Tectonic bets on GPCR heart failure drug post-Avrobio merger

Tectonic Therapeutic has successfully completed a reverse merger with AVROBIO and is set to commence trading on the Nasdaq global market under the ticker symbol 'TECX' starting June 21. This merger also included a private placement amounting to $130.7 million, secured from various U.S. and European investors. As a result of this financial boost, Tectonic reported total cash reserves of $181 million, which should be sufficient to fund its operations until mid-2027, even after accounting for final transaction-related expenses.

In conjunction with the merger, Avrobio executed a 1-for-12 reverse stock split of its common shares. Additionally, a non-transferable contingent value right was issued, allowing shareholders to receive cash payments that Tectonic might obtain in relation to Avrobio’s pre-transaction legacy assets. Avrobio’s shareholders will retain approximately 24.8% ownership of the newly formed company, while Tectonic's shareholders, including those who participated in the private placement, will hold the remaining 75.2% of the combined company’s outstanding common stock. The newly merged entity debuted on the Nasdaq with a share price of $16.80.

The merger was first announced in January as a strategic response to Avrobio’s financial difficulties. Last year, Avrobio halted development on its gene therapy programs, which led to a significant cash crunch. Additionally, Avrobio sold its investigational hematopoietic stem cell (HSC) gene therapy program for cystinosis to Novartis in an all-cash deal worth $87.5 million.

Tectonic's prominent asset, TX000045 (TX45), is designed to target G protein-coupled receptors (GCPR) by utilizing an Fc-relaxin fusion molecule. This molecule activates relaxin family peptide receptor 1 (RXFP1) in cardiovascular cells, potentially offering cardioprotective effects. Currently, TX45 is undergoing evaluation in a Phase Ia trial, targeting patients with group 2 pulmonary hypertension due to left-sided heart disease, which is one of the most common forms of pulmonary hypertension.

Dr. Alise Reicin, president and CEO of Tectonic, announced that the company plans to initiate a randomized Phase II clinical trial for TX45 in the second half of this year. This trial will focus on patients with group 2 pulmonary hypertension in the context of left heart disease with preserved ejection fraction. Results from the ongoing Phase Ia trial are anticipated by mid-2024, followed by Phase Ib results in 2025, and Phase II outcomes in 2026.

In addition to TX45, Tectonic is working on a second program targeting hereditary hemorrhagic telangiectasia (HHT), a genetic disorder that results in abnormal blood vessel growth and malformations. The company aims to select a development asset for HHT later this year and hopes to begin clinical trials in either the fourth quarter of 2025 or the first quarter of 2026.

Overall, Tectonic Therapeutic's strategic merger with AVROBIO and the successful private placement significantly bolster its financial position, enabling the company to advance its promising therapeutic programs aimed at addressing critical health conditions.