Avrobio strategic review culminates in merger with GPCR biotech Tectonic

30 Jan 2024
firstwordpharma.com
Phase 1AcquisitionGene Therapy
Troubled gene therapy specialist Avrobio has reached a definitive merger agreement to combine with Tectonic Therapeutic in an all-stock transaction. Once the merger becomes final, likely in Q2, the combined company will operate under the name Tectonic Therapeutic and focus on advancing the latter's GPCR-targeted assets.
The move concludes a strategic review that Avrobio started last year after it halted development of its clinical programmes and halved its workforce. "Our board believes that the merger…is in the best interests of our shareholders," said interim CEO Erik Ostrowski in a statement announcing the deal Tuesday. "Tectonic has unparalleled expertise in the biochemistry and biophysics of GPCRs, and a highly accomplished team poised to advance their rich pipeline."
Investors reacted negatively, however; Avrobio's shares slid 17% after the agreement was announced.
Catalyst roadmap
The transaction is expected help advance Tectonic's Fc-relaxin fusion protein, TX45, as well as additional candidates. "We foresee the emergence of several clinical catalysts in the coming three years," said CEO Alise Reicin, who will lead the new enterprise. "Many GPCRs remain unexplored and have proven to be challenging targets for drug development. Our GEODe platform makes it possible to discover a broad pipeline of biologics addressing some of the most challenging receptors in the class."
The plan is to focus TX45 on an area of high unmet need – pulmonary hypertension in heart failure patients with preserved ejection fraction. According to the companies, preliminary Phase Ia data point to TX45 having a potential "best-in-class" profile and monthly dosing. The compound will undergo continued Phase I testing this year and next, with a Phase II trial set to begin in 2026.
Tectonic has a second programme that addresses hereditary haemorrhagic telangiectasia, an autosomal dominant disease that causes abnormal blood vessel formation. Clinical studies are targeted for late 2025 or early 2026. Its third project is focused on fibrosis, using a bispecific approach to inhibit two different receptors with complementary modes of action.
In connection with the deal, Tectonic has raised or entered into agreements for a $130.7-million private placement with a syndicate of new and existing investors. The combined company is expected to have approximately $165 million of cash and cash equivalents at closing. Proceeds will be used to fund operations through to mid-2027.
Once the merger is finalised, pre-merger Avrobio shareholders are expected to own about 22.3% of the combined company, with roughly 40.2% to be held by pre-merger Tectonic shareholders.
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