Elicio Therapeutics has agreed to merge with struggling Angion Biomedica in a deal that gives the privately held vaccine maker, which unsuccessfully tried to go public last year, a new path to Wall Street.
Under the deal announced Tuesday, Elicio shareholders will own about 66% of the new company, with Angion stockholders getting the remainder. The new biotech take Elicio’s name, be run by the startup’s executive team and continue development of a cancer vaccine in Phase 1 testing. Angion will also provide Elicio with a $10 million bridge loan.
The transaction should close in the second quarter, after which the stock will trade on the Nasdaq stock exchange under the symbol “ELTX,” the companies said.
The agreement is the latest example of how biotechnology startups are responding to a difficult climate for initial public offerings. Only 22 biotechs priced new stock offerings in 2022, a nearly 80% decline from a year prior, according to data from BioPharma Dive. Some investors aren’t expecting that trend to change, at least in the near term.
“Maybe there might be pockets where some companies are able to go out,” said Clare Ozawa, a managing director at biotech company creator Versant Ventures, in an interview last week. “But we’re definitely not relying on that to happen in the current environment.”
IPOs are an important source of funds for growing biotechs and of returns for their investors. Without access to those offerings, companies are being forced to find different ways to finance their research. Some are staying private for longer, building more conservatively or forming partnerships earlier. Increasingly, companies are topping off existing funding rounds because they’re having trouble finding new investors, some say.
Right now, “it’s just much easier to extend the last round at the same valuation as opposed to pricing a new round,” said Chris Miller, a partner with the law firm Troutman Pepper who works on private financing deals.
Reverse mergers are an option too. Such deals enable a startup to quickly move onto Wall Street by combining with the shell of a distressed, publicly traded company. They also allow the investors of a struggling biotech to bet on the future of a new company. Since last summer, Kineta, Disc Medicine, Enliven Therapeutics and, most recently, Carisma Therapeutics have opted for a reverse merger instead of an IPO. (Although Carisma has run into some opposition to its plans.)
Elicio outlined plans to go public last June and set terms the following month for an offering projected to raise about $40 million. But Elicio canceled the offering in September and reportedly moved to secure funds privately instead. It wasn’t alone: Several biotechs, including cell therapy developer Artiva Biotherapeutics and gene therapy maker Affinia Therapeutics, changed course last year after initially seeking an IPO.
Elicio’s new direction is a combination with Angion, a biotech that has lost nearly all of its value since raising $80 million in an IPO in February 2021. Angion went public to advance a kidney disease drug, but stopped Phase 2 trials in June due to safety concerns and began evaluating strategic alternatives. That search led to a merger with Elicio, which will use Angion’s cash reserves — it had about $55 million on hand at the end of September, according to its last quarterly earnings filing — to develop a vaccine for tumors driven by the cancer gene KRAS.
That vaccine, ELI-002, is being tested in a Phase 1 study in patients with different KRAS-driven tumors. A second trial is expected to start later this year, the companies said Tuesday.
Upon filing for an IPO last year, Elicio had raised about $65 million in private funding. Clal Biotechnology Industries was its largest investor, holding about 20% of the company's shares.