ADIAL PHARMACEUTICALS, INC. 8-K

What Happened
Adial Pharmaceuticals, Inc. announced on June 11, 2026 that it completed a merger with Azora Therapeutics, Inc. under an Agreement and Plan of Merger dated June 11, 2026. As consideration at closing the company issued 437,474 shares of Adial common stock and 12,930.617 shares of Series A Non‑Voting Convertible Preferred Stock (each preferred share convertible into 1,000 shares of common stock, subject to conditions). The transaction was structured to qualify as a tax‑free reorganization for U.S. federal income tax purposes. Concurrent with the merger, Adial arranged a financing (PIPE) and an exchange to retire Azora’s amended and restated convertible promissory notes (totaling $5.5 million in principal) in exchange for pre‑funded warrants.

Key Details

• Merger and closing date: June 11, 2026.
• Equity issued to Azora stockholders: 437,474 shares of common stock plus 12,930.617 shares of Series A Non‑Voting Convertible Preferred Stock (convertible into 1,000 common shares per preferred share).
• Azora note treatment: Adial guaranteed $5.5M of Azora notes, then entered Exchange Agreements to extinguish the guarantee and retire those notes in exchange for Initial Closing Pre‑Funded Warrants to purchase 2,031,603 common shares.
• Capital structure / dilution (on a fully diluted basis, assuming full exercise/conversion and no ownership limits): pre‑Merger Adial holders ~7.7%; former Azora equityholders ~51.0%; former Azora noteholders ~7.1%; PIPE investors ~34.2%.
• Financing mechanics: Lucid Capital Markets served as exclusive placement agent (fee: 5.0% of gross proceeds, 2.5% for certain investors). Warrants issued to PIPE investors and noteholders were issued under exemptions from registration (Section 4(a)(2)).
• Registration commitments: Adial agreed to file an initial resale registration statement (Form S‑3 or available alternative) within 80 days after the Initial Closing, plus additional “milestone” registration statements when specified incremental proceeds thresholds ($5M initial; then $3M) are met. Liquidated‑damages provisions apply if registration deadlines/effectiveness are missed (1.0% of purchase price per 30 days, capped at 5.0%).

Why It Matters
This filing documents a material acquisition and a financing package that will materially change Adial’s ownership mix and increase potential dilution from conversion of preferred shares and exercise of warrants. Former Azora equityholders would hold a majority stake on a fully diluted basis under the stated assumptions, and PIPE and noteholder warrants represent a substantial potential source of new shares. The exchange that retires $5.5M of Azora debt removes that liability but replaces it with equity/warrants. Registration rights and associated timelines are important because they affect when investors can resell issued shares and because missed deadlines can trigger cash payments by Adial. Investors should watch for the company’s S‑3 filings and any future exercises/conversions that would change share count and ownership percentages.