Chinook, Aduro Merger Plan Sets Up New Kidney Disease-Focused Biotech

Xconomy Seattle — 

Chinook Therapeutics and Aduro Biotech, each pursuing different approaches to the same rare disease, are now converging on a path to combine their operations into a single company focused on developing new treatments for kidney disorders.

The merger agreement announced Tuesday will result in a business whose ownership will be split evenly between the shareholders of Berkeley, CA-based Aduro (NASDAQ: ADRO) and privately held Chinook. The combined company will do business under the Chinook name and operate from its current headquarters, which are in Vancouver, BC, and Seattle. Chinook’s management will lead the combined company, which is expected to trade on the Nasdaq under a new stock symbol, “KDNY.”

Chinook is a relative newcomer to the life sciences scene, having just launched last August with a pipeline of four compounds in preclinical development for kidney diseases. The company was formed by Versant Ventures, which led its $65 million Series A round of funding. In January, Chinook paid AbbVie (NYSE: ABBV) an undisclosed amount to acquire atresentan, a drug tested as a potential treatment for kidney disease in patients with chronic kidney disease and type 2 diabetes. AbbVie stopped a Phase 3 clinical trial in 2017 after reporting that the study was revealing fewer endpoints than expected. The company said at the time the decision had nothing to do with safety risks.

Under Chinook, atrasentan is being prepared for Phase 3 testing in immunoglobulin A nephropathy (IgAN), a rare autoimmune condition in which deposits of immunoglobulin A, an antibody, build up in the kidney, causing inflammation and damage to the organ. The damage is pronounced in the glomeruli, the units of the kidney that filter waste. This damage leads to leaking of blood into the urine and can progress to end-stage renal failure. At that point, patients may need dialysis or kidney transplant. AbbVie designed its small molecule drug to block the endothelin-A receptor, which in turn blocks the effects of a peptide that negatively affects kidney function.

Aduro aims to address IgAN in a different way. The company’s drug, BION-1301, is an antibody that blocks “A Proliferation Inducing Ligand” (APRIL), preventing it from binding to receptors believed to be key to the disease. In Phase 1 testing so far, Aduro says its drug has been well tolerated by patients and no serious adverse events have been reported. Separate from the merger announcement, Aduro said Tuesday that preclinical and early Phase 1 data for BION-1301 will be presented during next week’s virtual meeting of the European Renal Association—European Dialysis and Transplant Association.

Speaking on a Tuesday conference call to discuss the merger, Chinook CEO Eric Dobmeier described BION-1301 as offering a “potential disease-modifying approach.”

“We believe the proposed mechanisms of action of atresentan and BION 1301 are complementary and could potentially treat a broad spectrum of patients with IgAN and other primary glomerular diseases,” he added.

Kidney disease was not Aduro’s initial focus. Founded in 2000 as Oncologic, the company has spent most of its history developing cancer drugs, some of which are still in its pipeline. The biotech struck up research alliances with big pharmaceutical companies, including a cancer vaccines pact with Johnson & Johnson (NYSE: JNJ) and stimulator of interferon genes (STING) alliances with Novartis (NYSE: NVS) and Eli Lilly (NYSE: LLY). In 2018, J&J ended its partnership with Aduro. Months later, in January 2019, Aduro announced it would cut more than one-third of its workforce in a corporate restructuring intended to devote its remaining resources to its most advanced cancer programs.

In the second quarter of 2019, Aduro began evaluating “strategic alternatives” that included mergers with various companies. Most of the interest focused on BION-1301, CEO Stephen Isaacs said during the conference call. The board of directors determined that Chinook provided the best opportunity. Aduro will evaluate options for finding new homes for its non-kidney assets, including the cancer programs that are already partnered, Isaacs added. Current Aduro shareholders will receive contingent value rights, which entitle them to cash payments related to deals that the company makes for its non-kidney programs. Those rights extend for up to 10 years after the Chinook merger closes. Isaacs said he will step down from Aduro and its board of directors.

The boards of both Aduro and Chinook have approved the merger, which is expected to close in the second half of this year. The combined company will have $145 million in cash from Aduro and $10 million from Chinook. Chinook’s investors have also agreed to pump an additional $25 million into the new company. In the coming 12 to 18 months, the new Chinook is expected to have Phase 1 results for BION-1301 in IgAN and a Phase 3 study started for atrasentan, also for IgAN. In addition, the company plans to start a Phase 2 study of atrasentan in primary glomerular diseases and a Phase 1 study of CHK-336 in an ultra-rare, but so far, unspecified, kidney disease.

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