Gene therapy developer Rocket Pharmaceuticals is on track to seek FDA approval for its flagship program, but it’s also taking care to keep the stock in its portfolio. The company agreed to acquisition of Renovacorbiotech developing gene therapy for a genetically determined form of heart failure.
According to financial terms announced Tuesday, the all-stock deal represents a capital value of $53 million, or an implied value of $2.60 for each Renovacor share. That’s a 36.8% premium to Renovacor’s closing share price at Monday’s close, but a sharp decline from a year ago, when the company went public via SPAC merger and saw its shares trade on the New York Stock Exchange for more than $10 apiece.
Cambridge, Massachusetts-based Renovacor is developing gene therapies for genetically determined cardiovascular diseases. The company appeared in 2019 with an $11 million Series A round of funding for the preclinical development of a gene therapy that addresses BLCL2-associated athanogen 3 (BAG3) mutations that lead to dilated cardiomyopathy, a severe form of heart failure. Renovacor was founded by Arthur Feldman, a cardiologist and professor of medicine at Temple University.
Renovacor’s lead program REN-001 uses an adeno-associated virus (AAV) to deliver a healthy version of the BAG3 gene to cells. In preclinical tests, Renovacor said its gene therapy led to the production of a functional BAG3 protein and improved heart function. Human testing is the next step. The company said it expects to submit an investigational new drug application in the second half of this year to support a phase 1/2 clinical trial. Renovacor’s pipeline includes discovery-stage gene therapies targeting BAG3 mutations as well as the expression and function of this gene. The company has also expanded its research to include genetically determined arrhythmogenic cardiomyopathy.
“The acquisition of Renovacor aligns with our strategy to expand our leadership position in AAV-based gene therapy for heart disease and provides us with an ideal opportunity to continue our mission to transform the lives of heart failure patients through the power of gene therapy,” Executive Rocket director Gaurav Shah said in a prepared statement.
Rocket’s cardiac gene therapy research focuses on Dannon’s disease, a weakening of the heart muscle caused by mutations in the LAMP2 gene. The Cranberry, New Jersey-based company’s Danon program, the RP-A501, is currently in Phase 1 testing. In a research note sent to investors, William Blair analyst Raju Prasad said the prevalence of BAG3-related dilated cardiomyopathy is estimated at 30,000 patients in the US, a figure expected to grow with more genetic testing and awareness of the disease. He added that Renovacor brings synergy to Rocket as both companies use AAV-9 vectors to pursue genetically defined targets.
Rocket’s most advanced program, RP-L201, has reached pivotal Phase 2 testing for leukocyte adhesion deficiency-1 (LAD-1), a rare disease caused by mutations in the gene that codes for CD18, a protein that helps white blood cells cells to adhere to blood vessels. Children born with LAD-1 are susceptible to fungal and bacterial infections that can become life-threatening. In May, Rocket reported data showing 100 percent survival in seven patients 12 months after gene therapy infusion. In its Q2 2022 financial report last month, Rocket said it expected to file for FDA approval for its LAD-1 gene therapy in the first half of 2023.
The boards of directors of Rocket and Renovacor have approved the acquisition, but the approval of the shareholders of both companies is still required. The deal is expected to close by the first quarter of next year.
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