Micro-cap biotech Processa acquires immune-focused Vidya, announces share sale

Shares of Processa Pharmaceuticals, a micro-cap cancer drugmaker with a Nasdaq market capitalization of just $5.6 million, plunged 33% on Wednesday. The company announced the acquisition of privately held biotech Vidya Therapeutics and a concurrent private placement of approximately $200 million. Existing Processa shareholders will own less than 1% of the combined company.

Processa shares fell 33% to $2 apiece on Wednesday. In premarket trading on Thursday, they had dropped around another 9% as of this writing. The selloff came after the company announced its acquisition of privately held biotech Vidya, which is developing VT-7208 as a potential treatment for food allergy and multiple sclerosis.

At the same time, Processa will issue approximately $200 million of new preferred stock to a group of investors that includes Bain Capital Life Sciences, Janus Henderson Investors, and Marshall Wace. The preferred stock can subsequently be converted into common stock.

The boards of both companies have approved the acquisition. Neither the acquisition nor the private placement requires approval from Processa shareholders, the company stated. However, Processa shareholders must approve the conversion of the preferred stock into common stock.

Following the transactions, existing Processa shareholders will own approximately 0.9% of the combined company, existing Vidya shareholders will own approximately 46.0%, and investors participating in the private placement will get approximately 52.6%.

The combined company will initially focus on advancing Vidya’s VT-7208, according to the announcement. The drug inhibits Bruton’s tyrosine kinase, or BTK, a protein involved in immune-cell signaling, thereby reducing inflammation and inhibiting the growth of cancer cells.

Processa plans to test the drug in phase II clinical trials across three indications: food allergy, chronic spontaneous urticaria, and relapsing multiple sclerosis. Results are expected in 2027-2028.

The proceeds from the investor syndicate are expected to fund the company’s operations into the second half of 2029. They will also allow the three clinical programs to be run in parallel rather than sequentially, the company stated.