RARE Daily

OnKure Enters Reverse Merger with Reneo Pharma

May 14, 2024

Rare Daily Staff

Public biotech Reneo Pharmaceuticals and privately held OnKure said they have entered into a definitive merger agreement to combine the companies in an all-stock transaction.

The merger will create a Nasdaq-listed, clinical-stage company that will operate under the name OnKure and will focus on advancing OnKure’s pipeline candidates targeting oncogenic mutations in phosphoinositide 3-kinase alpha (PI3Kα), including its lead program OKI-219, which is currently in a phase 1 clinical trial for the treatment of solid tumors.

Reneo was focused on rare genetic mitochondrial diseases, but after its lead candidate failed in a pivotal study in adults with primary mitochondrial myopathies, the company suspended the trial and implemented immediate cost savings that included cutting 70 percent of its workforce.

“Following a thorough evaluation of strategic alternatives, the Reneo board of directors and management team believe that this anticipated transaction represents a compelling opportunity to deliver shareholder value as the OnKure team advances their PI3Kα inhibitors,” said Mike Grey, executive chairman and founder of Reneo Pharmaceuticals.

In connection with the transaction, Reneo has entered into a subscription agreement for a $65 million private investment in public equity financing expected to close concurrently with the closing of the merger.

Including proceeds from the concurrent PIPE financing, the combined company is expected to have approximately $120 million of cash, cash equivalents, and short-term investments at closing. The merger and concurrent PIPE financing are expected to close in 2024.

Pre-merger Reneo stockholders are expected to own approximately 31percent of the combined company, and pre-merger OnKure stockholders are expected to own approximately 69 percent of the combined company, upon the closing of the merger, exclusive of the PIPE financing. The percentage of the combined company that each company’s former stockholders are expected to own may be adjusted based on Reneo’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 2024, subject to customary closing conditions, including approval by the stockholders of each company.

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