U.S. biopharma company Yumanity Therapeutics, Inc. is selling off its lead clinical-stage neurodegenerative product candidate YTX-7739 to Janssen Pharmaceutica NV, and also entering a merger with Kineta, Inc.
YTX-7739, as well as Yumanity’s discovery-stage neuroscience product candidates and targets are being sold to Janssen, part of the Janssen Pharmaceutical Companies of Johnson & Johnson, for $26M in cash.
Yumanity said it plans to distribute any remaining available cash proceeds from the sale to Janssen to Yumanity stockholders with a one-time dividend, minus any amounts retained for outstanding obligations and net cash requirements associated with the proposed merger between Yumanity and Kineta.
Kineta will become a wholly-owned subsidiary of Yumanity in an all-stock transaction, resulting in a combined publicly traded company re-named Kineta, Inc., which will focus on immuno-oncology and continue Yumanity’s ongoing research collaboration with Merck & Co. in amyotrophic lateral sclerosis and frontotemporal lobar dementia.
Upon completion of the proposed merger, current Kineta stockholders are expected to own approximately 85% of the combined company and current Yumanity stockholders are expected to own approximately 15% of the combined company.
The combined company expects to raise a concurrent private investment in public equity led by Growth & Value Development Inc.
“After evaluating Yumanity’s strategic alternatives, management and our board of directors believes that the proposed transactions are in the best interest of Yumanity’s stockholders,” said Richard Peters, president and CEO of Yumanity.
“We are excited that our lead clinical-stage neurology asset and unpartnered assets will continue to be developed and we are very enthusiastic about Kineta’s innovative oncology pipeline.”
Kineta’s lead asset is KVA12.1, a VISTA blocking immunotherapy to address the problem of immunosuppression in the tumor microenvironment. The company said it may be an effective immunotherapy for many types of cancer including NSCLC (lung), colorectal, renal cell carcinoma, head and neck, and ovarian.
Kineta is also developing immunotherapies to address the problems of exhausted T cells and immunologically silent tumors.
“The proposed merger with Yumanity is a unique opportunity for Kineta to build a leading public immuno-oncology focused company with a diversified pipeline of new treatments for cancer patients,” said Shawn Iadonato, CEO of Kineta. “Kineta has demonstrated expertise in developing novel immunotherapies that will enable us to advance our lead programs towards multiple milestones over the next 18 months.”
Iadonato will be CEO of the new company, which will be based in Seattle.
The two transactions are expected to close in the second half of 2022, subject to customary closing conditions, including approval of both transactions by the stockholders of Yumanity.
In February, Yumanity announced a restructuring of the company and a reduction of 60% of its workforce. A month earlier, the U.S. Food and Drug Administration placed a partial clinical hold on multidose clinical trials of YTX-7739, currently being developed for the treatment of Parkinson’s disease.
The FDA did not stop all clinical programming and allowed Yumanity’s planned single dose clinical trial to proceed. The partial clinical hold suspends initiation of multiple dose clinical trials in the U.S. until the FDA’s questions have been addressed.
Cover image: Shutterstock