This article has been corrected to reflect that the combined company's name will be Neurogene, Inc.
NEW YORK – Neurogene and Neoleukin on Tuesday announced they would merge in an all-stock transaction to advance Neurogene's portfolio of genetic medicines for rare neurological diseases.
In parallel with announcing the merger, New York-based Neurogene announced an oversubscribed $95 million private financing led by new and existing investors including Great Point Partners, EcoR1 Capital, Redmile Group, Samsara BioCapital, Janus Henderson Investors, funds and accounts managed by BlackRock, Casdin Capital, Avidity Partners, Arrowmark Partners, Cormorant Asset Management, Alexandria Venture Investments, and an unnamed healthcare investment fund.
Under the terms of their merger agreement, Seattle-based biopharmaceutical firm Neoleukin will issue shares of its common stock to Neurogene stockholders in exchange for canceling their shares of Neurogene capital stock and Neurogene becoming a wholly owned subsidiary of Neoleukin. Neoleukin stockholders are expected to own around 16 percent of the combined company and Neurogene stockholders, including those buying Neurogene shares in the private financing, are expected to own approximately 84 percent.
Once the merger closes, which is expected to occur in Q4 2023, the combined company will be named Neurogene, Inc. At that point, the proportion of the combined company that Neurogene stockholders and Neoleukin stockholders will own is subject to certain adjustments including the amount of net cash Neoleukin has at closing. Neoleukin stockholders can also receive payments related to the firm's legacy assets or savings incurred in the merger.
The cash that Neoleukin and Neurogene have at closing plus the proceeds from the private financing is expected to yield $200 million in cash or cash equivalents for the combined firm. The firm will use the funds to advance Neurogene's gene therapies for Rett syndrome and CLN5 Batten disease and fund operations through the second half of 2026.
NGN-401, Neurogene's adeno-associated virus serotype 9 (AAV9)-vector gene therapy for Rett syndrome, is designed to deliver the MECP2 gene, mutations in which are a key cause of the rare neurodevelopmental disorder. The drug uses Neurogene's proprietary Expression Attenuation via Construct Tuning (EXACT) gene regulation platform, which Neurogene claims can deliver targeted levels of MECP2 transgene expression needed to treat the disease without causing the toxicities seen with traditional gene therapies. The US Food and Drug Administration earlier this year cleared an investigational new drug application for NGN-401, and Neurogene is planning to start a Phase I/II trial in female pediatric Rett syndrome patients in the second half of this year.
NGN-101 is Neurogene's gene therapy for the ocular and neurological manifestations of CLN5 Batten disease. The treatment is designed to use an AAV9 vector to deliver CLN5, the gene that is mutated in children with this rare neurodegenerative disease and causes toxic deposits to accumulate in organs. In preclinical studies, NGN-101 appears to slow or stop vision and mobility deficiencies characteristic of the disease, and Neurogene is currently evaluating the drug in a Phase I/II pediatric trial. The company is expecting a data readout from this study in the second half of 2024.
Neurogene also has an undisclosed discovery-stage therapy candidate that it hopes to move into clinical trials in 2025.
"We believe EXACT represents a meaningful technological advance for the gene therapy field, allowing us to develop therapeutic product candidates for complex diseases with attractive market opportunities not addressable with conventional gene therapy," Neurogene CEO and Founder Rachel McMinn said in a statement, adding that the available capital will also support internal manufacturing capabilities that allow the firm to be financially and strategically flexible.
The combined company will be led by McMinn and others on Neurogene's management team. Both companies' board of directors have approved the merger; the combined firm's board of directors will include five members chosen by Neurogene and two chosen by Neoleukin.
TD Cowen is Neurogene's exclusive financial adviser, and TD Cowen and Stifel are placement agents on Neurogene's planned concurrent private financing. Gibson Dunn & Crutcher is Neurogene's legal counsel, and Cooley is legal counsel to the placement agents. Leerink Partners is Neoleukin's exclusive financial adviser, and Fenwick & West is its legal counsel.