Lumos Pharma to Go Private with Double Point Ventures Merger at $4.25/Share Plus CVR

Lumos Pharma, Inc., a clinical-stage biopharmaceutical company concentrating on treatments for rare diseases, revealed it has signed a definitive merger agreement with Double Point Ventures LLC (DPV). Under this agreement, DPV will acquire all outstanding shares of Lumos Pharma’s common stock for $4.25 per share in cash, alongside a non-transferable, unsecured Contingent Value Right (CVR) per share contingent on the achievement of specific milestones. This decision follows an extensive review of financial and strategic alternatives by Lumos Pharma’s Board of Directors, who, with the aid of legal and financial advisors, concluded that DPV's acquisition is in the best interest of shareholders. The Board has approved the merger agreement and encourages shareholders to tender their shares in the offer. The transaction is anticipated to conclude by the end of 2024, pending certain closing conditions, including the tendering of a majority of Lumos Pharma's outstanding shares.

Approximately 17.7% of Lumos Pharma’s common stockholders, including officers and directors, have entered into support agreements, committing to tender their shares and support the merger. Concurrently, Lumos Pharma and the FDA have agreed on the final design for the Phase 3 trial of LUM-201, a novel oral growth hormone secretagogue aimed at treating pediatric growth hormone deficiency (PGHD). This pivotal trial will be global, multi-site, double-blinded, and placebo-controlled, involving two cohorts randomized 2:1 to receive either 1.6 mg/kg/day oral LUM-201 or a placebo for 12 months. The primary endpoint is comparing the annualized height velocity (AHV) between the LUM-201 and placebo groups. The trial, which will span approximately 80 global sites, is expected to initiate in the second quarter of 2025, significantly reducing risks for the Phase 3 program.

Rick Hawkins, Lumos Pharma’s Chair and CEO, expressed satisfaction with finalizing the Phase 3 trial design and signing the merger agreement with DPV. He thanked his colleagues, the endocrine community, and investors for their support in developing LUM-201 to enhance the lives of children with growth hormone deficiency. Hawkins believes the transaction with DPV is the optimal path forward for LUM-201’s development.

The merger agreement, structured as a tender offer by a DPV subsidiary for all outstanding Lumos Pharma shares, includes a $4.25 per share cash payment at closing and a CVR for each share. The CVRs entitle shareholders to additional contingent cash payments upon achieving certain milestones related to LUM-201’s global net revenue by 2037, transactions involving Lumos Pharma or its assets within 18 months of closing, or revenue-generating agreements entered within 18 months of closing tied to Lumos Pharma’s legacy products. The purchase price equates to an equity value of approximately $38 million, representing a 7.6% premium to Lumos Pharma’s closing share price on October 22, 2024, and a 10.5% premium to its 30-day volume-weighted average price.

The merger is not contingent on financing, as DPV will utilize its existing cash resources. Post-merger, Lumos Pharma will function as DPV’s indirect wholly-owned subsidiary, continuing operations independently from its headquarters in Austin, Texas. Given the merger offer, Lumos Pharma will not host a third-quarter 2024 financial results call but will file its quarterly report as required.

Advisors for the transaction include Piper Sandler as the exclusive financial advisor to Lumos Pharma, with Cooley LLP and Wilson Sonsini Goodrich and Rosati, P.C. acting as legal counsel. Foley & Lardner LLP is serving as legal counsel to DPV.

For the third quarter ending September 30, 2024, Lumos Pharma’s operating expenses were $8.4 million, with a net loss of $7.5 million. The cash balance was $13.5 million as of the same date, and the company has withdrawn its prior cash runway guidance.

Lumos Pharma focuses on developing and commercializing therapies for rare diseases, led by a management team with extensive experience in this field. Its lead candidate, LUM-201, is being evaluated in Phase 2 clinical studies for PGHD and holds Orphan Drug Designation in the US and EU, aiming to transform the global growth hormone market from injectable to oral therapy.