Adial acquires Azora Therapeutics and announces up to $64 million financing

Adial Pharmaceuticals, Inc. (Nasdaq: ADIL) said on June 11, 2026 that it has acquired Azora Therapeutics, Inc., a biopharmaceutical company developing treatments for serious inflammatory diseases. The acquisition brings Azora's lead asset, AT177, into Adial's pipeline. Adial also entered into a definitive agreement for a concurrent private placement of up to $64 million in gross proceeds, before placement agent and other offering expenses. The press release was issued from Glen Allen, Virginia, and Los Angeles, California.

The acquisition terms

The acquisition was structured as an asset acquisition. All of Azora's outstanding equity interests were exchanged, on a fixed exchange ratio, for a combination of 437,474 shares of Adial common stock and approximately 12,930 shares of Adial Series A non-voting convertible preferred stock. The preferred stock represents 12,930,617 shares of common stock on an as-converted basis. The figures are calculated on a fully diluted basis, without beneficial ownership limitations.

The private placement has two parts. The first is an upfront financing of approximately $32 million in gross proceeds, including the conversion of notes that Adial assumed in the acquisition. Investors receive pre-funded warrants to purchase 11,780,948 shares of Adial common stock at $2.7489 per warrant. The second is the potential for up to an additional $32 million in gross proceeds when Phase 1 clinical study initiation occurs. At that milestone, investors would receive pre-funded warrants for up to 11,780,948 shares and common warrants for up to the same number of shares, at a combined price of $2.7489 per pre-funded warrant and accompanying common warrant.

The financing was led by Coastlands Capital, with participation from Boxer Capital Management, Stonepine Capital Management, AuGC BioFund and other biotech specialists and institutional investors, as well as insiders and management. The combined company expects to use the proceeds mainly to advance AT177 through key clinical milestones, including IND-enabling studies and the Phase 1a and Phase 1b studies in ulcerative colitis.

The asset and the people

AT177 is a proprietary, colon-targeted aryl hydrocarbon receptor agonist designed to enable localized activation with limited systemic exposure. Azora describes its active ingredient as a prodrug of indirubin, the most potent AhR agonist within indigo naturalis, a botanical extract used in ulcerative colitis. The company says AT177 showed robust local colonic AhR activation in preclinical studies, with limited systemic exposure. The asset is in IND-enabling studies, and a proof-of-concept clinical trial is planned for 2027.

Chief executive Cary Claiborne said: "AhR is now a validated target in the treatment of ulcerative colitis." Matt Davidson, PhD, a co-founder of Azora, will become Adial's chief development officer and has been named a director. Adial also appointed Wendy Young, Ph.D., to its board. Young previously held senior leadership roles at Genentech and is a senior advisor to GV.

Azora was spun out of Stanford University after incubation in the translational medicine SPARK program. The company owns the worldwide royalty-free rights to its technology.

What Adial does

Adial describes itself as a biopharmaceutical company historically focused on treatments for addictions and related disorders. Its historical investigational drug, AD04, is a genetically targeted serotonin-3 receptor antagonist for alcohol use disorder in heavy drinking patients. The company's 10-K for 2025 reported research and development expense of $2.6 million for 2025, compared with $3.2 million for 2024, and a net loss of $8.0 million for 2025, compared with $13.2 million for 2024.

What the release does not settle

AT177 has only preclinical data. It is still in IND-enabling studies, and Phase 1 is not planned before mid-2027. The release itself says systemic AhR activation may be associated with immunosuppression and long-term safety risks. AT177 is designed to avoid that, but no human data show it does. Only about $32 million of the financing is upfront. The other $32 million depends on Phase 1 initiation and would add pre-funded warrants and common warrants, each for up to 11,780,948 shares. The upfront deal also carries 12,930,617 as-converted common shares in preferred stock and pre-funded warrants for 11,780,948 shares. Adial's 10-K reported an $8.0 million net loss for 2025 and warned that cash would not last twelve months, and the release calls AD04 a historical drug.

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