Tilsotolimod

Ever since disappointing late-stage data on its cancer drug tanked Idera Pharmaceuticals’ stock last year (unhelped by an ill-fated collaboration with AbbVie ), execs have been tightening the belt while searching for something — anything — that may dig the company out of its hole. More than a year later, they finally found it. In an acquisition that is reminiscent of a reverse merger, Idera is buying private biotech Aceragen in an all-stock deal. Instead of cancer, Idera will now be focused on rare, orphan pulmonary and rheumatic diseases. Specifically, it’s placing its hopes on ACG-701 in cystic fibrosis and melioidosis, and ACG-801 in Farber disease. Together, the companies say their cash pool will provide runway into Q3 2023, by which time Aceragen expects to have read out key clinical data. “After a thorough evaluation of strategic alternatives, we and our Board of Directors believe this acquisition represents the highest potential value creation opportunity for Idera’s stockholders,” said Vincent Milano, Idera’s CEO, who will now hand his job to Aceragen CEO John Taylor and transition to a board chair role. Idera’s former lead asset, tilsotolimod, is a toll-like receptor 9 agonist that initially spurred promising response rates in melanoma but ultimately flunked a Phase III trial. Combinations with drugs from AbbVie and Bristol Myers Squibb didn’t produce good enough data, either, and AbbVie ultimately cut a trial short. While it had originally hoped to out-license the drug, Idera eventually opened up its scope for the strategy alternatives it could consider. The biotech estimates that Aceragen’s lead programs will have a combined annual peak sales potential of $650 million. But it’s still got a lot to prove.

Two rare disease companies - Idera Pharmaceuticals and Aceragen - are merging to pursue the common goal of an FDA approval that could come as early as 2024. For Idera, the merger is something of a lifeline after its top drug candidate flopped last year. On the other side, Aceragen is now a publicly traded company less than two years after launching. The all-stock deal will leave the merged companies with $26 million on hand. Executives said this is enough cash to fund operations through August 2023. That’s when key data readouts from clinical trials are expected. Idera shareholders will end up with 33% of the combined company, which will continue to trade publicly under Idera’s stock symbol IDRA. But it’s Aceragen’s pipeline that will become the focus of the new company, and Aceragen’s executives will fill most of the new company’s top posts. Idera reported a second-quarter loss of $5.3 million compared with a $7.6 million loss over the same period last year. The merger comes after the March 2021 failure of Idera’s pivotal Phase III trial of tilsotolimod, a synthetic Toll-like receptor 9 agonist, as a treatment for melanoma. The molecule was Idera’s star product. Its failure prompted the Philadelphia-area company to look for 'strategic alternatives',” said Idera CEO Vincent Milano during a conference call Wednesday. Aceragen’s lead drug candidates are ACG-701 for cystic fibrosis and melioidosis patients. ACG-701 is the company’s take on sodium fusidate, a 50-year-old antibiotic. Aceragen’s formulation of sodium fusidate is meant to treat acute pulmonary exacerbations, a life-threatening infection, in cystic fibrosis patients. The FDA granted Orphan, Fast Track and Qualified Infectious Disease Product status to ACG-701 for this indication. Phase II clinical trial enrollment is expected to start by the end of the year. Aceragen also received a $51 million grant from the U.S. Defense Threat Reduction Agency to develop sodium fusidate as a potential medical countermeasure to melioidosis, a bacterial infection commonly known as Whitmore’s disease. ACG-701 is undergoing Phase II clinical trial testing. The company is targeting the U.S. government for a contract to add to the national stockpile if approved. “We believe the commercial potential of both these programs is strong,” said Aceragen CEO John Taylor during the call. Taylor was also appointed CEO of the new company. Aceragen Chief Medical Officer Carl Kraus will serve the same role at the merged company, as will Chief Operating Officer Daniel Salain. Idera’s CEO Vincent Milano will become chair of the board. Idera’s General Counsel Bryant Lim and Chief Financial Officer John Kirby will remain in their roles at the new company. Aceragen launched in May 2021 with a $35 million investment from Raleigh, N.C.-based NovaQuest.The Durham, N.C.-based Aceragen last year acquired Arrevus, which was also developing treatments for rare diseases.