- Yumanity Therapeutics plans to come to the Nasdaq stock exchange through a reverse merger with Proteostasis Therapeutics, a 15-year-old biotech that has been developing drugs for cystic fibrosis.
- The deal announced Monday would have Proteostasis acquiring all of Yumanity's stock in exchange for newly-issued Proteostasis shares. After closing, which is expected in the fourth quarter, current Proteostasis shareholders will own about a third of the combined company while Yumanity shareholders own the remaining two thirds.
- The combined company will operate under the Yumanity name and continue the Boston biotech's mission of creating drugs for neurodegenerative diseases like Alzheimer's, Parkinson's and ALS that are believed to be caused by misfolded proteins. In the meantime, Proteostasis plans to sell off its cystic fibrosis drugs. It also has reduced its workforce by 79%, leaving just five full-time employees.
Proteostasis has had a hard time convincing investors that it poses a threat to Vertex Pharmaceuticals, which came to dominate cystic fibrosis drug development over the last decade. By early 2016, when Proteostasis made the leap to the public markets, the company ended up selling shares at a significantly lower price than it had initially projected.
The gap between the two biotechs only grew larger in 2018, as data from a small study raised doubts that one of Proteostasis' experimental drugs could stand up to Vertex's marketed therapies.
More recently, Proteostasis touted results from a larger study that tested three of its drug candidates in combination. Based on the results, the company planned to initiate this year two studies meant to support an approval filing. A portion of one of those studies has enrolled 502 participants and should produce data in the fourth quarter, according to an Aug. 24 statement from Yumanity and Proteostasis.
Investors, however, still appear unconvinced that this regimen could challenge Vertex. As of Friday, Proteostasis shares were trading at $1.30 apiece, roughly where they settled after the biotech first reported results from its three-drug combo last year.
Now the company is searching for a new home for its drugs. Proteostasis said proceeds from any sale of its cystic fibrosis assets will be shared with investors though so-called contingent value rights. Stockholders would get a portion of the returns from any additional deal, such as the sale or licensing of drugs, between now and the closing of the Yumanity deal, or within nine months post-merger.
For Yumanity, the deal provides a quick and clear route to a Nasdaq listing, allowing it to bypass the painstaking process of an initial public offering.
Yumanity claims there's also a level of synergy between the two companies, given that Proteostasis' cystic fibrosis research could strengthen the combined company's knowledge of misfolded proteins.
"We believe the combined company is well-positioned to advance multiple programs into and through the clinic, including Yumanity's lead candidate YTX-7739, currently in Phase 1 trials for the treatment of Parkinson's disease," Meenu Chhabra, CEO of Proteostasis, said in the Aug. 24 statment.
Yumanity was founded in 2014 and has raised more than $100 million from investors such as Pfizer, Biogen, Merck & Co., Sanofi Ventures and Alexandria Venture Investments. In June, the company inked a research deal with Merck to develop new drugs for ALS and frontotemporal lobar dementia.