Cytocom looking to raise USD 50m to fund advanced clinical trials, CEO says

21 December 2020

Cytocom, an immunotherapy-focused biotech company set to go public next year by merging with Cleveland BioLabs [NASDAQ:CBLI], is looking to raise at least USD 50m in the next year to fund late-stage clinical trials of later-stage drugs in development, according to CEO Michael Handley. 

 

Winter Park, Florida-based Cytocom agreed to an all-stock merger with Cleveland BioLabs last October, a deal that added to Cytocom’s previous all-stock deal in July 2020 to buy ImQuest Life Sciences, a contract development (CRO) firm and drug developer.  

 

Handley said Cytocom has already started raising USD 25m from strategics and institutional investors and expects to close that round by the time the merger with Cleveland BioLabs closes early next year. After that, he said the company plans to raise “at least another USD 25m” through a PIPE or follow-on share offering to further capitalize the merged entity.  

 

Cytocom is looking to advance two compounds, CYTO-201 for Crohn’s disease and CYTO-401 for pancreatic cancer, into Phase 3 trials by 1Q21, which would be funded by the capital raises, the CEO said. It also plans to seek partnerships with large pharmaceutical companies to develop other pipeline projects, including treatments for auto-immune disorders and cancers, he said.  

 

“Our strategy is to raise enough capital to do Phase 3 trials” of CYTO-201 and CYTO-401, “but will be speaking to strategics” for others, he said.  

 

Cytocom has four Phase 3-ready clinical programs for Crohn’s disease, pancreatic cancer, multiple sclerosis and fibromyalgia, along with other treatments in earlier stages, according to its website.  

 

With the purchase of ImQuest Life Sciences last year, Cytocom gained access to ImQuest BioSciences, a CRO that focuses on preclinical development for vaccines, biologics and pharmaceuticals. The CRO will be operated as a separate revenue-generating entity for other drug developers, but will also assist Cytocom in developing its own products, Handley said.  

 

“It was a good transaction for us,” the CEO said, bringing expertise in virology and oncology in-house to support Cytocom’s programs with the CRO’s 12,000-square-foot laboratory facility while throwing off cash flow. He said the company has no plans to sell or spin-off the CRO, but will grow it organically in coming years and may look to acquire similar assets in the space to build its capabilities.  

 

Cytocom also plans to continue a strategy of acquiring or in-licensing late-stage assets in immunotherapy and other technologies, particularly those that will assist it in finding treatments that can be combined with currently marketed drugs and therapies, Handley said.  

 

He said the company already has two term sheets signed for potential acquisition candidates that would add to its current drug development portfolio and is looking for others. He said he anticipates closing these deals in 1H2 and is “strongly evaluating other acquisitions.”  

 

Cytocom did not use an investment bank for either the Cleveland BioLabs merger or the ImQuest Life Sciences deals. Terms were not disclosed for either.  

 

Cleveland BioLabs was recently trading at USD 2.92, giving it a market value of USD 38m.  

 

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