Following a special purpose acquisition company (SPAC) deal that merged Peak Bio Co. Ltd. with blank-check company Ignyte Acquisition Corp., the newly-combined Peak Bio Inc. (PKBO) marked the first day of trading Wednesday with a 41% plunge that sent its shares down from $13.05 to $7.70—a reflection of just how much the market for publicly-traded biotech stock continues to reel, a year into the bear market.
Those shares continued to shrivel in early trading Thursday, falling another 36% to $4.45 as of 10:28 a.m.
South Korea-based Peak Bio focuses on developing drugs to treat oncology and inflammatory diseases. The company’s pipeline is led by PHP-303, an oral QD, reversible and highly selective small molecule acquired from Bayer and ready to enter Phase II in Alpha-1 antitrypsin deficiency (AATD). PHP-303 is designed to work by inhibiting a bioactive form of neutrophil elastase (NE). As a fifth-generation NE inhibitor, PHP-303 addresses toxicity and efficacy shortfalls from previous generation NE inhibitors, according to Peak Bio.
The company’s pipeline also includes an antibody drug conjugate (ADC) platform focused on developing therapies for oncology indications. Peak Bio’s approach to ADCs engages the immune system to enhance tumoricidal activity, an approach designed to reduce the number of treatment cycles and improving toxicity with a proprietary approach towards generating novel toxins.
Peak Bio says its most advanced ADC candidate, which targets Trop2, has shown superior linker stability and in vivo activity compared to an unnamed FDA-approved competitor with superior specificity to cancer cells and a unique ability to generate neoepitopes and synergize with immuno-oncology therapies. The company plans to Fund toxin studies in the lead ADC program, with the goal of an IND submission in the second half of 2023 and the start of a Phase Ia trial in 2024
Other uses for proceeds from the SPAC deal, according to Peak Bio:
- Fund and begin a Phase II AATD Adaptive Design study in 2022, with data expected to be read out in the first half of 2024
- Apply for a Department of Defense grant to fund a Phase II study of PHP-303 in ARDS, with an IND submission set for the first half of 2023
- Conduct research and development to identify new ADC toxins
Investors consisting of existing Peak Bio stockholders and the firm Palo Alto Investors committed to the transaction by participating in a $25 million common stock private investment in public equity (PIPE) at a purchase price of $10 per share. Also among participating investors was Peak Bio’s CEO, Hoyoung Huh, MD, PhD, a serial entrepreneur/investor with board seats on several public and private biotech companies.
In addition to the $25 million from the PIPE, Peak Bio is expected to have approximately $57.5 million in cash held in Ignyte’s trust account (assuming no Ignyte stockholders exercise their redemption rights at closing), for a total of more than $82.5 million in gross proceeds. The SPAC transaction valued the combined company at a pro forma equity value of $278 million, based on a $10 share price and no shareholder redemptions.
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