A cancer biotech’s collapse gives Neurogene a path to Wall Street

18 Jul 2023
www.biopharmadive.com
Gene TherapyAcquisitionIPO
Gene therapy startup Neurogene has reached a deal to go public through a reverse merger with cancer drug developer Neoleukin Therapeutics, the companies announced Tuesday.
The new company will operate under the name Neurogene, be led by its management team and trade on the Nasdaq stock exchange with the ticker symbol “NGNE.” The startup’s shareholders will own 84% of the company, with Neoleukin stockholders getting the remainder.
A group of investment firms have poured $95 million into the company alongside the merger, leaving Neurogene with about $200 million in cash on hand when the deal closes later this year.
The deal is the latest reverse merger involving a startup and struggling, publicly-traded biotech company. These agreements help young drugmakers pivot quickly onto Wall Street by merging with the shell of a distressed, publicly traded counterpart. They’ve also become a valuable tool during the sector’s recent downturn, which has made initial public offerings harder to pull off and equity raises for those already on Wall Street more challenging to complete.
Enliven Therapeutics, Dianthus Therapeutics and Elicio Therapeutics are among those that have inked reverse mergers since last summer. Korro Bio joined them last week.
Now Neurogene is following suit. The company has been developing gene therapies for neurological diseases, and, three years ago, raised $115 million from many of the same investors that backed the funding it announced Tuesday.
The new funds are expected to support operations into the second half of 2026, helping bankroll a pipeline that includes two gene therapies in early-stage testing in Rett syndrome and a form of Batten disease. Data from both programs are expected in 2023 and 2024.
The deal marks the end of the road for Neoleukin, which also went public through a reverse merger with a struggling company.
Neoleukin is one of several cancer drug companies that have been developing new medicines aimed at the inflammatory protein IL-2. But its lead drug, NL-201, produced disappointing results and early-stage testing and was scrapped last year. The company laid off the majority of its workforce in March and began the strategic review that led to its merger with Neurogene.
Two of the combined company’s board members will be selected by Neoleukin.
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