Adial Pharmaceuticals Receives Notice of Exercise from Adovate for the Acquisition of Purnovate’s Assets and Business

Adial to receive potential development and commercial milestone payments of up to $83 million on the first three compounds plus 19.9% equity stake and ongoing royalties

CHARLOTTESVILLE, Va., May 10, 2023 (GLOBE NEWSWIRE) -- Adial Pharmaceuticals, Inc. (NASDAQ: ADIL; ADILW) (“Adial” or the “Company”) a clinical-stage biopharmaceutical company focused on developing therapies for the treatment and prevention of addiction and related disorders, today announced that Adovate, LLC (formerly known as Adenomed, LLC) (“Adovate”), has provided irrevocable notice of exercise of its previously announced option to acquire the assets and business of Purnovate, Inc., a wholly owned subsidiary of the Company, under the terms previously agreed. Adovate was recently formed by William Stilley, co-founder and former CEO of Adial, for the sole purpose of acquiring, funding and advancing Purnovate’s business. The option exercise is effective May 16, 2023.

With the notice, Adial received a non-refundable option exercise fee and upfront payment of $450,000, and, after a final acquisition agreement is signed, will receive expense reimbursement of approximately $0.9 million for Purnovate expenditures incurred and paid by Adial after December 1, 2022 through and including May 15, 2023. Any Purnovate expenses incurred on and subsequent to May 16, 2023, will become the responsibility of Adovate. In addition, the Company is entitled to receive up to approximately $11 million in development and approval milestones for each compound (up to $33 million in total development and approval milestones for the first three compounds alone), as well as a total of $50 million in additional commercial milestones, for a total consideration of up to $83 million with potential milestone payments on additional compounds. Additionally, the Company will receive a single digit royalty and receive a 19.9% equity stake in Adovate.

Cary Claiborne, President and Chief Executive Officer of Adial, stated, “We believe this is another significant milestone for Adial as it demonstrates our commitment to maximizing the value of our assets, as well as advancing our assets in the most cost-efficient way possible. By executing this agreement with Adovate, we will effectively reduce our cash burn rate, receive upfront non-dilutive capital, and maintain meaningful equity and downstream economics. In addition, this will enable us to focus exclusively on advancing AD04 which remains our top priority through potential regulatory approvals and prioritize our resources accordingly. Given recent positive developments as it relates to AD04, we believe it is an ideal time for us to sell the Purnovate assets and business in order to maximize the value of both AD04 and Purnovate for our shareholders.”