Graphite Bio Reverse Merges with Lenz Therapeutics
November 15, 2023
Rare Daily Staff
Gene editing biotech Graphite Bio is merging with Lenz Therapeutics, a late-stage biotech focused on improving vision, in an all-stock transaction.
The lead programs of the combined company will address presbyopia, the inevitable loss of near vision that impacts the daily lives of nearly all people over the age of 45. The combined company is expected to trade on Nasdaq under the ticker symbol “LENZ.”
Graphite Bio, in February, discontinued the development of its experimental gene-edited therapeutic for sickle cell disease, cut half its workforce, and began a process to explore and review a range of strategic alternatives focused on maximizing stockholder value.
In connection with the merger, Graphite Bio has also entered into a subscription agreement for a PIPE financing that is expected to close concurrently with the completion of the merger of $53.5 million, with a syndicate led by Lenz’s existing investors and participation from new investors.
Including the PIPE financing, the combined company is expected to have approximately $225 million of cash or cash equivalents. Graphite Bio is expected to contribute $115 million to the combined entity and expects to pay a dividend to Graphite Bio shareholders of approximately $60 million at the close of the transaction.
It is expected that the net proceeds from the merger and concurrent financing will allow the combined company to continue to build infrastructure and successfully commercialize Lenz’s lead product candidate, subject to successful completion of the ongoing phase 3 trials, New Drug Application submission and subsequent FDA approval.
“Graphite Bio ran a thorough and strategic process and we believe that this transaction represents the company’s commitment to delivering value to the Graphite stockholders,” said Kim Drapkin, CEO of Graphite Bio. “Lenz Therapeutics is strongly positioned with phase 3 lead program, addressing a very large target market with near-term, high potential, value-inflecting milestones and a well-credentialed management team to lead the combined company.”
Lenz Therapeutics’ initial focus is the treatment of presbyopia, which affects approximately 128 million people in the United States. Lenz believes that a once-daily pharmacological eye drop that can effectively and safely improve near vision throughout the full workday, without the need for reading glasses, will be a highly attractive commercial product with an estimated U.S. market opportunity in excess of $3 billion.
Lenz’s product candidates, LNZ100 and LNZ101, are preservative-free, single-use, once-daily eye drops containing aceclidine and aceclidine plus brimonidine, respectively. These product candidates are differentiated based on rapid onset, degree and duration of near vision improvement, as well as their ability to be used across the full age range of presbyopes, from their mid-40s well into their mid-70s, as well as the broadest refractive range while avoiding blurry distance vision.
Aceclidine is a miotic, a small molecule that causes pupil contraction, creating a pinhole effect that improves near vision. Unlike other miotics, such as pilocarpine and carbachol, aceclidine’s mechanism of action is pupil-selective, meaning it can reduce the pupil size below the desired 2 millimeters without overstimulating the ciliary muscles that can cause a myopic shift that can impair distance vision.
Lenz is currently conducting three phase 3 multi-center, double-masked, randomized, active and vehicle-controlled, U.S.-based efficacy and safety trials for LNZ100 and LNZ101. To date, all sites are activated and the two six-week efficacy trials, CLARITY-1 and CLARITY-2, are fully enrolled and over 95 percent enrolled, respectively and the six-month safety trial, CLARITY-3, is fully enrolled. The primary efficacy endpoint in the CLARITY-1 and CLARITY-2 trials is the percentage of subjects who achieve three-lines or greater improvement in near vision, but at three hours post-treatment rather than one hour post-treatment.
Lenz expects to report phase 3 topline results from the CLARITY trials in the second quarter of 2024 with a potential submission of an NDA for at least one product candidate in mid-2024. Lenz’s objective is to commercialize the approved product that will most effectively meet the needs of the widest range of presbyopes and best create loyalty and value based on an “all eyes, all day” brand mission.
Pre-merger Graphite Bio stockholders are expected to own approximately 35 percent of the combined company and pre-merger LENZ Therapeutics stockholders are expected to own approximately 65 percent of the combined company upon the closing of the merger, prior to the additional PIPE financing transaction. The percentage of the combined company that each company’s former stockholders are expected to own may be adjusted based on Graphite Bio’s net cash at closing.
The transaction has been unanimously approved by the Board of Directors of both companies and is expected to close in the first quarter of 2024, subject to customary closing conditions, including the approvals by the stockholders of each company.
Following the merger, the combined company will be led by Eef Schimmelpennink, president and CEO of Lenz Therapeutics, and other members of the Lenz management team. Graphite Bio will be renamed “LENZ Therapeutics, Inc.” and the corporate headquarters will be located in San Diego, CA. The merger agreement provides that the Board of Directors of the combined company will be composed of seven members, including five LENZ board members and two members selected by the Graphite Bio board.
Photo: Kim Drapkin, CEO of Graphite Bio
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