A tough setback for Arsanis has given privately held X4 Pharmaceuticals the chance to go public.
Arsanis (NASDAQ: ASNS) and X4, two Boston-area biotech firms, agreed Tuesday morning to merge in a deal that will enable X4 to become a publicly traded company. The combined company will keep the X4 name and be led by X4’s president and CEO (and former Genzyme vet) Paula Ragan. Arsanis president and CEO Rene Russo has resigned to “pursue other opportunities,” the companies said in a statement.
X4 shareholders will get 70 percent of the combined company, with Arsanis backers getting the remaining 30 percent. Both boards have approved the deal, which should close in early 2019.
The agreement marks the second time in two days a biotech has executed a reverse merger. These arrangements are used by struggling biotechs to recoup some value for shareholders, while offering private companies a quicker and cheaper way to go public than an IPO.
On Monday, Edge Therapeutics (NASDAQ: EDGE) cut a deal to merge with PDS Biotechnology after a failed trial that eviscerated its shares. Arsanis is now following a similar path. The company, co-founded in 2010 by serial biotech entrepreneur Tillman Gerngross, aimed to use antibody drugs to treat or prevent infectious diseases. It went public at $10 per share in November 2017, but lost most of that value in June when an experimental pneumonia drug failed. The company has since undergone a strategic review, cut jobs, and changed its development strategy, opting to move a drug forward for respiratory syncytial virus. That drug wasn’t mentioned in today’s press release.
Arsanis shares closed at just $1.16 apiece on Monday. Shares ticked up 22 percent in pre-market trading Tuesday morning.
X4, meanwhile, will head to the NASDAQ looking to fund the development of small molecule drugs that target a receptor called CXC chemokine receptor type 4, or CXCR4, aiming to treat cancer and certain rare diseases. Ragan started the company in 2012 with the help of seed funding from the late Genzyme CEO Henri Termeer, former Cubist Pharmaceuticals chief (and current Kaleido Biosciences CEO) Mike Bonney, and others. She hired a crew of ex-Genzyme staffers who helped developed a drug called plerixafor (Mozobil), which is also a CXCR4 blocker.
X4’s most advanced drug, X4P-001, is headed for a late-stage trial in 2019 in WHIM syndrome, a rare immunodeficiency disorder that makes patients susceptible to a variety of infections. X4 is also testing the drug in a mid-stage study in kidney cancer in combination with the Pfizer (NYSE: PFE) drug axitinib (Inlyta), with results expected next year.