Celsus Therapeutics will acquire Volution Immuno Pharmaceuticals (VIP), creating a combined company focused on developing and commercializing treatments for orphan autoimmune and inflammatory diseases caused by dysregulation of complement C5, the companies said today.

The value of the acquisition was not disclosed. VIP would become a subsidiary of Celsus in the all-stock transaction that will create the combined company, to be named Akari Therapeutics. Akari would focus on treating diseases that include paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS).

“We expect Akari to become a leading company in C5 inhibition by continuing the successful development of our potential best-in-class drug, Coversin, for the treatment of PNH, aHUS, and other orphan indications,” Celsus CEO Gur Roshwalb, M.D., said in a statement.

Dr. Roshwalb will be CEO of Akari, with VIP’s chairman and CEO Ray Prudo, M.D., to serve as executive chairman of the new company; and Celsus’ current chairman Mark Cohen, vice chairman.

Derived from a protein in the saliva of the Ornithodoros moubata tick, Coversin is a second-generation complement inhibitor designed to prevent release of C5a and formation of C5b-9 (also called the membrane attack complex or MAC). C5 inhibition has been linked to rare autoimmune diseases related to dysregulation of the complement component of the immune system, including PNH, aHUS, and Guillain Barré syndrome (GBS).

Last year, Celsus successfully completed a Phase Ia fixed-dose clinical trial of Coversin in healthy subjects. A follow-up chronic dosing Phase Ib clinical trial of Coversin in healthy subjects is set to start later this year.

Within the next 18 months, Celsus and VIP said, Akari will launch multiple Phase II clinical trials of Coversin in several indications, including PNH, aHUS, and GBS. Data readouts from two of the trials are expected by the end of 2016, Dr. Prudo stated, adding: “The enhanced operating capabilities and improved access to public financing markets provided by this merger will provide the resources necessary to accelerate development of Coversin.”

Also later this year, Celsus and VIP said, Akari plans to launch a compassionate use program to treat patients resistant to Soliris® (eculizumab), the only currently approved treatment for PNH and aHUS.

The deal with VIP followed the failure of Celsus’ lead product MRX-6 Cream 2% for pediatric atopic dermatitis in a Phase II trial in February. Since then, the company suspended development of MRX-6 and closed its IND application with the FDA for the treatment, Celsus disclosed May 12 in a Form 10-Q quarterly filing with the U.S. Securities and Exchange Commission.

“Following an extensive and thorough review of strategic alternatives, we believe the proposed business combination with Volution Immuno Pharmaceuticals provides the best opportunity for positive returns for Celsus shareholders,” Dr. Roshwalb added.

The boards of both companies have approved the deal, as has RPC Pharma, VIP’s sole shareholder.

On a pro forma basis and based upon the number of shares of Celsus common stock to be issued in the deal, VIP shareholders would own 91.68% of Akari on a fully diluted basis. The remaining 8.32% of shares will be held by current Celsus shareholders, following completion by the companies of their Definitive Exchange Agreement.

The transaction is expected to close in the third quarter of 2015, subject to approval by Celsus shareholders and other customary conditions, Celsus and VIP said.

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