Pain drug developer Adynxx has signed a definitive merger agreement under which its stockholders would become the majority owners of Alliqua’s outstanding common stock on a fully-diluted basis.

This merger will lead to creation of a public clinical-stage pharmaceutical company with focus on building a platform of non-opioid therapies to treat pain.

Adynxx’s lead product candidate is brivoligide, which offers pain relief and reduces opioid usage with a single administration at the time of surgery. It is intended for patients who stand at a greater risk of experiencing prolonged pain after surgery.

Alliqua CEO Dave Johnson said: “We are excited about creating multiple ways for our shareholders to maximize value with Alliqua. First, as announced in May, we intend to make a special cash dividend to our stockholders before the merger.

“Second, following an extensive review of strategic alternatives, Alliqua’s Board of Directors has determined that the signing of our definitive agreement with Adynxx will allow our stockholders the opportunity to enjoy value appreciation in their equity holdings. Finally, we are currently exploring alternatives for our 16,500 square foot GMP custom hydrogel manufacturing facility in Langhorne, PA to maximize value for our shareholders.”

Adynxx CEO Rick Orr said: “With the ongoing opioid crisis in the United States, there is a critical need for novel and effective non-opioid therapeutics to treat pain and reduce opioid usage.

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“Following this transaction, our goal is to accelerate the development of brivoligide to benefit patients that would otherwise experience greater pain and higher levels of opioid usage following surgery.

“With the ongoing opioid crisis in the United States, there is a critical need for novel and effective non-opioid therapeutics to treat pain and reduce opioid usage.”

“We also plan to build a robust pipeline of novel therapeutics for pain and inflammation through development of our earlier-stage internal programs, our ongoing discovery collaboration leveraging artificial intelligence, and additional in-licensing activities.”

As per the agreement, Adynxx shares will convert into Alliqua stock, leaving its shareholders owning around 86% of the merged entity.

Following closure of the deal, Alliqua will be renamed as Adynxx and will be headquartered in San Francisco, California under the leadership of current management team of Adynxx.

The deal has been unanimously approved by the board of directors of the two firms.

It is expected to close by the first quarter of 2019, following approvals by the stockholders of each company and other customary closing conditions.

H.C. Wainwright & Co. is acting as Alliqua’s financial advisor while MTS Securities is serving as financial advisor to Adynxx.

Haynes and Boone is serving as legal counsel to Alliqua, while Cooley is serving as legal counsel to Adynxx for the deal.