Orchard Therapeutics Enters Strategic Financing Agreement for up to $188 Million
March 7, 2023
Rare Daily Staff
Orchard Therapeutics has entered into a securities purchase agreement for the sale of ordinary shares and warrants in a private placement that could bring in up to $188 million at increasing valuations following the achievement of U.S. regulatory milestones for OTL-200 for metachromatic leukodystrophy.
RA Capital Management led the financing, which attracted new and existing investors Deep Track Capital, Cowen Healthcare Investments, Woodline Partners LP, and Zentree Investments, among others.
“This commitment from top-tier investors is a significant demonstration of confidence ahead of our anticipated regulatory filing for OTL-200 in the U.S.,” said Frank Thomas, president and chief operating officer of Orchard Therapeutics. “The financing will provide important capital to accelerate the commercialization of Libmeldy and advance the other programs in our HSC gene therapy platform. We believe the deal’s innovative structure provides additional committed capital at progressively higher valuations as OTL-200 advances towards potential regulatory approval in the United States.”
Metachromatic leukodystrophy (MLD) is caused by a mutation in the arylsulfatase A (ARSA) gene that results in the accumulation of sulfatides in the central and peripheral nervous systems and other areas of the body, including the liver, the gall bladder, kidneys, and/or spleen. Over time, the nervous system is damaged and patients with MLD will experience neurological problems, such as motor, behavioral and cognitive regression, severe spasticity and seizures, making it more and more difficult to move, talk, swallow, eat and see. Currently, there are no effective treatments for MLD.
OTL-200 is an ex vivo, autologous, hematopoietic stem cell-based gene therapy developed for the treatment of MLD that Orchard acquired from GSK in April 2018. OTL-200 originated from a collaboration between GSK and the San Raffaele Hospital and the Telethon Foundation, acting through their joint San Raffaele-Telethon Institute for Gene Therapy in Milan.
Orchard intends to use the net proceeds from the offering to support its growing commercial capabilities, including expanding its commercialization efforts of Libmeldy (OTL-200) in Europe, preparing for a potential BLA submission and approval for OTL-200 in the U.S., advancing its clinical and pre-clinical stage HSC gene therapy programs and servicing its existing outstanding debt, as well as for general corporate purposes.
Under the terms of the agreement, the securities will be sold as a unit comprised of ten ordinary or non-voting ordinary shares plus a warrant to purchase 11 ordinary or non-voting ordinary shares. At the initial closing, expected on or about March 10, 2023, investors will receive a unit at a purchase price of $6.00 (or $0.60 per ordinary share plus a portion of a warrant) for an aggregate total of $34 million in proceeds and the issuance of 56.7 million shares. The initial closing is expected to follow the company’s previously announced change to its American Depositary Shares to ordinary shares ratio from 1:1 to 1:10.
At the second closing, investors have committed to purchase additional units at a purchase price of $8.00 per unit (or $0.80 per ordinary share plus a portion of a warrant) for aggregate proceeds of $34 million and the issuance of 42.5 million shares. The second closing is subject to the company’s public announcement of its intention to submit a biologics license application with the U.S. Food and Drug Administration (following receipt of minutes from the Company’s pre-BLA meeting with the FDA currently scheduled for the second quarter of 2023) and shareholder approval for authority under U.K. law to allot the shares issuable upon exercise of the warrants.
A total of 109.1 million warrants are being sold in the offering will have an exercise price of $1.10 per share if OTL-200 is approved by the FDA in 2024 and an exercise price of $0.95 per share if OTL-200 is approved by the FDA after 2024. The warrants will expire at the earlier of March 10, 2026 or, assuming shareholder approval for authority under U.K. law to allot the shares has been obtained, 30 days after the Company announces FDA approval of OTL-200 in the U.S.
Photo: Frank Thomas, president and chief operating officer of Orchard Therapeutics
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