For the second time in a week a Canadian drug developer has unveiled plans to list publicly on Nasdaq, the bellwether exchange for biotech companies.
Privately held kidney disease drug developer Chinook Therapeutics Inc., which is jointly headquartered in Vancouver and Seattle, said Tuesday it had agreed to merge with publicly traded immunotherapy developer Aduro Biotech Inc. The deal is effectively a reverse takeover: Aduro will acquire all stock in Chinook from its private backers in exchange for shares, representing about half of Aduro’s outstanding common stock after the deal. But Chinook management will take over the combined entity, which will use the name Chinook Therapeutics.
News of the deal came four days after Montreal precision oncology firm Repare Therapeutics Inc. filed with the U.S. Securities and Exchange Commission to raise US$100-million in an initial public offering. “Biotech is very much alive and well in Canada,” said Jerel Davis, managing director of Versant Ventures, which backed both Chinook and Repare.
The Chinook-Aduro deal was greeted poorly by Aduro investors. Its stock sold off almost 24 per cent on the day. The company, which had been focused on developing cancer treatments, underwent a strategic review and cost-cutting effort recently and had been exploring strategic alternatives before striking the deal with Chinook. Chinook chief executive Eric Dobmeier said Aduro stock could remain volatile in the short run as shareholders who had invested because it was focused on cancer treatments sell out. “Over the long run we hope investors will see the value of this new focus on kidney disease and the pipeline we have,” he said in an interview.
The combined company will have US$200-million in cash – mostly Aduro’s, with $10-million from Chinook and another US$25-million from its private backers – and three drug candidates to treat rare, chronic kidney treatments affecting hundreds of thousands of people globally: Chinook’s atrasentan, which is set to start key effectiveness trials in humans next year; Aduro’s early-stage antibody BION-1301, which targets the same condition, known as IgA nephropathy; and a third drug in preclinical development.
Mr. Dobmeier called the opportunity to merge with a company that had cash, a drug development program in a similar area and a team managing public listing requirements “pretty unique. You don’t always find all those things in one place.”
Chinook was created last year by Versant at its company-creation lab in Vancouver, where 20 of its 35 employees, including its drug researchers, now work. The intention was to develop “orphan drugs” – those targeted at sufferers of rare, severe chronic kidney disorders for which there were no treatments, a situation that typically leads regulators to allow expedited trials to get drugs to market faster.
The company hired Mr. Dobmeier, a veteran, Seattle-based biotech executive, and raised US$65-million from Versant and two other U.S. private capital firms last year. In January, Chinook said it had licensed worldwide rights to develop atrasentan from U.S. pharma giant AbbVie Inc., which had proved the drug was safe in large-scale human trials for a different application that it abandoned a few years ago. But data subsequently published in the Lancet indicated the AbbVie study would have yielded some positive results had it continued, prompting Chinook to give the drug another shot.
Chinook is one of several companies to find early success in Canada’s flourishing biotechnology sector in recent years. Last year Canadian life sciences companies raised a record $921-million in venture capital and two companies sold out at US$1-billion valuations. Several have raised nine-figure sums to fund development, including lupus drug developer Aurinia Pharmaceuticals Inc., which last week filed the first new drug application in several years by a Canadian firm with the U.S. Food and Drug Administration.
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