Korro Bio and Frequency Therapeutics to Merge and Focus on Rare Disease Therapeutics
July 14, 2023
Rare Daily Staff
RNA editing biotech Korro Bio and Frequency Therapeutics have entered into a definitive merger agreement to combine the companies in an all-stock transaction.
The merger agreement has been unanimously approved by the boards of directors of both companies. The combined company will focus on the advancement of Korro Bio’s portfolio of RNA editing programs, is expected to operate under Korro Bio, Inc. and will apply to trade on Nasdaq under the ticker symbol KRRO.
Korro Bio has secured commitments from a syndicate of life sciences investors for a planned concurrent $117 million financing, co-led by Surveyor Capital (a Citadel company) and Cormorant Asset Management and participation from Atlas Venture, NEA, Platanus, Qiming Venture Partners USA, MP Healthcare Venture Management, Eventide Asset Management, Fidelity Management & Research Company LLC, Invus, Point72, Verition Fund Management, Monashee Investment Management, Sixty Degree Capital and additional investors.
The financing is expected to close immediately prior to the completion of the merger. The combined company is expected to have approximately $170 million in cash, cash equivalents and marketable securities at close after estimated transaction expenses, which is expected to provide cash runway through several value-creating milestones and into 2026. The merger and related financing are expected to close in the fourth quarter of 2023, subject to approval by Frequency Therapeutics’ stockholders and other customary closing conditions.
“RNA editing, specifically utilizing our OPERA (Oligonucleotide Promoted Editing of RNA) platform, holds significant promise to transform the therapeutic landscape for rare and common diseases. The ability to make a single base change on RNA using a simple drug product provides an opportunity to modify disease in an unprecedented manner,” said Ram Aiyar, CEO of Korro Bio. “The power of our OPERA platform is exemplified by our lead program in AATD, where we have demonstrated an increase of normal A1AT protein to 85 percent of total protein in circulation, which has the potential of disease-modifying effects.”
Korro Bio is advancing its lead program for AATD to a clinical trial and intends to submit a regulatory filing in the second half of 2024. AATD is an inherited disease that results from a single genetic defect that manifests itself as a broad spectrum of clinical pathologies. A majority of the patients are diagnosed later in life, having multiple clinical effects including liver disease and lung disease, eventually leading to organ transplant in some cases. Studies suggest that clinical unawareness of AATD results in a significant number of patients that go undiagnosed or misdiagnosed with approximately 100,000 patients in the U.S. currently identified with AATD. Korro Bio’s lead program is focused on precisely and transiently editing the genetic mutation in RNA rather than permanently altering DNA. Korro Bio has also demonstrated the ability to edit within the coding region of the SERPINA1 gene showing translation from the PiZ mouse model to non-human primates.
“Following comprehensive review and consideration of our strategic options, management and our Board of Directors believe the merger with Korro Bio provides the best opportunity for the company and its stockholders,” said David Lucchino, CEO of Frequency Therapeutics. “Korro Bio’s RNA editing technology leverages genetics transiently, expanding the target space to intervene in biology in a unique manner. We are confident in their ability to bring forward important genetic medicines with the potential to transform the lives of patients.”
Korro Bio’s RNA editing platform enables a breadth of indications with an initial focus on six potential programs that are all wholly owned, including AATD.
Pre-merger Frequency Therapeutics stockholders are expected to own approximately 8 percent of the combined company and pre-merger Korro Bio stockholders (including those purchasing Korro Bio shares in the private financing discussed above) are expected to own approximately 92 percent of the combined company. Under the terms of the merger agreement, stockholders of Korro Bio will receive newly issued shares of Frequency Therapeutics common stock pursuant to a formula set forth in the merger agreement. The percentage of the combined company that Frequency Therapeutics stockholders will own upon the closing of the merger is further subject to adjustment based on the amount of Frequency Therapeutics’ net cash at the time of closing.
Frequency Therapeutics has discontinued development of its remyelination program for Multiple Sclerosis as it explores strategic alternatives for the program. If Frequency Therapeutics has not otherwise monetized its remyelination program for Multiple Sclerosis prior to the closing of the proposed merger, Frequency Therapeutics stockholders of record will be issued a contingent value right (CVR) for each outstanding share of Frequency Therapeutics common stock held by such Frequency Therapeutics stockholder prior to the closing of the proposed merger. The CVR would represent the right to receive certain cash payments from proceeds received by Frequency Therapeutics related to its remyelination program for multiple sclerosis that is in preclinical development.
Photo: Ram Aiyar, CEO of Korro Bio
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