A new biotechnology company with plans to develop better bowel disease drugs emerged Thursday with hundreds of millions of dollars in funding and a deal that places it on the public markets.
Spyre Therapeutics will combine with the struggling Aeglea BioTherapeutics in a merger that’s taking place alongside a private financing led by Fairmount Funds Management and joined by more than a dozen other blue-chip investors.
Spyre is the second spinout of antibody developer Paragon Therapeutics, which last year split off another immune disease drugmaker named Apogee Therapeutics.
Like Apogee, Spyre aims to develop more effective medicines for the kinds of inflammatory conditions that have lately been the focus of intense drug research across the pharmaceutical industry. Spyre’s focus is inflammatory bowel disease, or IBD, for which it is developing antibody drugs that work in ways familiar to drug hunters already in the space.
Its lead drug candidate is aimed at a target called a4b7, which is how Takeda’s blockbuster IBD treatment Entyvio works. Another targets a protein called TL1A that’s now the goal of a competitive development race between Merck & Co., Roivant Sciences and Teva Pharmaceutical. Merck recently acquired a TL1A-targeting drug via its $10.8 billion buyout of Prometheus Biosciences, while Roivant and Teva have fast tracked research of their rival medicines.
Spyre’s third disclosed target is IL-23, a protein targeted by AbbVie’s Skyrizi and Johnson & Johnson’s Tremfya.
All of the company’s drugs are preclinical, although Spyre aims to begin human testing of its a4b7 and TL1A programs in 2024, with data for the former expected the same year.
It’s a pipeline that attracted a deep bench of investors, which put together the private investment in public equity, or PIPE, that will give the combined Spyre-Aeglea company $210 million in funding before expenses. That cash will allow the merged firm to operate into 2026.
The merger was structured as a stock-for-stock deal in which Spyre equity was converted into Aeglea common stock and Series A preferred stock. Shareholders in Aeglea will own just under 5.5% of the combined company, which will be led by Aeglea and Spyre executives.
Aeglea shareholders will also receive a contingent value right for certain stock or cash payments should the combined company sell or otherwise dispose of Aeglea’s legacy assets within one year of the deal.
For Aeglea, the combination is a dramatic end to a long road of restructurings and layoffs that forced it in April to consider strategic alternatives.
“Our management and our board of directors thoroughly explored numerous strategic alternatives and believe this acquisition of Spyre provides a phenomenal outcome for our stockholders," said Jonathan Alspaugh, Aeglea’s CFO, in a statement.