing Pre-Funded Warrant and each Milestone Pre-Funded Warrant (collectively, the “Pre-Funded Warrants”) will have an exercise price per share of Common Stock equal to $0.001, will never expire until fully exercised, and, subject to receipt of stockholder approval of the Financing Initial Closing Proposal and Financing Milestone Closing Proposal, as applicable, and certain beneficial ownership limitations and other limitations, will be immediately exercisable from the date of stockholder approval for one share of Common Stock. The Milestone Incentive Warrants will have an exercise price per share of Common Stock equal to the Purchase Price, will expire five years from the date of issuance, and, subject to receipt of stockholder approval of the Financing Initial Closing Proposal and Financing Milestone Closing Proposal, as applicable, and certain beneficial ownership limitations and other limitations, will be immediately exercisable from their date of stockholder approval for one share of Common Stock.
The Warrants may not be exercised by the holders thereof unless and until the Company receives stockholder approval of the Financing Initial Closing Proposal and Financing Milestone Closing Proposal, as applicable to the respective Warrants. The Company is prohibited from effecting an exercise of any Warrants to the extent that such exercise would result in the number of shares of Common Stock beneficially owned by such holder and its affiliates exceeding 4.99% (or 9.99% or up to 19.99%, at election of the holder) of the total number of shares of Common Stock outstanding immediately after giving effect to the exercise (the “Beneficial Ownership Limitation”), which percentage may be increased or decreased at the holder’s election, not to exceed 19.99%. Any increase to the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company.
Pursuant to the Purchase Agreement, subject to certain exceptions, from the Initial Closing Date until the date that is ten business days following the later of (i) the Milestone Funding Period Expiration (or, if earlier, the date on which all PIPE Investors have (x) closed their Milestone Closing or (y) have lost their right to participate in a Milestone Closing) and (ii) provided that a resale registration statement covering the shares of Common Stock underlying the Initial Closing Pre-funded Warrants is effective, the Shareholder Approval Date (as defined in the Form of Pre-funded Warrant), the Company shall not, without the prior written consent of the PIPE Investors holding a majority of the then-outstanding Pre-funded Warrants, issue shares of Common Stock or common stock equivalents at a price per share of Common Stock that is less than $4.25.
Wendy Young, who was appointed as a director of the Company in connection with the Merger, as discussed in further detail in Item 5.02 below, is participating in the Financing and agreed to purchase Initial Closing Pre-Funded Warrants to purchase 36,378 shares of Common Stock for an aggregate purchase price of $100,000 at the Initial Closing.
Lucid Capital Markets, LLC (“Lucid”) served as the Company’s exclusive placement agent in connection with the Financing pursuant to an engagement agreement (the “Engagement Agreement”), dated April 23, 2026 and amended on June 11, 2026, entered into between the Company and Lucid, pursuant to which Lucid is entitled to receive (i) a cash fee equal to 5.0% of the aggregate gross proceeds of the Initial Closing of the Financing, provided that Lucid is only entitled to receive a cash fee equal to 2.5% of the aggregate gross proceeds raised from certain investors.
The issuance of the Warrants to the PIPE Investors will be exempt from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
The foregoing summary of the Purchase Agreement, the Pre-Funded Warrants to be issued to the PIPE Investors and the Milestone Incentive Warrants to the issued to the PIPE Investors does not purport to be complete and is qualified in its entirety by reference to the full text of the forms of the Purchase Agreement, Pre-Funded Warrant (Financing) and Common Warrant (Financing), copies of which are filed as Exhibits 10.2, 4.1 and 4.2 to this Current Report, and are incorporated by reference herein.
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Azora Note Exchange
Pursuant to the terms of the Merger Agreement, upon the Merger Closing, the Company agreed to guaranty the payment of $5.5 million in principal amount of amended and restated convertible promissory notes issued by Azora (the “Azora Notes”) to certain individuals (collectively, the “Azora Noteholders”). On June 11, 2026, the Company entered into exchange agreements (the “Exchange Agreements”) with the Azora Noteholders to extinguish the payment guarantee and retire the Azora Notes in exchange for Initial Closing Pre-Funded Warrants to purchase an aggregate of 2,031,603 shares of Common Stock (the “Azora Note Exchange”). As a result of the Azora Note Exchange, all such Azora Notes have been deemed to be repaid in full and all outstanding obligations thereunder have been extinguished.
Pursuant to the Exchange Agreements, the Azora Noteholders are entitled to participate in Milestone Closings to purchase Milestone Pre-Funded Warrants to purchase up to an aggregate of 2,031,603 shares of Common Stock and Milestone Incentive Warrants to purchase up to an aggregate of 2,031,603 shares of Common Stock, at a combined price equal to the Purchase Price, on substantially the same terms as the PIPE Investors under the Purchase Agreement.
The issuance of the Warrants to the Azora Noteholders in accordance with the Exchange Agreements was, and to the extent not issued, will be, exempt from registration pursuant to Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.
The foregoing description of the Exchange Agreements, the Pre-Funded Warrants issued to the Azora Noteholders and the Milestone Incentive Warrants to the issued to the Azora Noteholders does not purport to be complete and is qualified in its entirety by reference to the full text of the forms of Exchange Agreement, Pre-Funded Warrant (Note Exchange) and Common Warrant (Note Exchange), copies of which are filed as Exhibits 10.2, 4.3 and 4.4 to this Current Report, and are incorporated by reference herein.
Following the consummation of the Initial Closing of the Financing, the consummation of the Azora Note Exchange and the consummation of the Merger, assuming the full exercise of the Initial Closing Pre-Funded Warrants issued to the Azora Noteholders in the Azora Note Exchange into shares of Common Stock and the full exercise of the Initial Closing Pre-Funded Warrants issued to the Pipe Investors at the Initial Closing of the Financing into shares of Common Stock, and further assuming the conversion of all shares of Series A Preferred Stock issued to Azora stockholders pursuant to the Merger Agreement into shares of Common Stock (in each case, without giving effect to any beneficial ownership limitations), pre-Merger equityholders of the Company will hold approximately 7.7% of the issued and outstanding shares of Common Stock, former equityholders of Azora will hold approximately 51.0% of the issued and outstanding shares of Common Stock, former Noteholders of Azora will hold approximately 7.1% of the issued and outstanding shares of Common Stock, and the PIPE Investors will hold approximately 34.2% of the issued and outstanding shares of Common Stock, on a fully diluted basis.
Registration Rights Agreement
In connection with the closing of the Merger, Financing and Note Exchange, and as a condition to closing of the Merger, on June 11, 2026, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the several investors signatory thereto. Pursuant to the Registration Rights Agreement, the Company agreed, as promptly as practicable following the Initial Closing (and in any event within 80 days following the Initial Closing Date), to prepare and file with the SEC, a registration statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available) (the “Initial Registration Statement”) to register for resale of the shares of Common Stock issued pursuant to the Merger Agreement, the shares of Common Stock issuable upon conversion of the shares of Series A Preferred Stock issued pursuant the Merger Agreement, the shares of Common Stock issuable upon exercise of the Initial Closing Pre-Funded Warrants and any other Warrants that will be issued to the PIPE Investors pursuant to the Purchase Agreement and the Azora Noteholders pursuant to the Note Exchange Agreements prior to filing such registration statement. Additionally, following the date on which the purchase price paid by investors and Azora Noteholders in connection with all Milestone Closings for which the underlying shares have not yet be registered equals $5,000,000 in the aggregate (the “Initial Milestone Registration Trigger Date”), and thereafter, following the date on which the aggregate purchase price paid by the investors and Azora Noteholders in connection with all additional Milestone Closings after the Initial Milestone Registration Trigger Date, for which the underlying shares have not yet be registered equals or exceeds $3,000,000 in the aggregate (together with the Initial Milestone Registration Trigger Date, each a “Milestone Registration Trigger Date”), the Company agreed, as promptly as practicable following the applicable Milestone Registration Trigger Date (and in any event within 30 days following such Milestone Registration Trigger Date), to prepare and file with the SEC, an additional registration statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available) (each such additional registration statement, a “Milestone Registration Statement”) to register for resale all shares of Common Stock underlying the Warrants issued pursuant to such applicable Milestone Closings not already registered. The Company further agreed to use its reasonable best efforts to have (i) the Initial Registration Statement declared effective by (a) no later than 120 calendar days following the earlier of the initial filing date of the Initial Registration Statement or the applicable filing deadline, if the SEC notifies the Company that it will not review the Initial Registration Statement and (b) no later than the 150th calendar day following the initial filing deadline of the Initial Registration Statement or the applicable filing deadline, if the SEC notifies the Company that it will review the Initial Registration Statement; and (ii) each Milestone Registration Statement declared effective by no later than the earlier of (a) the 60th calendar day following the earlier of the initial filing date of the Milestone Registration Statement or the applicable filing deadline, if the SEC notifies the Company that it will review the Milestone Registration Statement and (b) the 5th business day after the SEC notifies the Company that it will not review the Milestone Registration Statement or that it is not subject to further review.
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If a registration statement required to be filed by the Company with the SEC pursuant to the Registration Rights Agreement has not been filed with the SEC by the applicable filing deadline or declared effective by the SEC by the applicable effectiveness deadline, or after any such registration statement has been declared effective by the SEC sales cannot be made pursuant to such registration statement for any reason (subject to limited exceptions), then the Company will be required to make pro rata payments to each investor then holding registrable securities covered by such registration statement, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount paid pursuant to the Purchase Agreement by such investor for such registrable securities then held by such investor for each 30-day period or pro rata for any portion thereof during which the failure continues, not to exceed 5.0% of the aggregate purchase price paid by such investors.
The Company has also agreed to, among other things, indemnify the signatories to the Registration Rights Agreement, their officers, directors, members, employees, partners, managers, stockholders, affiliates, investment advisors and agents under the registration statement from certain liabilities and pay all fees and expenses (excluding any legal fees of the selling holder(s), and any underwriting discounts and selling commissions) incident to the Company’s obligations under the Registration Rights Agreement.
The foregoing summary of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Registration Rights Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report, and is incorporated by reference herein.
Item 2.01 - Completion of Acquisition or Disposition of Assets.
On June 11, 2026, the Company completed its acquisition of Azora. The information contained in Item 1.01 of this Current Report is incorporated by reference into this Item 2.01.
Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 of this Current Report regarding the Company’s guarantee of the payment of the Azora Notes upon closing of the Merger is incorporated by reference into this Item 2.01.
Item 3.02 - Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report with respect to the sale and issuance of the 437,474 shares of Common Stock issued pursuant to the Merger Agreement, the 12,930.617 shares of Series A Preferred Stock issued pursuant to the Merger Agreement that are convertible into 12,930,617 shares of Common Stock and the Warrants issued or to be issued pursuant to the Financing and/or Note Exchange that are exercisable for up to an aggregate of 35,342,844 shares of Common Stock, including those Initial Closing Pre-funded Warrants to be sold and issued at the Initial Closing and those Milestone Pre-Funded Warrants and Milestone Incentive Warrants that may be sold or issued in Milestone Closings in accordance with the Purchase Agreement and Note Exchange Agreements, as well as the Conversion Shares and Warrant Shares issuable or to be issuable upon conversion or exercise of the foregoing (collectively, the “Securities”), as applicable, is incorporated by reference into this Item 3.02.
With respect to the Securities that have already been issued and sold, such Securities were offered and sold, and with respect to such Securities that will be issued and sold, such Securities will be offered and sold, in transactions exempt from registration under the Securities Act, in reliance on Section 4(a)(2) thereof. The Securities that have already been issued and sold have not been, and to the extent the securities have not yet been issued will not be, registered under the Securities Act or applicable state securities laws and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Neither this Current nor any of the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock, the Securities or any other securities of the Company.
Item 5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Director Fees
On June 11, 2026, upon closing of the Merger, each director of the Company immediately prior to the First Effective Time will receive cash payment of $30,000.
Resignation of Director
In connection with the Merger, effective as of the First Effective Time, Tony Goodman resigned as a Class I Director of the Company. Mr. Goodman did not resign as a result of any disagreements with the Board or the Company.
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Appointment of Directors and Chief Development Officer
On June 11, 2026, in connection with the Merger, effective immediately after the First Effective Time, Matt Davidson, Ph.D., was appointed to the Board as a Class I Director, to fill the vacancy created by the resignation of Mr. Goodman, with a term expiring at the Company’s 2028 Annual Meeting of Stockholders, and Wendy B. Young, Ph. D. was appointed to the Board as a Class III Director, filling a standing vacancy on the Board, with a term expiring at the Company’s 2027 Annual Meeting of Stockholders. On June 11, 2026, effective immediately after the First Effective Time, Dr. Davidson was also appointed as the Company’s Chief Development Officer. Dr. Davidson and Dr. Young were not appointed as a member to any Committee of the Board.
Matt Davidson (age 42) was appointed as the Company’s Chief Development Officer and member of the Board effective as of immediately after the First Effective Time. Prior to the Merger Closing, Dr. Davidson served as the Chief Executive Officer, Co-Founder and Chairman of the Board of Directors of Azora since its inception in March 2019. From August 2013 until December 2017, he served as the Chief Executive Officer, Founder and Chairman of the Board of Directors of Verrica Pharmaceuticals, Inc., a Nasdaq-listed company, where he invented and developed the first FDA-approved drug for the skin disease molluscum contagiosum. Dr. Davidson holds a Ph.D. in Immunology from Stanford University School of Medicine and a B.A. in Molecular and Cell Biology from the University of California, Berkeley.
Wendy P. Young (age 60) was appointed as a member of the Board effective as of immediately after the First Effective Time. Since July 2021 she has served as President of BioPharma Discovery, LLC, where she provides scientific advisory services and expert witness services, and she has also served as a Senior Advisor to GV (Google Ventures), focused on life science company creation and investments, since January 2023. Additionally, she has served as a Senior Advisor to YK Bioventures since 2024 and currently serves as an independent board director of Rapport Therapeutics, Terray Therapeutics, Shenandoah, Genuiti, BioIntervene, and Think Bioscience. Dr. Young previously served as an Executive Partner at MPM Capital and as interim Chief Executive Officer and Chief Scientific Officer of a stealth oncology small molecule platform company from September 2021 to September 2023. Before joining MPM Capital, Dr. Young spent 15 years at Genentech, a member of the Roche group, where she most recently served as Senior Vice President, Small Molecule Drug Discovery from January 2018 to September 2021. In that role, she led a department of approximately 900 internal and external scientists across chemistry, cheminformatics, biochemical pharmacology, drug metabolism and pharmacokinetics, and small molecule pharmaceutical sciences, and she served as an executive member of Genentech’s research and development leadership team. Dr. Young earned a Ph.D. in Chemistry from Princeton University in 1993 and a B.A./M.S. in Chemistry, cum laude, from Wake Forest University in 1989.
Each of Dr. Davidson and Dr. Young will receive the standard compensation available to the Company’s current directors. Dr. Young will also receive an option grant to purchase 25,666 shares of Common Stock on the second trading day after public announcement of the Merger, which shall have an exercise price equal to the closing price of the Common Stock on the second trading day after public announcement of the Merger, shall have a term of ten years from the date of grant, and shall not be exercisable unless and until the Company amends its 2017 Equity Incentive Plan (the “2017 Plan”) to increase the number of shares of Common Stock authorized for issuance thereunder by a sufficient number of shares to permit the exercise of such grant, at which time the options shall vest as to a number of shares of Common Stock equal to the result obtained by multiplying 25,666 by a fraction the numerator of which is the number of whole months between the date of grant and the date of such stockholder approval (the “Pre-Stockholder Approval Months”) and the denominator of which is 36 and thereafter the balance of the grant shall vest pro rata on a monthly basis over a number of months equal to the difference between 36 and the number of Pre-Stockholder Approval Months; provided, however, that in the event that such amendment to the 2017 Plan is not approved by the Company’s stockholders one or before the one-year anniversary of such grant, such grant shall be forfeited and cancelled in full.
Except as described in the Merger Agreement, there are no arrangements or understandings between Dr. Davidson and any other person pursuant to which he was appointed as a director of the Company. There are no arrangements or understandings between Dr. Young and any other person pursuant to which she was appointed as a director of the Company. Except as described above and below, Dr. Davidson and Dr. Young are not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Indemnification Agreements
In connection with Dr. Davidson’s appointment as a director of the Company and as the Company’s Chief Development Officer and Dr. Young’s appointment as a director, on June 11, 2026, the Company and each of Dr. Davidson and Dr. Young entered into the Company’s standard form of indemnification agreement, a copy of which was filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 5, 2026.
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Executive Officers
Appointment of Dr. Davidson and Execution of Davidson Agreement
In accordance with the Merger Agreement, on June 11, 2026, effective immediately after the First Effective Time, Dr. Davidson was appointed as the Chief Development Officer of the Company. In connection with Dr. Davidson’s appointment as Chief Development Officer, the Company will enter into an employment agreement with Dr. Davidson (the “Davidson Agreement”), which shall be effective as of June 11, 2026 and shall remain in effect until terminated by either party pursuant to its terms. The Davidson Agreement provides for Dr. Davidson to serve as the Company’s Chief Development Officer following the closing of the Merger, reporting to the Company’s Chief Executive Officer and Board, and provides for an annual base salary of $609,120, provided that in the event that the Company raises an additional $20 million or similar significant financing, his annual base salary shall be increased to $648,000. Additionally, upon closing Dr. Davidson will receive a cash payment of $312,484.98 as payment for previously deferred salary. Under the Davidson Agreement, Dr. Davidson is eligible to receive an annual bonus with a target amount equal to 50% of his base salary, which will be awarded by the Board, in its discretion, based on the achievement of performance-based metrics established by the Compensation Committee of the Board (or in its absence, the Board) on an annual basis. Dr. Davidson may also receive, in the discretion of the Compensation Committee (or in its absence, the Board), equity awards under the Company’s then-current equity plan. The Davidson Agreement further provides that the Company will make a one-time inducement equity award to Dr. Davidson to be divided equally between restricted stock units (the “Davidson RSU Inducement Award”) and stock options to purchase Common Stock (the “Davidson Option Inducement Award” and together with the Davidson RSU Inducement Award, the “Davidson Inducement Awards”), to be granted one trading day following the announcement by the Company of the consummation of the Merger. The Davidson agreement provides that the aggregate number of shares underlying the Davidson Inducement Awards will be equal to 1.63% of the Company’s fully diluted shares of Common Stock outstanding following the consummation of the Merger, the Initial Closing of the Financing and Note Exchange (collectively, the “Transactions”), plus 1.63% of the number of shares of Common Stock that may be issued upon exercise of all Milestone Pre-Funded Warrants and Milestone Incentive Warrants that may be issued to the PIPE Investors and the Azora Noteholders in Milestone Closings pursuant to the Purchase Agreement and the Note Exchange Agreements, respectively. The Davidson Inducement Awards will vest (i) with respect to that number of shares subject to the Davidson Inducement Awards calculated as of closing of the Transactions, pro rata on a monthly basis over three years commencing on the one month anniversary of the effective grant date hereof and (ii) with respect to that number of shares subject to the Davidson Inducement Awards calculated based on the number of Milestone Warrants that may be issued pursuant to the Purchase Agreement and the Note Exchange Agreement, a pro rata portion of such awards will be subject to the same vesting included in (i) upon issuance by the Company of each Milestone Warrant, subject to catch up vesting for any awards that would have otherwise vested prior to issuance of such Milestone Warrants. The Davidson Option Inducement Award will have an exercise price equal to the closing price of the Common Stock on the first trading day after the public announcement of the Merger.
The Company may terminate the Davidson Agreement upon written notice to Dr. Davidson in the event of Disability (as defined in the Davidson Agreement) or for Cause (as defined in the Davidson Agreement), in which event the Company would have no further obligations under the Davidson Agreement, except for payment of any Accrued Obligations (as defined in the Davidson Agreement). Dr. Davidson’s employment automatically terminates upon his death, in which event the Company would have no further obligations under the Davidson Agreement, except for payment of any Accrued Obligations. The Company may terminate the Davidson Agreement without Cause immediately upon written notice of termination to Dr. Davidson, and in such event, in addition to payment of any Accrued Obligations due, subject to the Company’s receipt of a release from Dr. Davidson, Dr. Davidson is entitled to receive severance payments in an amount equal to Dr. Davidson’s base salary for a period of 12 months after the effective date of the termination and a COBRA subsidy coverage for up to 12 months.
Dr. Davidson may generally terminate his agreement by providing 30 days written notice to the Company, provided, that to terminate his agreement for Good Reason (as defined in the Davidson Agreement), he must first meet certain procedural requirements set forth in the Davidson Agreement. If Dr. Davidson terminates his employment for Good Reason, Dr. Davidson will be entitled to receive the same payments and benefits on the same terms and conditions as would be applicable upon termination by the Company without Cause.
If the Davidson Agreement is terminated by Dr. Davidson for Good Reason or by us without Cause (other than on account of Dr. Davidson’s death or Disability), then, in addition to the severance payments described above, Dr. Davidson will be afforded an additional 12 months of vesting credit with respect to the Davidson Inducement Awards and extension of the post-termination exercise period for all vested stock options until the earliest of (i) the 12-month anniversary of the date of termination, (ii) the original expiration date of the applicable option or (iii) the 10th anniversary of the applicable option’s grant date.
If the Davidson Agreement is terminated by Dr. Davidson for Good Reason or by us without Cause (other than on account of Dr. Davidson’s death or Disability) in the three months before or 12 months following a Change in Control (as defined in the Davidson Agreement), then Dr. Davidson will be entitled to receive severance payments in an amount equal to Dr. Davidson’s base salary for a period of 18 months after the effective date of the termination (or the Change in Control, if later), his target annual bonus, a COBRA subsidy for up to 18 months, and acceleration of all incentive equity awards, with any performance-based awards deemed earned at the greater of target or actual performance.
The Company expects to grant and issue as an inducement to Dr. Davidson’s employment with the Company the Davidson RSU Inducement Award, consisting of 424,446 restricted stock units, and the Davidson Option Inducement Award to purchase 424,447 shares of Common Stock on June 12, 2026. The Davidson RSU Inducement Award, and the Davidson Option Inducement Award will be granted, outside of, but subject to the terms of, the Company’s 2017 Plan, and pursuant to the terms of the applicable award agreements. The Davidson RSU Inducement Award was issued, and the Davidson Option Inducement Award will be issued, without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4).
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Dr. Davidson has no family relationships with any of the executive officers or directors of the Company. Except as otherwise described in the Merger Agreement, there are no arrangements or understandings between Dr. Davidson and any other person pursuant to which he was appointed as an executive officer of the Company. Except as described above, Dr. Davidson is not party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The foregoing description of the Davidson Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Davidson Agreement, a copy of which will be filed as an exhibit to the next periodic report that the Company files with the SEC. Complete copies of the form of stock option grant notice and stock option agreement used for the Davidson Option Inducement Award and the restricted stock unit grant notice and restricted stock unit agreement used as for the Davidson RSU Inducement Award will also be filed as exhibits to the next periodic report that the Company files with the SEC.
Amendment and Restatement of Certain Executive Employment Agreements
On June 11, 2026, the Company amended the Amended and Restated Employment Agreement previously entered into with Cary J. Claiborne, its President and Chief Executive Officer (the “Claiborne EA Amendment”), the Employment Agreement previously entered into with Tony Goodman, its Chief Operating Officer (the “Goodman EA Amendment”), and the Employment Agreement previously entered into with Vinay Shah, its Chief Financial Officer (the “Shah EA Amendment” and, together with the Claiborne EA Amendment and the Goodman EA Amendment, the “EA Amendments”). The EA Amendments amended the severance provisions of the respective employment agreements to provide for the payments specified below upon a termination of employment without cause within twenty-four months after an “Execution Trigger” (as defined in the EA Amendments) and provide that amounts payable shall include: (i) the annual bonus earned by the executive for the immediately prior fiscal year to the extent unpaid, as if no such termination had occurred; (ii) the executive’s annual bonus target for the year in which the termination date occurs, multiplied by a fraction (A) the numerator of which is the number of days in the fiscal year that have transpired through the termination date and (B) the denominator of which is the number of days in such fiscal year, to be paid in cash on the first payroll date after the effective date of the release required by the EA Amendments to be delivered by the executives in favor of the Company (with all revocation periods having expired unexercised); (iii) for Mr. Claiborne, a lump sum payment equal to two times his base salary and the higher of his target annual bonus opportunity and the annual bonus paid to him with respect to the fiscal year immediately preceding the fiscal year in which such termination occurred, to be paid in cash on the first payroll date after the effective date of the release required by the agreement to be delivered by Mr. Claiborne in favor of the Company (with all revocation periods having expired unexercised) and in all events no later than 70 days after such termination and continuation of medical coverage for 24 months; and (iv) for Mr. Shah and Mr. Goodman, a lump sum payment equal to the executive’s annual base salary and the higher of executive’s target annual bonus opportunity and the annual bonus paid to executive with respect to the fiscal year immediately preceding the fiscal year in which such termination occurred, to be paid in cash on the first payroll date after the effective date of the release required by the agreement to be delivered by the executives in favor of the Company (with all revocation periods having expired unexercised) and in all events no later than 70 days after such termination and continuation of medical coverage for 12 months.
In addition, upon closing of the Merger on June 11, 2026, as compensation for additional duties performed in connection with evaluating the transactions described herein, Mr. Claiborne, Mr. Shah and Mr. Goodman also received a discretionary bonus equal to $508,820, $327,600 and $156,000, respectively.
The foregoing description of the EA Amendments do not purport to be complete and are qualified by reference to the full text of the Claiborne EA Amendment, Goodman EA Amendment and Shah EA Amendment, copies of which are attached hereto as Exhibits 10.4, 10.5 and 10.6, respectively, and incorporated herein by reference.
Employee Inducement Awards
On June 11, 2026, as inducements to entering into employment with the Company, the Board approved sign-on equity awards to an Azora employee who is expected to commence employment with the Company immediately following the Merger (collectively, the “Employee Inducement Awards”), in substantially the same form of awards granted to Dr. Davidson. The Employee Inducement Awards will consist of a one-time inducement equity award to such employees to be divided equally between restricted stock units (the “Employee RSU Inducement Awards”) and stock options to purchase Common Stock (the “Employee Option Inducement Awards” and together with the Employee RSU Inducement Awards, the “Employee Inducement Awards”), to be granted one trading day following the announcement by the Company of the consummation of the Merger. The aggregate number of shares underlying the Employee Inducement Awards will be equal to 0.51% of the Company’s fully diluted shares of Common Stock outstanding following the consummation of Transactions, plus 0.51% of the number of shares of Common Stock that may be issued upon exercise of all Milestone Pre-Funded Warrants and Milestone Incentive Warrants that may be issued to the PIPE Investors and the Azora Noteholders in Milestone Closings pursuant to the Purchase Agreement and the Note Exchange Agreements, respectively. The Employee Inducement Awards will vest (i) with respect to that number of shares subject to the Employee Inducement Awards calculated as of closing of the Transactions, pro rata on a monthly basis over three years commencing on the one month anniversary of the effective grant date hereof and (ii) with respect to that number of shares subject to the Employee Inducement Awards calculated based on the number of Milestone Warrants that may be issued pursuant to the Purchase Agreement and the Note Exchange Agreement, a pro rata portion of such awards will be subject to the same vesting included in (i) upon issuance by the Company of each Milestone Warrant, subject to catch up vesting for any awards that would have otherwise vested prior to issuance of such Milestone Warrants. The Employee Option Inducement Awards will have an exercise price equal to the closing price of the Common Stock on the second trading day after the public announcement of the Merger.
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The Company expects to grant and issue as an inducement to the individual’s employment with the Company the Employee RSU Inducement Award, consisting of 132,802 restricted stock units, and the Employee Option Inducement Award to purchase 132,802 shares of Common Stock on June 12, 2026. The Employee Inducement Awards will be issued without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4). In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the Employee Inducement Awards will be made only to individuals who are commencing employment with the Company or a subsidiary thereof and such grants were made in connection with his or her commencement of employment with the Company or such subsidiary and as an inducement material to his or her entering into employment with the Company or such subsidiary.
A complete copy of the form of stock option grant notice and stock option agreement used for the Employee Option Inducement Award and Employee Inducement Award will be filed as an exhibit to the next periodic report that the Company files with the SEC. The Company will issue a press release with the information required by Nasdaq Listing Rule 5635(c)(4) regarding the Davidson Option Inducement Award and Employee Inducement Awards.
Termination of Chief Operating Officer
Mr. Goodman’s employment with the Company is expected to be terminated on or about 60 days following closing of the Merger. Upon such termination, and subject to his execution of a release, Mr. Goodman will be entitled to receive the severance payments and benefits set forth above under the Section of this Current Report titled “Amendment and Restatement of Certain Executive Employment Agreements.”
Item 5.03 - Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On June 11, 2026, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designation in connection with the Merger referenced in Item 1.01 above. The Certificate of Designation provides for the creation of the Company’s Series A Preferred Stock, designating 13,000 shares of the Company’s preferred stock as Series A Preferred Stock, and sets forth the terms applicable thereto, a summary of certain of which is set forth below.
Ranking. The Series A Preferred Stock ranks pari pasu with the Common Stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Dividends. Holders of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock equal to, on an as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of the Common Stock.
Voting. Except as otherwise provided in the Certificate of Designation or as otherwise required by the General Corporation Law of the State of Delaware, the Series A Preferred Stock shall have no voting rights. However, as long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock: (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation, amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (ii) issue further shares of Series A Preferred Stock or increase or decrease the number of authorized shares of Series A Preferred Stock, (iii) prior to the stockholder approval of the Company Stockholder Matters, consummate either: (A) any Fundamental Transaction (as defined in the Certificate of Designation) or (B) any merger or consolidation of the Company with or into another Person or any stock sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into another Person in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction or in which the Company issues securities in such transaction that represent or are convertible into securities representing more than a majority of the voting power of the Company immediately before such transaction, (iv) prior to the stockholder approval of the Company Stockholder Matters, authorize or issue any class or series of stock that has powers, preferences or rights that are senior to those of the Series A Preferred Stock, (v) amend, waive or modify the Merger Agreement in any manner that would be reasonably likely to prevent, impede or materially delay stockholder approval of the Company Stockholder Matters or the Automatic Conversion (as defined in the Certificate of Designation) or (iv) enter into any agreement with respect to any of the foregoing. Holders of shares of Common Stock acquired upon the conversion of shares of Series A Preferred Stock shall be entitled to the same voting rights as each other holder of Common Stock, except that such holders may not vote such shares in connection with the Company Stockholder Matters in accordance with Rule 5635 of the listing rules of Nasdaq.
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Transfer Restrictions. Subject to certain exceptions, holders of shares of Series A Preferred Stock and shares of Common Stock issued upon conversion of shares of Series A Preferred Stock (collectively, the “Locked Shares”) shall be subject to the following restrictions on transfer:
| 1. | 1/3 of the Locked Shares held by each holder thereof shall not be transferred until the date that is 180 days after the Initial Closing; |
| 2. | 1/3 of the Locked Shares held by each holder thereof shall not be transferred until the date that is 180 days after the date that stockholder approval of the Company Stockholder Matters in obtained; and |
| 3. | 1/3 of the Locked Shares held by each holder thereof shall not be transferred until the date that is 180 days after the date that the Company issues the Milestone Event Notice. |
Notwithstanding the foregoing, in no event shall any Locked Shares remain subject to the foregoing transfer restrictions after the Company’s issuance of the Milestone Event Notice.
Conversion. Following stockholder approval of the Company Stockholder Matters, each share of Series A Preferred Stock will automatically convert into 1,000 shares of Common Stock, subject to certain limitations (the “Conversion Ratio”), including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 4.99% and 19.99%) of the total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion, provided that following approval of the Nasdaq Listing Application (as defined in the Merger Agreement) and the Company Stockholder Matters, such beneficial ownership blockers may be waived by each holder of Series A Preferred Stock upon written notice to the Company to be effective on the 61st day following receipt of such notice. Following the earlier of (i) the third business day after the date that the Company Stockholder Matters are approved by the Company’s stockholders and (ii) solely for purposes of a cash settlement (as discussed below), the date that is 6 months after the initial issuance date of the Series A Non-Voting Preferred Stock, any shares of Series A Preferred Stock that remain outstanding may be converted, at the option of the holder thereof, into that number of shares equal to the Conversion Ratio.
Cash Settlement. If at any time after the earlier of (i) approval of the Company Stockholder Matters or (ii) six months after the initial issuance of the Series A Preferred Stock, the Company fails to deliver to the holder of the Series A Preferred Stock shares of Common Stock underlying such shares Series A Preferred Stock, then (other than in certain circumstances set forth in the Certificate of Designation), the Company will pay, at the request of such holder, an amount of cash by wire transfer of immediately available funds equal to the Fair Value (as defined in the Certificate of Designation) of such undelivered shares.
Liquidation. In the event of liquidation, dissolution, or winding up of the affairs of the Company, whether voluntary or involuntary, holders of Series A Preferred Stock shall rank on parity with holders of Common Stock as to the distributions of assets.
The foregoing description of the Series A Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 - Regulation FD Disclosure.
On June 11, 2026, the Company issued a press release announcing the Merger, the Financing and related transactions and made available Azora’s investor presentation to be used in general corporate communications and investor communications. Copies of the press release and presentation are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report.
The information in Item 7.01 of this Current Report, including the information in the press release attached as Exhibit 99.1 and the presentation attached as Exhibit 99.2 to this Current Report, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information in Item 7.01 of this Current Report, including Exhibit 99.1 and Exhibit 99.2 to this Current Report, shall not be deemed to be incorporated by reference in the filings of the Company under the Securities Act.
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Forward Looking Statements
Certain statements contained in this Form 8-K may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words and phrases “designed to,” “may,” “might,” “can,” “will,” “to be,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “likely,” “continue,” “ongoing” or similar expressions, or the negative of such words, are intended to identify “forward-looking statements.” These forward-looking statements include, but are not limited to, statements regarding the Company, Azora, the Financing and the Merger, including regarding the timing of the Initial Closing and Milestone Closings, if any, under the Purchase Agreement and Exchange Agreements, and the expected effects, perceived benefits or opportunities and related timing with respect thereto; the expected grant and issuance of inducement awards to Mr. Davidson and other Azora employees; and expectations regarding or plans for the combined company’s pipeline, including its ongoing clinical trials and research and development programs. The Company has based these forward-looking statements on its current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those above in this Current Report on Form 8-K and in the Company’s other filings with the SEC. Statements made herein are as of the date of the filing of this Current Report on Form 8-K with the SEC and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, the Company does not undertake, and it specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
Item 9.01 - Financial Statements and Exhibits.
(a) Financial statements of business acquired
The financial statements required by this Item 9.01(a) are not included in this Current Report. The Company intends to include such financial statements by amendment to this Current Report no later than 71 calendar days after the date this Current Report is required to be filed.
(b) Pro forma financial information
The pro forma financial information required by this Item 9.01(b) is not included in this Current Report. The Company intends to include such pro forma financial information by amendment to this Current Report no later than 71 calendar days after the date this Current Report is required to be filed.
(d) Exhibits
| Exhibit Number |
Description | |
| 2.1* | Agreement and Plan of Merger, dated June 11, by and among Adial Pharmaceuticals, Inc., Adial First Merger Sub, Inc., Adial Second Merger Sub, LLC and Azora Therapeutics, Inc. | |
| 3.1 | Certificate of Designation of Series A Non-Voting Convertible Preferred Stock, dated June 11, 2026. | |
| 4.1 | Form of Pre-Funded Warrant (Financing). | |
| 4.2 | Form of Warrant (Financing). | |
| 4.3 | Form of Pre-Funded Warrant (Note Exchange). | |
| 4.4 | Form of Warrant (Note Exchange). | |
| 10.1* | Form of Securities Purchase Agreement, dated as of June 11, 2026, by and among Adial Pharmaceuticals, Inc. and each investor listed on Exhibit A thereto. | |
| 10.2* | Form of Exchange Agreement, dated as of June 11, 2026, by and among Adial Pharmaceuticals, Inc. and each note holder listed on Exhibit A thereto. | |
| 10.3 | Form of Registration Rights Agreement, by and among Adial Pharmaceuticals, Inc. and the investors signatory thereto. | |
| 10.4 | Amendment to Amended and Restated Employment Agreement between Adial Pharmaceuticals, Inc. and Cary J. Claiborne, effective June 11, 2026. | |
| 10.5 | Amendment to Employment Agreement between Adial Pharmaceuticals, Inc. and Tony Goodman, effective June 11, 2026. | |
| 10.6 | Amendment to Employment Agreement between Adial Pharmaceuticals, Inc. and Vinay Shah, effective June 11, 2026. | |
| 99.1 | Press Release issued on June 11, 2026. | |
| 99.2 | Investor Presentation, dated June 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to provide, on a supplemental basis, a copy of any omitted schedules and attachments to the Securities and Exchange Commission or its staff upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: June 11, 2026 | ADIAL PHARMACEUTICALS, INC. | |
| By: | /s/ Cary J. Claiborne | |
| Name: | Cary J. Claiborne | |
| Title: | President and Chief Executive Officer | |
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Exhibit 99.1
Adial Pharmaceuticals Announces Acquisition of Azora Therapeutics and up to $64 Million Financing
Acquisition of Azora and concurrent private placement positions the combined company to advance its pipeline through key clinical milestones in ulcerative colitis, including Phase 1 initiation in mid-2027
- Azora’s oral candidate, AT177, is a novel, colon-targeted AhR agonist rationally engineered to have minimal systemic exposure and designed to mitigate safety concerns with systemically absorbed AhR agonists
- $32 million in upfront financing with the potential to receive an additional $32 million under additional milestone tranches
- Adial to host a conference call today, June 11, 2026 at 1pm ET
GLEN ALLEN, Va. and LOS ANGELES, Calif., June 11, 2026 — Adial Pharmaceuticals, Inc. (Nasdaq: ADIL) (“Adial” or the “Company”) today announced that it has acquired Azora Therapeutics, Inc. (“Azora”), a biopharmaceutical company developing treatments for serious inflammatory diseases. The acquisition brings Azora’s lead asset AT177, a proprietary colon-targeted aryl hydrocarbon receptor (AhR) agonist designed to enable localized activation with limited systemic exposure, into Adial’s pipeline.
Concurrent with the acquisition, Adial entered into a definitive agreement for a concurrent private placement of up to $64 million in gross proceeds to Adial, before deducting placement agent and other offering expenses. The private placement is composed of (i) an initial upfront financing of approximately $32 million in gross proceeds (including the conversion of outstanding notes assumed in the acquisition) in exchange for pre-funded warrants to purchase 11,780,948 shares of Adial’s common stock, representing a purchase price of $2.7489 for each pre-funded warrant sold at the initial closing and (ii) the potential for up to an additional $32 million in gross proceeds upon Phase 1 clinical study initiation in exchange for (x) pre-funded warrants to purchase up to 11,780,948 shares of common stock and (y) common warrants to purchase up to 11,780,948 shares of common stock at a combined purchase price of $2.7489 for each pre-funded warrant and accompanying common warrant sold at milestone closings. The financing was led by Coastlands Capital with participation from Boxer Capital Management, Stonepine Capital Management, AuGC BioFund and other biotech specialists and institutional investors along with insiders and management. The combined company expects to use the proceeds from the private placement primarily to advance Azora’s AT177 lead colon-targeted AhR program through key clinical milestones, including IND-enabling studies and the Phase 1a and Phase 1b studies in ulcerative colitis (“UC”).
“AhR is now a validated target in the treatment of ulcerative colitis. Azora’s data support a uniquely differentiated, colon-targeted approach that is designed to minimize systemic exposure in ulcerative colitis. The quality of the investor syndicate supporting this transaction reinforces our conviction in Azora’s thesis and the AT177 program,” said Cary Claiborne, president and chief executive officer of Adial. “With these proceeds, we believe the combined company will be well capitalized to execute through key clinical milestones to address a significant unmet need in ulcerative colitis.”
“AhR signaling is a key regulator of gut homeostasis, and clinical experience has helped establish both the therapeutic relevance of this pathway in ulcerative colitis and the importance of controlling systemic exposure. Systemic AhR activation may be associated with immunosuppression, which creates the potential for long-term safety risks. AT177 was engineered to address this challenge directly. It is a rationally-designed, fully-synthetic, patented compound intended to concentrate pharmacologic activity at the site of inflammation in the colon while minimizing systemic exposure,” said Matt Davidson, PhD, co-Founder of Azora Therapeutics and incoming chief development officer and newly appointed director of Adial. “By starting from fundamental UC biology and robust clinical data, we built what we believe has the potential to be a best-in-class therapy that avoids the risks associated with systemic AhR circulation. For the many UC patients who still do not achieve durable remission on currently available therapies, AT177 represents a potentially meaningfully differentiated option with a safety profile designed to support long-term use.”
In addition, Adial is pleased to announce the appointment of Wendy Young, Ph.D., to its Board of Directors. Dr. Young brings more than 32 years of drug discovery and biopharma leadership experience, including senior leadership roles at Genentech, where she served as senior vice president, small molecule drug discovery. She currently serves as, senior advisor to GV (Google Ventures), and an independent board director and scientific advisor to multiple life sciences companies. The Company believes Dr. Young’s deep expertise in small-molecule drug discovery, company building and strategic R&D leadership will be highly valuable as the Company advances its next phase of growth.
About Adial Pharmaceuticals, Inc.
Adial Pharmaceuticals is a biopharmaceutical company historically focused on the development of treatments for addictions and related disorders. Following the acquisition of Azora Therapeutics, Adial’s lead program is AT177, a proprietary colon-targeted aryl hydrocarbon receptor (AhR) agonist designed to enable localized activation with limited systemic exposure in development for ulcerative colitis. The company’s historical investigational new drug product, AD04, is a genetically targeted, serotonin-3 receptor antagonist, therapeutic agent for the treatment of Alcohol Use Disorder (AUD) in heavy drinking patients. Additional information is available at www.adial.com.
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About Azora Therapeutics
Azora Therapeutics Inc. is a biopharmaceutical company focused on developing treatments for serious inflammatory diseases. The company was spun out of Stanford University after being incubated in the translational medicine SPARK program. Azora owns the worldwide royalty-free rights to its technology, which is based on the development of potential best-in-class oral agonists of the aryl hydrocarbon receptor. The company’s lead program is AT177, a proprietary colon-targeted aryl hydrocarbon receptor (AhR) agonist designed to enable localized activation with limited systemic exposure in development for ulcerative colitis. More information on Azora can be found on the company’s website at www.AzoraTherapeutics.com.
About AT177
AT177 is a fully synthetic, patented, oral AhR agonist designed to restore mucosal immune homeostasis at the site of disease with minimal systemic exposure. Its active ingredient is a prodrug of indirubin, the most potent AhR agonist within indigo naturalis, a botanical extract with best-in-category clinical efficacy in ulcerative colitis. AT177’s colon-targeted formulation delivers therapeutic AhR engagement directly to the colonic mucosa with exquisite gut restriction, minimizing the systemic AhR exposure associated with adverse effects. In preclinical studies, AT177 demonstrated robust local colonic AhR activation with markedly limited systemic exposure and superior colon-to-systemic selectivity compared to other AhR agonists in development. AT177 is currently in IND-enabling studies, with a proof-of-concept clinical trial planned for 2027.
About the Transactions
The acquisition of Azora was structured as an asset acquisition pursuant to which all of Azora’s outstanding equity interests were exchanged, based on a fixed exchange ratio, for a combination of 437,474 shares of Adial common stock and approximately 12,930 shares of Adial Series A non-voting convertible preferred stock (representing 12,930,617 shares on an as-converted-to-common basis), in each case, calculated on a fully-diluted basis (and without giving effect to any beneficial ownership limitations). Concurrently with the acquisition of Azora, Adial entered into a definitive agreement for a private placement financing with new and returning investors to raise up to $64 million in gross proceeds. The private placement is composed of (i) an initial upfront financing of approximately $32 million in gross proceeds (including the conversion of outstanding notes assumed in the acquisition) in exchange for pre-funded warrants to purchase 11,780,948 shares of Adial’s common stock (without giving effect to any beneficial ownership limitations), representing a purchase price of $2.7489 for each pre-funded warrant sold at the initial closing, and (ii) the potential for up to an additional $32 million in gross proceeds in exchange for (x) pre-funded warrants to purchase up to 11,780,948 shares of Adial common stock and (y) common warrants to purchase up to 11,780,948 shares of Adial common stock at a combined purchase price of $2.7489 for each pre-funded warrant and common warrant sold at milestone closings. In addition, following Adial stockholder approval, each share of Series A non-voting convertible preferred stock issued in the acquisition will automatically convert into 1,000 shares of common stock and each pre-funded warrant and common warrant (if issued) sold in the private placement will become exercisable into common stock, subject to certain beneficial ownership limitations set by each holder.
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As a result of the transactions, following Adial stockholder approval, and without giving effect to the funding of the milestone tranche of the financing, equity holders of Adial immediately prior to the acquisition will own approximately 7.7% of Adial’s common stock, equity holders of Azora immediately prior to the acquisition will own approximately 51.0% of Adial’s common stock and investors in the private placement financing including the conversion of outstanding notes will own approximately 41.3% of Adial’s common stock, in each case, calculated on a fully-diluted, as-converted-to-common-basis (and without giving effect to any beneficial ownership limitations) using the treasury stock method and based on the implied equity values of Adial and Azora.
The acquisition was approved by the Board of Directors of Adial and the Board of Directors and stockholders of Azora. The closings of the transactions were not subject to the approval of Adial’s stockholders. The approval of Adial’s stockholders is required under the terms of the Series A non-voting convertible preferred stock in order for the Series A non-voting convertible preferred stock to be converted into shares of Adial common stock and for the pre-funded warrants and common warrants issued, and to be issued, in the private placement as well as in the exchange of certain outstanding notes issued by Azora, in each case, to become exercisable into shares of Adial’s common stock, and Adial is required to promptly hold a stockholder meeting for such vote.
Oppenheimer & Co. Inc. is serving as financial advisor to Adial. Blank Rome LLP is serving as legal counsel to Adial. Lucid Capital Markets is serving as the exclusive placement agent for the concurrent financing and financial advisor to Azora. TD Cowen is serving as capital markets advisor to Azora for the concurrent financing. Honigman LLP is serving as legal counsel to Azora.
Conference Call and Webcast Details
The company will host a conference call and webcast today, June 11, 2026, at 1pm ET to discuss the acquisition and financing. To access the call: 1-877-451-6152 (domestic), 1-201-389-0879 (International), Passcode: 13761153, Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1764298&tp_key=1feafa06f8.
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Cautionary Note Regarding Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of the U.S. federal securities laws. Such statements are based upon various facts and derived utilizing numerous important assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. The forward-looking statements include, but are not limited to, statements regarding Azora’s lead asset AT177 enabling localized activation with limited systemic exposure; the potential for the Company to receive an additional $32 million upon second tranche milestone; using the private placement proceeds primarily to advance Azora’s AT177 lead colon-targeted AhR program through key clinical milestones, including IND-enabling studies, the Phase 1a and Phase 1b studies in ulcerative colitis; Azora’s colon-targeted approach minimizing systemic exposure in ulcerative colitis; the combined company being well capitalized to execute through key clinical milestones; Systemic AhR activation being associated with immunosuppression creating the potential for long-term safety risks; AT177 addressing systemic AhR activation risk directly; building a best-in-class therapy, that avoids the risks associated with systemic AhR circulation; AT177 representing a meaningfully differentiated option, with a safety profile designed to support long-term use; the expected contribution of Dr. Young; advancing the Company’s next phase of growth; the potential of AD04 to treat other addictive disorders such as opioid use disorder, gambling, and obesity; and plans for a proof-of-concept clinical trial of AT177 for 2027. Any forward-looking statements included herein reflect the Company’s current views, and they involve certain risks and uncertainties, including, among others, the Company’s ability to pursue its regulatory strategy; the Company’s ability to obtain regulatory approvals for commercialization of product candidates or to comply with ongoing regulatory requirements; the Company’s ability to develop strategic partnership opportunities and maintain collaborations; the Company’s ability to obtain or maintain the capital or grants necessary to fund its research and development activities; the Company’s ability to complete clinical trials on time and achieve desired results and benefits as expected; regulatory limitations relating to the Company’s ability to promote or commercialize its product candidates for specific indications; acceptance of the Company’s product candidates in the marketplace and the successful development, marketing or sale of its products; the Company’s ability to maintain its license agreements; the continued maintenance and growth of the Company’s patent estate and its ability to retain its key employees or maintain the Company’s Nasdaq listing. These risks should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K filed with the Securities and Exchange Commission. These risks should not be construed as exhaustive and should be read together with the other cautionary statements contained in such reports. Any forward-looking statement speaks only as of the date on which it was initially made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
Contact:
Crescendo Communications, LLC
David Waldman / Alexandra Schilt
Tel: 212-671-1020
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Mike Moyer
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Phone: (617) 328-4326
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Exhibit 99.2
Transaction & Company Overview June 2026
2 Forward Looking Statements This presentation includes statements that are, or may be deemed, ‘‘forward - looking statements’’ within the meaning of the U.S. federal securities laws. Such statements are based upon various facts and derived utilizing numerous important assumptions and are subject to known and unknown risks, uncertainties and other factors tha t may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. In some cases, these forward - looking statements can be identified by the use of forward - looking terminology, including the terms “believes,” “might,” estimates,” “approximately,” “expects,” “anticipates,” “in tends,” “estimates,” “plans,” “seeks,” “may,” “should,” “could,” “would,” “will”, “future,” “likely,” “goal,” “continue,” “appears,” “suggests,” “ongoing,” or, in each case, their negative or other variation s t hereon or comparable terminology, although not all forward - looking statements contain these words. Forward looking statements appear in a number of places throughout this presentation and include stateme nts regarding our intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things, the proposed merger transaction between Adial and Azora and concurrent PIPE offering, our ongoing and planned discovery and development of drugs targeting inflammatory bowel diseases, our planned clinical trials, targeting an IND filing for AT177 in 2027, the concurrent PI PE offering positioning the combined company to advance its colon - targeted AhR program through key clinical milestones in ulcerative colitis, the potential for AT177 to be a best - in - class AhR agonist rationally designed to transform UC treatment, combining AT177's AhR mechanism with other mechanisms; the opportunity for expansion to Crohn’s disease; the strength and breadth of our intellectual proper ty the length of time that we will be able to continue to fund our operating expenses and capital expenditures, and our expected financing needs and sources of financing. Any forward - looking statements included herein reflect our current views, and they involve certain risks and uncertainties, incl uding, among others, our ability to conclude the merger transaction and concurrent PIPE offering, our ability to pursue our regulatory strategy, our ability to commence our planned clinical trials, our abilit y t o obtain regulatory approvals for commercialization of product candidates or to comply with ongoing regulatory requirements, our ability to obtain or maintain the capital necessary to fund our research and de velopment activities, our ability to complete clinical trials on time and achieve desired results and benefits as expected, our ability to partner our product development, regulatory limitations relating to our ability to promote or commercialize our product candidates for specific indications, acceptance of our product candidates in the marketplace and the successful development, marketing or sale of our pr oducts, the continued maintenance and growth of our patent estate and our ability to retain our key employees. These risks should not be construed as exhaustive and should be read together with the o the r cautionary statements included in Adial’s Annual Report on Form 10 - K for the year ended December 31, 2025, subsequent Quarterly Reports on Form 10 - Q and current reports on Form 8 - K filed with the Securitie s and Exchange Commission. Any forward - looking statement speaks only as of the date on which it was initially made. Adial undertakes no obligation to publicly update or revise any forward - looking statement, whether as a result of new information, fu ture events, changed circumstances or otherwise, unless required by law. This Presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the propert y o f their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Presentation may be listed without the TM, SM or © or ® symbols , b ut the combined company will assert, to the fullest extent under applicable law, the rights of the owners to these trademarks, service marks, trade names and copyrights.
3 Adial / Azora – Transaction highlights Transaction Structure Use of Proceeds Management • Acquisition of Azora structured as a stock - for - stock transaction where all of Azora’s outstanding equity interests were exchanged for Adial common stock and a newly created non - voting convertible preferred stock. • $32 million in upfront financing with the potential to receive an additional $32 million upon second tranche milestone of IND or first dosing. • Proceeds and existing cash and cash equivalents position the combined company to advance its colon - targeted AhR program through key clinical milestones in ulcerative colitis including opening of IND, Phase 1a SAD/MAD study and Phase 1b proof - of concept studies in UC patients. • IND and Phase 1a SAD/MAD initiation are expected first half of 2027 Continuing Azora Leadership: Matt Davidson PhD, Cofounder/CEO CEO at Verrica , developed Ycanth ® Julie Saiki PhD, Cofounder/COO Ran UC trial at Stanford, McKinsey & Co Continuing Adial Leadership: Cary Caliborne MBA, CEO and Director Vinay Shah MBA, CFO New Independent Director: Wendy Young PhD Ex - SVP small molecules at Genentech Company is positioned to read out PoC study in ulcerative colitis early 2028
4 Capitalization As of 06/10/2026 Pre - acquisition Adial common stock outstanding 2,188,469 Adial options and warrants (as converted to common) 1 2,133 Acquisition Consideration Shares of common 437,474 Shares of preferred stock 12,930 Options 2 1,177,782 Preferred stock conversion ratio 1,000 Total pre - financing common equivalents outstanding 3 16,736,455 Concurrent financing 4 Pre - funded warrants 11,780,970 Purchase price $2.7489 Total capitalization (Common, as converted) 5 28.5 million Market capitalization at deal price ~$80 million 1. Calculated using treasury stock method 2. Represents shares of common stock underlying Azora options assumed by Adial 3. Includes common stock, options and preferred stock calculated on an as converted to common stock basis 4. Represents shares underlying pre - funded warrants issuable upon closing of the financing and includes conversion of bridge note 5. Represents Adial’s pre - acquisition shares of common stock outstanding and share of common stock underlying the preferred stock i ssued to Azora stockholders at the closing of the acquisition and pre - funded warrants to be issued upon the closing of the concurrent financing and note exchange. Does not include any securities that may be issued in a future mi les tone closing. • Shares of common stock, preferred stock and options were issued to Azora security holders in exchange for all of Azora’s outstanding equity interests. • Pre - funded warrants issued to investors upon closing of the $32 million private placement and note exchange. • Following approval by Adial’s shareholders and subject to beneficial ownership restrictions and contractual lockup terms, each share of Adial preferred stock will convert into 1,000 shares of Adial common stock. • Private placement and note investors may purchase an additional $32 million of pre - funded warrants in connection with Phase 1 clinical study initiation • Please refer to the company’s SEC filings for additional information.
5 Inspired by nature, clinically validated, scientifically optimized Azora Therapeutics is a Stanford spin - out advancing potential best - in - category therapies inspired by indigo naturalis , a botanical extract with demonstrated clinical benefit in ulcerative colitis but potential systemic safety liabilities AT177 is a fully - synthetic, patented, oral, colon - targeted aryl hydrocarbon receptor ( AhR ) agonist designed to restore mucosal immune homeostasis at the site of disease with minimal systemic exposure to optimize safety Current Status: • Drug scaled, in vivo animal efficacy, target PK/PD in large animals, GLP rat tox completed • FDA Pre - IND feedback received, IND - enabling studies ongoing, IND planned Q2 2027 • Up to $64M potential financing positions Azora into P1b clinical inflection in early 2028
6 AT177: Potential best - in - class AhR agonist rationally designed to transform UC Validated in patients with ulcerative colitis: AT177's active moiety indirubin is the same as in indigo naturalis which has demonstrated clinical benefit in UC; AhR mechanism further validated in Phase 3 trials of obefazimod Optimized profile for ulcerative colitis: oral, colon - targeted AT177 is engineered to maximize local AhR activation at the site of disease to improve efficacy while minimizing systemic exposure to limit toxicities Durable IP: composition - of - matter protection to 2043 with potential blocking IP on colon - targeted AhR agonists Market expansion opportunities: AT177 is designed to be combinable with other UC mechanisms. UC proof - of - concept unlocks Crohn’s disease. Financing to clinical PoC: Up to $64M private placement from fundamental biotech specialist investors supports Azora through Phase 1 PoC in UC Current approved therapies for ulcerative colitis (UC) are inadequate due to limited efficacy, secondary loss of response, and systemic safety liabilities
7 The future of IBD treatment is oral AT177's mechanism of action is oral, orthogonal to other mechanisms and potentially combinable with approved drugs IBD is a $30B market: even modest improvements in efficacy unlock significant value $30B per year 1 $11B in UC, 5M patients and growing, shift to orals 2, 3 $2 - $6B Individual annual revenue for IBD sales and growing $ 10B market cap after positive UC Phase 3 AhR agonist data with 16.4% placebo - adjusted remission at induction 7 $3 - $11B Acquisitions after positive Phase 1b or Phase 2 Value creation precedents Market opportunity Limitations of existing UC drugs Therapeutic ceiling that does not exceed 30% clinical remission at induction or 40% at maintenance 4 50% of patients with initial benefit lose response 5 10% fail all therapies and require colectomy 6 Systemic drugs: immunosuppression and cancer risk 1) IBD = inflammatory bowel disease global market by 2030 Polaris Market Research, Inflammatory Bowel Disease Treatment Marke t R eport, 2022 - 2030.; 2) Global UC Allied Market Research, "Ulcerative Colitis Market," 2021 3) Global UC patients Le Berre (2023) Lancet 4) Placebo adjusted - Papamichael (2019) Curr Opin Gastroenterol 35(4):302 - 310. 5) Alsoud (2021) Lancet Gastroenterol Hepatol 6(7):589 - 595. 6) 10 - year post - diagnosis colectomy rate. Dai (2023) Dig Liver Dis 55(1):13 - 20. 7) Market cap $11B on Dec 23 2025, 50 mg dose achieved 16.4% placebo - adjusted clinical remission at Week 8. Abivax press release, July 2025.
8 The solution: AT177, a fully - synthetic, gut - restricted small molecule AhR agonist, designed to recapitulate the benefit of indigo naturalis , while minimizing systemic exposure Prodrug approach: Converts to indirubin, the most potent AhR agonist in indigo naturalis , in colon lumen The design: Once - daily oral small molecule, scalable CMC, colon - targeted delivery, strong granted IP (to 2043) The discovery: Azora cofounder Julie Saiki treated her refractory UC with a botanical mixture called indigo naturalis Validated biology: Julie conducted a Phase 1b trial at Stanford demonstrating that indigo naturalis was effective in refractory UC patients and drove robust colonic AhR signaling The problem: : Indigo naturalis is an uncontrolled botanical mixture with potential systemic safety risks and is not FDA approved AT177: From botanical proof - of - concept to rationally - engineered drug
9 Inspired by nature Rationally designed Azora is inspired by patient experience and robust clinical data We rationally built AT177 based on validated science for potential best - class - safety and best - in - category efficacy
10 Aryl hydrocarbon receptor ( AhR ) is a master regulator of gut health AhR : transcription factor expressed in immune cells and epithelium that regulates immune and barrier function (increases tight junction proteins)¹ AhR agonism reduces pro - inflammatory cytokines (IL - 17a, IL - 6, TNF α ) and increases IL - 10, IL - 22, and Tregs ² Disrupted and reduced AhR signaling drives UC risk and severity 3 ; AhR polymorphisms associated with UC 4 Systemic AhR agonists are effective in UC but systemic AhR signaling presents potential safety risks like headaches, cardiovascular AEs and immunosuppression which may increase cancer risk 1) Stockinger (2021) Nat Rev Gastroenterol Hepatol 18 (8): 559 - 570; 2) Mizoguchi (2018) J Gastroenterol 53:465 – 474; 3) Yoshimats u (2022) Cell Rep. 39(6):110773; 4) Huo (2023) Front Cell Infect Microbiol 13:1279172. AEs = Adverse Events.
11 Indigo naturalis has profound durable efficacy, validating AhR mechanism in UC Saiki (2021) BMJ Open Gastroenterology Stanford phase 1b (n=11) • Refractory patients: 9/11 anti - TNF ; 6/11 anti - TNF and vedolizumab, 5/11 colectomy - recommended • AhR target engagement: ~12,000X increase in colon AhR activity Randomized, double - blind, placebo - controlled (n=86) • Up to 50% placebo - adjust clinical remission 1 • Equal benefit observed in biologic experienced and biologic naïve patients 2 Efficacy endpoints at Week 8 Efficacy endpoints at Week 8 Clinical remission Clinical response Mucosal healing C l i n i c a l r e s p o n s e C l i n i c a l r e m i s s i o n M u c o s a l h e a l i n g 0 20 40 60 80 100 100 80 60 40 20 0 91% 27% 64% Long term maintenance (n= 33 ) • Long term use: clinical remission 73% at 1 - year 3 • With continued use, 90% (9/10) of those achieving remission still in remission 1 - year later 4 Efficacy endpoints to Week 52 94% 85% 73% 58% 70% 73% 0% 20% 40% 60% 80% 100% 4 wk 8 wk 52 wk Clinical response Clinical remission Matsuno (2022) Intest Res 20(2):260 - 268. Matsuno (2024) Gastroenterology 166S12. Naganuma (2018) Gastroenterology 154(4):935 - 947. 1 ) Naganuma (2018) Gastroenterology 154(4):935 - 947. 2) Naganuma (2020) J. Gastroenterology 55:169 - 189 3) Matsuno (2022) Intest Res 20(2):260 - 268; 4) Matsuno (2024) Gastroenterology 166S12
12 0% 20% 40% AhR agonist 1 M iR - 124 / AhR 2 JAK inhibitor Anti - TNF S1P modulator Anti - integrin IL - 23 inhibitor IL - 12/23 inhibitor AhR has the potential to raise the efficacy bar in UC UC placebo - adjusted clinical remission rates by mechanism of action at induction Indigo naturalis 21 - 51% placebo - adjusted remission demonstrates potential ceiling - breaking efficacy with AhR mechanism Obefazimod Medium - potency systemic AhR agonist 3 designed to treat HIV, PK/PD profile may not achieve optimal colon AhR activation levels based on published PK data 4 C urrent therapies fall short • Modest efficacy, particularly in biologic - experienced patients • Slow onset of benefit • Lack of durability and development of anti - drug antibodies • Systemically immunosuppressive • Safety risks including infection, malignancy, intolerability Placebo - adjusted clinical remission at induction. 1) Indigo naturalis Naganuma (2018) Gastroenterology 154(4):935 - 947. 2) Obefazimod : ABTECT - 1/2 Phase 3 (2025). All other data from pivotal Phase 2/3 trials per drug labels. 3) Azora data on file and Equillium investor presentation May 27 2026. 4) Near undetectable levels of obefazimod and metabolite in rectal biopsies at 50 - 150mg doses at all time points. https://clinicaltrials.gov/study/NCT02990325 accessed on Jun 3 2026.
13 AhR is a validated target: efficacy is driven locally, not systemically 1) DSS colitis model · AhR Δ IEC = mice with AhR deleted selectively in intestinal epithelial cells (immune - cell AhR intact) · I3C = indole - 3 - carbinol, AhR agonist structurally distinct from indigo naturalis , used here to isolate AhR - dependent epithelial function. IN is indigo naturalis . Blocking AhR eliminates benefit of indigo naturalis When epithelial AhR is knocked out in the gut ( AhR Δ IEC ) in a chronic murine colitis model, AhR agonism loses most of its benefit Colon epithelial signaling key to efficacy 1 Tapinarof ( Vtama ® ), a topically - applied AhR agonist approved for psoriasis and atopic dermatitis, achieves its therapeutic effect with trivial systemic exposure Azora’s AT193 topical indirubin program was effective in psoriasis with no quantifiable systemic exposure Local AhR activation sufficient to drive clinical benefit When AhR is knocked out in a murine colitis model, indigo naturalis loses its therapeutic effect Indirubin Placebo Mouse colitis model +/ - AhR agonist (I3C) AhR Δ IEC – no AhR in intestinal epithelium; AhR intact elsewhere Kawai (2017) J Gastroenterol 52(8):904 - 919. Qazi (2023) Nutrients 15(23):4980. Dermavant Vtama ® and Azora AT193 clinical data Week 16 Indigo Naturalis does not work in AhR KO
14 AT177 converts into indirubin, the active moiety in indigo naturalis 1) In vitro AhR activation in human liver cell line using luciferase behind CYP1A1 promoter. 2) Azora prodrug scaffold, molecule converts int o indirubin. 3) AhR crystal structure bound to indirubin from Gruszcyzk (2022) Nat Commun 13(1):7010. Indirubin is the most potent AhR agonist in indigo naturalis with sub - nanomolar activity 1 AhR activation in vitro Indirubin Indigo naturalis Indigo AT177 rapidly converts into indirubin in the lumen of the colon and does not require absorption or bacterial enzymes 2 Indirubin directly binds the AhR and is as effective as indigo naturalis in animal models of UC 3
15 Oral AT177 is effective in UC models and achieves ~8X more colon AhR signaling than indirubin Local colon AhR signaling AT177 works like indirubin in DSS colitis mouse model with superior in vivo AhR activity Dextra sodium sulfate (DSS) model. Mice treated for 9 days orally with a molar equivalent of indirubin N=5. Colon samples t ake n at 6h after final dose. Similar trends observed with disease activity index ** p<0.01, **** p<0.0001
16 Rodents treated with oral AT177 have preserved colonic crypt architecture, restored epithelial integrity and reduced inflammatory infiltrate in lamina propria AT177 is effective in TNBS colitis and supported by histology Trinitrobenzene sulfonic acid (TNBS) model. Sham animals not administered TNBS. Disease activity index is a composite score of weight loss, stool consistency and rectal bleeding from 0 to 12. N=8, dosed orally for 7 days. H&E histopathology at 200X shown. ** p<0.05, **** p<0.0001
17 Indirubin levels above the EC 50 along the entire colon 1,000X Greater i ndirubin colon levels than plasma levels Robust colon AhR activation with minimal systemic exposure 10X 5 00X Lower plasma Cmax than topical tapinarof Lower plasma Cmax than oral obefazimod Plasma exposure well below expected safe thresholds Oral AT177 Administration AT177 is exquisitely gut - restricted and has a wide therapeutic index BQL – below the quantification limit. EC50 – indirubin 50% effective concentration on AhR of 2 ng/g. Colon concentration average of distal, mid and proximal colon levels. Colon to plasma ratio calculated as colon concentration divided by highest average day 1 plasma levels assuming BQL levels are at the lower limit o f q uantification. Cmax of tapinarof in maximum use systemic exposure studies of 0.9 to 1.3 ng/ mL. Cmax of obefazimod reported as 50.21 ng/ml with 50 mg dose under fed conditions Scherrer 2016.
18 AT177 was rationally designed to be a potential best - in - class AhR agonist for UC 1. In July ௗ 2025, AllianThera entered into a strategic partnership with Dr. Falk Pharma Azora’s AT177 designed to be h ighly potent, rapidly metabolized, and the most gut - restricted program in development to mitigate possible systemic safety risks Dr. Falk 1 Equillium Abivax Azora X X D Active moiety has shown benefit in patients X High potency AhR agonist X X X Optimized PK/PD profile for UC X X X Active moiety is endogenous X Colon - targeted formulation supports gut restriction Safety Efficacy
19 AT177 is clinically derisked - same active moiety as indigo naturalis with superior control and delivery 1. Indigo naturalis has demonstrated clinical benefit in refractory UC 2. Indigo naturalis efficacy requires AhR signaling in the intestinal epithelium 3. Indirubin is the most potent AhR agonist in indigo naturalis 4. Indirubin alone is effective in murine UC models and in patients with psoriasis 1 5. AT177 rapidly converts into indirubin and drives more colonic AhR signaling compared with the same amount of indirubin 6. AT177 delivers indirubin above the EC 50 in large animals across the entire colon and into the rectum with dramatically lower systemic exposures than other AhR agonists AT177 is derisked and positioned for clinical development 1. Azora P1b study of synthetic indirubin AT193 in psoriasis under Australian clinical trial notification scheme, Azora data on file
20 AT177: Phase 1 clinical trial 2027 With rapid progression to Phase ௗ 1 and 2 value inflection
21 Drug Substance • Commercially available fully - synthetic starting materials • Proprietary synthetic route • 18M+ room temperature stability • KG+ feasibility batches completed • US - based GMP manufacturing initiated • Processes are highly scalable • Uses only FDA - approved excipients • Highly - targeted release profile • Precise drug delivery to colon confirmed in large animal studies CMC infrastructure is ready to support clinical advancement Drug Product Formulation Scale - Up AT177's CMC package is derisked with a scalable synthetic route, colon - targeted formulation using FDA - approved excipients, and US - based GMP manufacturing
22 Financing positions Azora through IND - enabling studies and into PoC in UC 2029 2028 2027 2026 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Financing Reg CMC Tox IND - enabling Clinic External events GLP 28d minipig MTD, Dose Finding GMP Manufacturing Transporter, safety pharm, genetox Long term tox Ph1 SAD/MAD + P1b PoC in UC patients Global Phase 2 with 6 mo open - label extension GMP Manufacturing Open IND OLE to Q2 2030 Obefazimod NDA submission Capital - efficient path to clinical proof - of - concept in ulcerative colitis $32M financing Up to $32M milestone tranche Obefazimod P2 Crohn’s OLE = open label extension. PoC = proof of concept. SAD/MAD = single ascending dose and multiple ascending dose. GMP = good ma nufacturing processes. GLP = good laboratory practices. NDA = new drug application. CD = Crohn’s disease.. Obefazimod timeline from LifeSci Capital analyst report 6.2.26.
23 Experienced team with track record of FDA approval Our team and advisors have developed the following drugs: Cary J. Claiborne MBA Chief Executive Officer, Director Vinay Shah MBA Chief Financial Officer Matt Davidson PhD Chief Development Officer, Director Julie Saiki PhD EVP of Strategy
24 Strong, long - dated granted IP position with broad claims on use of AhR agonists pending Key Claims Expires Status Type Publication No. • Indirubin prodrugs 2043 Granted (US, JP) Composition US - 2023 0227408 - A1 • Use of APIs in inflammatory diseases 2043 Granted (US) Method US - 2024 - 0182416 - A1 • Colon - targeted formulations of AhR agonists 2040 Pending Composition US - 2025 - 0255820 - A1 • Methods to reduce possible side effects of AhR agonists including headaches, GI, PAH. • Methods to enhance the efficacy of AhR agonists 2042 Pending Method US - 2025 - 0195469 Azora holds 100% ownership of all intellectual property on a worldwide, royalty - free basis GI = Gastrointestinal. PAH = Pulmonary Arterial Hypertension. API = Active Pharmaceutical Ingredients
25 AT177: Ulcerative colitis success unlocks Crohn’s disease and possible combinations Phase 2 Phase 1a/1b IND - Enabling Pre - Clinical Discovery AT177 Ulcerative Colitis Lead program AT177 Crohn's Disease UC proof unlocks CD Undisclosed Platform optionality Initiate Phase 1 trial 2027 TODAY Current financing positions Azora through IND - enabling studies and key clinical AT177 value inflection
26 Thank you Investor Contact Mike Moyer, Managing Director LifeSci Advisors +1 - 617 - 308 - 4306 mmoyer@lifesciadvisors.com
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Filing Exhibits & Attachments
17 documentsPress Releases
Agreements & Contracts
- EX-10.1 FORM OF SECURITIES PURCHASE AGREEMENT, DATED AS OF JUNE 11, 2026, BY AND AMONG A 257.3 KB
- EX-10.2 FORM OF EXCHANGE AGREEMENT, DATED AS OF JUNE 11, 2026, BY AND AMONG ADIAL PHARMA 237.7 KB
- EX-10.3 FORM OF REGISTRATION RIGHTS AGREEMENT, BY AND AMONG ADIAL PHARMACEUTICALS, INC. 146.7 KB
- EX-10.4 AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT BETWEEN ADIAL PHARMACEUTI 17.4 KB
- EX-10.5 AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN ADIAL PHARMACEUTICALS, INC. AND TONY G 17.6 KB
- EX-10.6 AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN ADIAL PHARMACEUTICALS, INC. AND VINAY 17.8 KB
Other Documents
- EX-2.1 AGREEMENT AND PLAN OF MERGER, DATED JUNE 11, BY AND AMONG ADIAL PHARMACEUTICALS, 868.4 KB
- EX-3.1 CERTIFICATE OF DESIGNATION OF SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK, D 101.4 KB
- EX-4.1 FORM OF PRE-FUNDED WARRANT (FINANCING) 90.8 KB
- EX-4.2 FORM OF WARRANT (FINANCING) 91.1 KB
- EX-4.3 FORM OF PRE-FUNDED WARRANT (NOTE EXCHANGE) 90.8 KB
- EX-4.4 FORM OF WARRANT (NOTE EXCHANGE) 91.2 KB
- EX-101 XBRL SCHEMA FILE 2.9 KB
- EX-101 XBRL LABEL FILE 33.4 KB
- EX-101 XBRL PRESENTATION FILE 21.8 KB