OS Therapies Agrees to Acquire All Listeria Monotygenes-based Immuno-Oncology Programs and IP Assets from Ayala Pharmaceuticals, Adding Phase 2 Lung Cancer and Phase 1 Prostate Cancer Programs to Pipeline

Rhea-AI Summary

OS Therapies (NYSE-A: OSTX) has entered an asset purchase agreement to acquire listeria monocytogenes-based immuno-oncology programs and IP assets from Ayala Pharmaceuticals. The acquisition includes a Phase 2 lung cancer and Phase 1 prostate cancer program, along with direct ownership of IP related to OST-HER2 for osteosarcoma.

The deal involves a $0.5 million cash payment and $7.5 million in OSTX common shares. The company recently secured $7.1 million in financing at $4.00 per share, providing cash runway into 2026. OS Therapies plans to request BLA for OST-HER2 in osteosarcoma in Q2 2025, with potential FDA approval and Priority Review Voucher by end of 2025.

The agreement eliminates milestone payment obligations and reduces royalty rates for OST-HER2. The company's current burn rate is approximately $0.4M monthly, and they are prohibited from issuing shares for capital raising for 6 months and below $12.00 per share.

Positive

• Acquisition eliminates milestone payments and reduces royalty obligations for OST-HER2
• Secured $7.1M funding providing cash runway into 2026
• Low monthly burn rate of $0.4M
• Addition of Phase 2 lung cancer and Phase 1 prostate cancer programs to pipeline
• Potential Priority Review Voucher expected by end of 2025

Negative

• Share dilution through $7.5M worth of common shares issuance to Ayala
• Restricted ability to raise capital for 6 months
• Additional $0.5M cash payment required for acquisition

Insights

Biotech Investment Analyst

This strategic acquisition represents a significant transformation for OS Therapies, substantially strengthening their position in immuno-oncology. The deal structure is notably favorable - for just $0.5M cash and $7.5M in shares, they've acquired Phase 2 lung cancer and Phase 1 prostate cancer assets while consolidating their IP position.

The financial implications are compelling:

• Elimination of milestone payments and reduced royalties significantly enhance the net present value of OST-HER2
• The potential Priority Review Voucher (PRV) upon approval could be worth $100M to $120M based on recent PRV transactions
• With a $0.4M monthly burn rate and runway into 2026, the company has adequate capital to reach key milestones

The acquired programs target substantial markets - lung cancer ($19B growing to $44B by 2030) and prostate cancer ($6.4B growing to $16B by 2030). The Phase 2 lung cancer data showing 46% to 67% disease control rates when combined with Keytruda® is particularly promising for patients who've progressed on prior treatment.

The $7.1M financing at $4.00/share with restrictions on raises below $12.00 demonstrates strong investor confidence and protects against near-term dilution. This strategic move positions OS Therapies as a more attractive partner for potential collaborations while maintaining focus on their lead program's regulatory approval.

Oncology Research Analyst

The consolidation of listeria monocytogenes-based immunotherapy technology represents a significant advancement in cancer treatment approaches. This platform's unique mechanism - using attenuated bacteria to stimulate both innate and adaptive immune responses - has shown particular promise in combination with checkpoint inhibitors.

The clinical data from the lung cancer program is noteworthy:

• Disease control rates of 46%-67% in patients who progressed on pembrolizumab demonstrate potential to overcome checkpoint inhibitor resistance
• The ability to restore sensitivity to checkpoint inhibitors addresses a critical unmet need in non-small cell lung cancer treatment
• The safety profile appears favorable, a important factor for combination therapies

This technology's potential in both lung and prostate cancers is particularly significant as these indications often develop resistance to current immunotherapies. The acquisition consolidates a comprehensive IP portfolio around this platform, potentially enabling more efficient development of next-generation immunotherapies across multiple solid tumor types.

• Consolidates ownership of listeria monocytogenes-based immunotherapy IP
• Eliminates milestone payments and reduces future royalty obligations relating to OST-HER2 for osteosarcoma and other HER2-related indications
• Capital allocation focus remains on regulatory approval, priority review voucher (PRV) issuance and commercialization of OST-HER2 in osteosarcoma
• Previously disclosed $7.1M funding for OS therapies priced at $4.00/share provides cash runway into 2026 & precludes raises below $12.00 for 6 months
• Karim Galzahr appointed to OS Therapies Board of Directors

NEW YORK--(BUSINESS WIRE)-- OS Therapies, Inc. (NYSE-A: OSTX), a clinical-stage biotechnology company advancing immunotherapies and targeted drug conjugates for cancer treatment, today announced it has entered into an asset purchase agreement to acquire the listeria monocytogenes-based immuno-oncology programs and related intellectual property (IP) assets from Ayala Pharmaceuticals (OTC: ADXS). The assets being acquired include a Phase 2 lung cancer and Phase1 prostate cancer program, in addition to the gaining direct ownership of the underlying IP related to OS Therapies’ lead asset OST-HER2 for osteosarcoma and other HER2-related indications.

“The assets being acquired from Ayala complete OS Therapeutics’ ownership of the key intellectual property underlying our listeria monocytogenes immunotherapy platform, as well as bolster our development pipeline with the addition of clinical-stage lung cancer and prostate cancer immunotherapy assets,” said Paul Romness, MHP, Chairman & CEO of OS Therapies. “Importantly, this agreement eliminates certain near-term milestone payment obligations related to OST-HER2 in osteosarcoma, projected sales milestone payments, and significantly reduces our effective royalty rate. As a result, we have enhanced both the clinical and financial prospects for the Company with minimal impact to our cash position. The elimination of these milestones payment obligations and reduction in royalties obligations significantly improves the net present value of the OST-HER2 program while also improving our negotiating position with potential partners. Taken together, this agreement bolsters our financial and partnership prospects.”

OS Therapies anticipates requesting Biologics Licensing Authorization (BLA) for OST-HER2 in osteosarcoma in the second quarter of 2025, and hopes to be granted a BLA and related Priority Review Voucher (PRV) from FDA by the end of 2025. Additionally, the Company intends to sell the PRV immediately upon issuance and does not intend to initiate any new clinical development programs until it has completed interactions with FDA around OST-HER2 in osteosarcoma.

Under the terms of the agreement, OS Therapies has agreed to pay $0.5 million in cash and issue $7.5 million worth of OS Therapies’ common shares to Ayala. The transaction is expected to close 60 days from execution of the agreement, subject to customary closing conditions.

OS Therapies previously disclosed that it completed a $7.1 million financing, priced at $4.00 per share primarily with existing shareholders, that provides the Company with sufficient cash runway into 2026 inclusive of payments to Ayala. Under the terms of the financing agreement, OS Therapies is prohibited from issuing shares to raise capital for at least 6 months and suspended the issuance of shares to raise capital under its equity line of credit so long as the price of the common stock is below $12.00. The Company’s burn rate is now approximately $0.4M per month.

As part of the financing agreement, OS Therapies agreed to appoint Karim Galzahr to the Company’s Board of Directors. Galzahr is managing partner at OKG Capital, a medtech and life science investor. Galzahr brings over 30 years of experience in all aspects of finance including M&A, asset management, corporate development and strategic advisory work across the technology sector and medical technology sectors.

"I am honored to join the OS Therapies Board of Directors at such a pivotal moment in the Company’s journey,” said Galzahr, newly appointed Board Member of OS Therapies. “With compelling Phase 2b osteosarcoma data, the anticipated FDA approval of OST-HER2, and the potential to earn a saleable Priority Review Voucher, the Company is positioned to unlock the full potential of its market leading listeria-based immunotherapy platform. This acquisition not only strengthens its intellectual property portfolio but also clears financial hurdles, paving the way for groundbreaking work in osteosarcoma and expanding opportunities in lung and prostate cancer. I look forward to contributing to OS Therapies' mission of transforming cancer care and improving patient outcomes worldwide.”

Lung Cancer Asset Clinical Data

Lung Cancer

1. ASCO 2022 Poster: A phase 2 study of an off-the-shelf, multi-neoantigen vector (ADXS-503 / OST-503) in patients with metastatic non-small cell lung cancer either progressing on prior pembrolizumab or in the first line setting.
   
   Conclusions: The addition of ADXS-503 (OST-503) to pembro (Keytruda®) after disease progression on pembro appears to be well tolerated and induced antigen-specific T-cell responses and durable disease control in 46% of patients in Part B and 67% of patients in Part C. Additional patients are currently being enrolled into both parts of the study to further explore the potential of A503 to restore or enhance sensitivity to checkpoint inhibitors. Clinical trial information: NCT03847519.
   
   
2. ASCO 2022 Poster: Immunogenicity and disease control induced by a multi-neoantigen vaccine (ADXS-503 / OST-503)) in patients with metastatic non-small cell lung cancer who have progressed on pembrolizumab.
   
   Conclusions: Adding ADXS-503 (OST-503) to pembro (Keytruda®) after Progression of Disease appears to induce innate and adaptive immune responses that may restore or enhance sensitivity to checkpoint inhibitors in pts with clinical benefit. Clinical trial information: NCT03847519.

The global lung cancer treatment market size was estimated at $19 billion in 2023 according to Grandview Research and is expected to grow to over $44 billion by 2030. The global prostate cancer treatment market was estimated at $6.4 billion in 2023 according to Grandview Research and is expected to grow to over $16 billion by 2030.

About OS Therapies

OS Therapies is a clinical stage oncology company focused on the identification, development, and commercialization of treatments for Osteosarcoma (OS) and other solid tumors. OST-HER2, the Company's lead asset, is an immunotherapy leveraging the immune-stimulatory effects of Listeria bacteria to initiate a strong immune response targeting the HER2 protein. OST-HER2 has received rare pediatric disease, fast-track and orphan drug designations from the US FDA. The Company has completed enrollment for a 41-patient Phase 2b clinical trial of OST-HER2 in recurrent, fully resected, lung metastatic osteosarcoma, with positive results released in the first quarter of 2025. The Company anticipates submitting a Biologics Licensing Application (BLA) to the US FDA for OST-HER2 in osteosarcoma in 2025 and, if approved, would become eligible to receive a Priority Review Voucher that it could then sell. OST-HER2 has completed a Phase 1 clinical study primarily in breast cancer patients, in addition to showing preclinical efficacy data in various models of breast cancer. OST-HER2 has been conditionally approved by the U.S. Department of Agriculture for the treatment of canines with osteosarcoma.

In addition, OS Therapies is advancing its next-generation Antibody Drug Conjugate (ADC) platform, known as tunable ADC (tADC), which features tunable, tailored antibody-linker-payload candidates. This platform leverages the Company's proprietary silicone linker technology, enabling the delivery of multiple payloads per linker. For more information, please visit www.ostherapies.com.

Forward-Looking Statements

Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements and terms such as "anticipate," "expect," "intend," "may," "will," "should" or other comparable terms involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Those statements include statements regarding the intent, belief or current expectations of OS Therapies and members of its management, as well as the assumptions on which such statements are based. OS Therapies cautions readers that forward-looking statements are based on management’s expectations and assumptions as of the date of this news release and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not limited to the approval of OST-HER2 by the US FDA and grant of a priority review voucher and other risks and uncertainties described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2024, as amended on November 27, 2024, and other subsequent documents we file with the SEC, including but not limited to our Quarterly Reports on Form 10-Q. Any forward-looking statements contained in this press release speak only as of the date hereof, and, except as required by the federal securities laws, OS Therapies specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250129509280/en/

OS Therapies Contact Information:

Press Contact:

Kati Waldenburg

katiw@coreir.com

Investor Contact:

Chris Erdman

410-297-7793

Irpr@ostherapies.com

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Source: OS Therapies

FAQ

What assets is OSTX acquiring from Ayala Pharmaceuticals?

OSTX is acquiring listeria monocytogenes-based immuno-oncology programs and IP assets, including a Phase 2 lung cancer program and Phase 1 prostate cancer program, along with IP related to OST-HER2 for osteosarcoma.

How much is OSTX paying for the Ayala acquisition?

OSTX is paying $0.5 million in cash and issuing $7.5 million worth of common shares to Ayala Pharmaceuticals.

When does OSTX expect FDA approval for OST-HER2 in osteosarcoma?

OSTX plans to request BLA in Q2 2025 and expects potential FDA approval and Priority Review Voucher by the end of 2025.

What is OSTX's current cash runway following the $7.1M financing?

The $7.1M financing provides OSTX with cash runway into 2026, with a current burn rate of approximately $0.4M per month.

What restrictions are placed on OSTX's ability to raise capital?

OSTX is prohibited from issuing shares to raise capital for at least 6 months and cannot issue shares under its equity line of credit while stock price is below $12.00.