Paragon Labs, the biotechnology incubator behind more than half a dozen startups, watched another of its companies go public Tuesday through an increasingly popular type of deal.
Velaris Therapeutics is the ninth and newest spinout from Paragon, with research directed at diseases of the heart and lungs. It’s just been acquired by Alaunos Therapeutics, a former cell therapy developer that abandoned its programs in 2023 and has since been looking for a lifeline in a strategic deal. Alaunos has struggled financially over the past few years and at least twice risked losing its Nasdaq listing.
While branded an acquisition, the deal’s terms are more aligned with a “reverse merger,” where a private company slots into a public “shell” and takes control of the operations. The combined business will focus on Velaris’ drug programs, and four of its five board directors will be either from or picked by Fairmount Funds, the Philadelphia-based investment firm that founded Paragon in 2021.
Alongside the deal, Fairmount led a private stock offering that raised around $350 million to support Velaris’ research and keep the new company operational into 2029. Several other big-name investors participated in the round, including Venrock Healthcare Capital Partners, Wellington Management, Janus Henderson Investors, Perceptive Advisors and certain accounts advised by T. Rowe Price Investment Management.
“We believe this transaction and the concurrent private placement provide a strong financial foundation for us to advance an exciting pipeline and offer our stockholders a compelling opportunity to realize value,” Holger Weis, CEO and board chairman at Alaunos, said in a statement.
Until recently, many healthcare investors viewed reverse mergers as unsavory deals between a washed-out public company and a private drugmaker whose assets weren’t interesting enough to drive an initial public offering. But that image has changed drastically over the last couple years. That’s largely because of Fairmount, which showed these deals, when backed by tight groups of credible investors, can offer promising private developers a fast track to the public markets.
More than two dozen biotech reverse mergers have been announced this year — a marked increase from the 10 seen across all of 2025 — according to a database compiled by life sciences advisory firm JB Strategy Partners. That figure roughly matches the total number of IPOs so far in 2026.
In addition to Velaris, this new class has two other Paragon-forged companies: the migraine specialist Mentari Therapeutics and the brain drug developer Korsana Biosciences. Each came with private stock offerings worth hundreds of millions of dollars.
Mentari’s deal is set to close before the end of the year. If it does, eight of Paragon’s nine disclosed spinouts will have gone public through reverse mergers. The lone exception is Apogee Therapeutics, an immunology-focused biotech that raised $300 million through an IPO in 2023. Apogee then sold to AbbVie in a nearly $11 billion deal that closed last month.
Branden Berns, a partner at the law firm Gibson Dunn who helped advise Velaris, explained to BioPharma Dive that, generally, private companies exploring reverse mergers have the bandwidth to evaluate around two to five public vehicles. That was the case with Velaris. The companies also did a speedier, often harder-to-pull-off version known as a simultaneous sign and close. At least two other Paragon biotechs, Spyre Therapeutics and Damora Therapeutics, used the same approach.
"The Fairmount team is very capable at identifying appropriate counterparties and executing transactions quickly,” Berns said.
The combined company said that, along with Velaris' pipeline, it does intend to keep working on an obesity and metabolic disorders drug that Alaunos pivoted to after stepping back from cancer cell therapies.
