NewLink Genetics Corporation (NASDAQ:NLNK) and Lumos Pharma, Inc.,
a private clinical stage biopharmaceutical company focused on
development and commercialization of therapeutics for rare
diseases, today announced that the companies have entered into a
definitive merger agreement. Under the terms of the agreement,
NewLink will issue Lumos Pharma stockholders NewLink common stock
in exchange for their shares in Lumos such that Lumos Pharma
stockholders will own approximately 50% of NewLink. Immediately
following the closing of the merger, Lumos Pharma will become a
wholly-owned subsidiary of NewLink, and NewLink will be renamed
“Lumos Pharma, Inc.” and will trade on Nasdaq under the symbol
“LUMO.” The combined company is expected to have offices in Austin,
TX and Ames, IA. The Boards of Directors of both companies have
approved the transaction. Major stockholders of Lumos Pharma have
also approved the transaction, and the largest stockholder of
NewLink has signed a support agreement in favor of the merger
transaction. The transaction is anticipated to close in the first
quarter of 2020.
The proposed merger would create a
biopharmaceutical company focused initially on the development of
Lumos Pharma’s lead candidate, LUM-201 (ibutamoren), a potential
oral therapy for pediatric growth hormone deficiency (PGHD) and
other rare endocrine disorders. The merger would combine the Lumos
management team’s deep experience in rare diseases and
endocrinology with NewLink’s expertise in drug development and its
solid financial position. This merger is expected to provide the
financial support necessary to expedite the clinical development of
LUM-201 for PGHD, for which the next step is the anticipated
initiation of a Phase 2b clinical trial in mid-2020. The planned
Phase 2b clinical trial will evaluate LUM-201 for children with
PGHD compared to the current standard of care: daily injections of
recombinant human growth hormone (rhGH).
“We believe this combined entity offers us a
new, strategic position in the market and has the potential to
create significant value to patients and our stockholders alike,”
said Eugene Kennedy, MD, Chief Medical Officer of NewLink.
“Rick Hawkins and the other members of the Lumos senior management
team bring longstanding experience in rare disease drug development
and corporate management, which align ideally with our new
strategic focus,” he added.
“Our board and entire team are pleased to
announce this exciting merger with NewLink,” said Rick Hawkins, CEO
of Lumos Pharma. “Working toward the development and
commercialization of novel therapies for rare diseases remains the
cornerstone of Lumos Pharma’s strategy. As we advance LUM-201 for
PGHD through later stages of clinical development, we believe there
is an established regulatory path to approval and the opportunity
for LUM-201 to become the world’s first oral therapeutic for
pediatric growth hormone deficiency. Other target indications for
LUM-201 have potential for development, supporting expanded market
opportunity for this drug candidate. With exciting prospects for
the clinic, we are optimistic about what this combined company will
achieve.”
The market for PGHD is well-established and
sizable, with current and anticipated therapies consisting of
injectable treatments of rhGH or its derivatives. LUM-201 would
potentially represent the first orally administered therapeutic for
PGHD, with the aim to supplant a prolonged treatment regimen of
frequent injections. LUM-201 is a growth hormone (GH) secretagogue,
providing a differentiated mechanism of action to treat PGHD by
increasing the amplitude of endogenous, pulsatile GH secretion.
Related to LUM-201’s mechanism of action, clinically-derived
predictive enrichment markers (PEM) are planned to be employed to
optimize the targeted patient population for future clinical trials
and treatment. LUM-201 has orphan drug designation for the
treatment of growth hormone deficiency in the U.S. and EU, as well
as an issued U.S. patent which expires in 2036 and pending patent
applications in other jurisdictions.
In addition, the combined company expects to
evaluate other opportunities to acquire or in-license assets
addressing rare diseases to grow its pipeline and expects to
continue to evaluate NewLink’s oncology portfolio to determine
value creation opportunities.
Proposed Transaction
Details
Under the terms of the merger agreement, at the
effective time of the merger, the outstanding shares of Lumos
Pharma capital stock will be converted into the right to receive a
number of newly issued shares of NewLink common stock at exchange
ratios applicable to each series of capital stock. The conversion
of all Lumos Pharma capital stock will result in former Lumos
Pharma and NewLink stockholders each owning approximately 50% of
the combined company’s outstanding common stock. In conjunction
with the transaction, the combined company plans to effect a
reverse stock split.
The transaction has been approved by the Boards
of Directors of both companies and the majority of Lumos Pharma
stockholders, which include Deerfield Management, a fund managed by
Blackstone Life Sciences, Roche Venture Fund, New Enterprise
Associates (NEA), and Santé Ventures. The largest stockholder of
NewLink, Stine Seed Farm, Inc., has also pledged to support the
agreement. The transaction is expected to close in the first
quarter of 2020, subject to the satisfaction of customary closing
conditions, including approval by the stockholders of NewLink
Genetics.
NewLink is being advised by Stifel as financial
advisor and Cooley LLP as legal counsel. Lumos Pharma is being
advised by DLA Piper LLP (US) as legal counsel.
Management and Organization
Following the merger, Richard J. Hawkins,
current Chief Executive Officer of Lumos Pharma, is expected to
become Chief Executive Officer of the combined company. Additional
management of the combined company is expected to include John
McKew, PhD, Chief Scientific Officer of Lumos Pharma as Chief
Scientific Officer of the combined company; Eugene Kennedy, MD,
Chief Medical Officer of NewLink as Chief Medical Officer of the
combined company; and Carl Langren, Chief Financial Officer of
NewLink as Chief Financial Officer of the combined company. The
Board of Directors is expected to be composed of three directors
designated by NewLink, three directors designated by Lumos Pharma,
and one director jointly designated by both companies. Upon closing
of the transaction, the combined company will operate as Lumos
Pharma, Inc. The company expects to have offices in Austin, Texas
and Ames, Iowa.
Today, NewLink Genetics announced that Nicholas
Vahanian, M.D. has chosen to retire from his position as President
of the company and has also resigned from its Board of Directors;
both effective Friday, September 27, 2019. Dr. Vahanian
cofounded NewLink Genetics in 1999 and has served as President of
the company since 2009 and as a member of its Board of Directors
since 2015. Previously, he served as NewLink’s Chief Medical
Officer and Chief Operations Officer.
“Cofounding and leading NewLink these past 20
years has been a most rewarding experience particularly with the
recent announcement that our partnered Ebola vaccine has been
accepted for priority review by the FDA,” said Nicholas Vahanian,
M.D. “It has been remarkable to work with people who remain
committed to keeping patients at the center of all that we do.
I am grateful to my colleagues and our stockholders for this
incredible chapter in my life and am excited about what lies ahead,
both for me and for NewLink Genetics as the company works to
consummate the proposed merger with Lumos Pharma.”
Thomas A. Raffin, M.D., Lead Independent
Director of NewLink Genetics commented, “NewLink Genetics is
grateful to its cofounder, Nick Vahanian, for the insight and
relentless energy he brought to the company throughout his
tenure. The Board thanks Dr. Vahanian for these and many
other contributions he has made to the company and wishes him well
in his future endeavors.”
On September 30, 2019, management commenced a
restructuring plan in the context of the anticipated merger. This
action is expected to be substantially completed by December 31,
2019. The objective of the restructuring is to reduce NewLink’s
operating expenses and align its personnel with the anticipated
needs of NewLink following the merger.
Under the restructuring plan, NewLink will
reduce its workforce by 28 employees (approximately 60%), including
several members of management. NewLink expects that the workforce
reduction and the change in the management team will decrease its
cash payroll expense by approximately $5.0-$6.0 million
annually.
In connection with the restructuring and the
departure of Dr. Vahanian, NewLink estimates that it will incur
aggregate restructuring charges of approximately $4.5 million,
which will be recorded in the third and fourth quarters of 2019,
related to one-time termination severance payments and other
employee-related costs, excluding any amounts related to
stock-based compensation expense for the acceleration of stock
options and the extension of post-termination stock option exercise
periods. The charges that it expects to incur in connection with
the workforce reduction is subject to a number of assumptions, and
actual results may differ materially. NewLink may also incur
additional costs not currently contemplated due to events that may
occur as a result of, or that are associated with, the workforce
reduction.
Financial Position and Operational
Synergies
In advance of the proposed merger, NewLink has
commenced an organizational realignment to support the operational
and strategic activities of the combined company upon close of the
merger. The parties expect the combined company to have
approximately $80.0 million in cash as of December 31, 2019
(unaudited pro forma cash balance), which excludes cash reserved
for restructuring and severance costs relating to the departures of
NewLink executives and other employees. The combined company
forecasts that the average cash spend per quarter in 2020 will be
approximately $6.5-$7.5 million, excluding restructuring and
severance costs, acquisitions, licensing or financing
opportunities. This financial position is expected to be sufficient
to support the combined company’s planned clinical development
program through the readout of its Phase 2b clinical trial of
LUM-201. The combined company may receive additional, non-dilutive
financing should the U.S. Food and Drug Administration (FDA)
approve NewLink’s partnered Ebola vaccine V920, triggering the
issuance of a monetizable priority review voucher (PRV) in which
NewLink has a substantial interest. On September 17, 2019, it was
announced that the FDA has accepted the biologics license
application (BLA) for Ebola vaccine V920 and the Prescription Drug
User Fee Act (PDUFA), or target action date, is set for March 14,
2020.
Conference Call and Webcast
Details
The companies have scheduled a conference call
and webcast for 8:30 a.m. EDT tomorrow, October 1st, to review the
transaction. Access to the live conference call is available by
dialing (855) 469-0612 (U.S.) or +1 (484) 756-4268 (international)
five minutes prior to the start of the call. The conference call
will be webcast live, and a link to the webcast can be accessed
here at https://edge.media-server.com/mmc/p/ko4geqtk, through the
NewLink Genetics website at www.NewLinkGenetics.com in the
"Investors & Media" section under "Events and Presentations,"
or through the Lumos Pharma website at https://lumos-pharma.com/ in
the “News” section. To ensure a timely connection, it is
recommended that users register at least 15 minutes prior to the
scheduled webcast.
A replay of the call will be available
approximately two hours after the completion of the call and can be
accessed by dialing (855) 859-2056 (U.S.) or +1 (404) 537-3406
(international) and using the passcode 1287208. The replay will be
available for 60 days from the date of the call.
Additional Information and Where to Find
It
In connection with the proposed transaction,
NewLink Genetics will be filing documents with the SEC, including
preliminary and definitive proxy statements relating to the
proposed transaction. The definitive proxy statement will be mailed
to NewLink Genetics’ stockholders in connection with the proposed
transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY AND DEFINITIVE
PROXY STATEMENTS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC
IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY
REFERENCE IN THE PROXY STATEMENT WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders may obtain free copies
of these documents (when they are available) and other related
documents filed with the SEC at the SEC’s web site at www.sec.gov,
on NewLink Genetics’ website at www.newlinkgenetics.com or by
contacting NewLink Genetics’ Investor Relations at
515-598-2555.
Participants in the
Solicitation
NewLink and Lumos Pharma and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from NewLink stockholders in
connection with the proposed transaction. Information about
NewLink’s directors and executive officers and their ownership of
NewLink‘s securities is set forth in NewLink Genetics’ proxy
statement for its 2019 Annual Meeting of Stockholders, which was
filed with the SEC on April 5, 2019, as modified or supplemented by
any Form 3 or Form 4 filed with the SEC since the date of such
filing. Other information regarding the proposed transaction,
including information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in
the proxy statements described above and other relevant materials
to be filed with the SEC when they become available. These
documents are or will be available free of charge at the SEC’s web
site at www.sec.gov and from other sources indicated above.
About Lumos Pharma
Lumos Pharma, Inc. is a clinical stage
biopharmaceutical company focused on the development and
commercialization of therapeutics for rare and neglected diseases.
Lumos Pharma was founded and is led by a management team with
longstanding experience in rare disease drug development and is
funded by leading healthcare investors, including Deerfield
Management, a fund managed by Blackstone Life Sciences, Roche
Venture Fund, New Enterprise Associates (NEA), Santé Ventures, and
UCB. Lumos Pharma’s lead product candidate is LUM-201, an oral
growth hormone stimulating therapeutic, is in late stage clinical
development for the treatment of Pediatric Growth Hormone
Deficiency (PGHD). If approved by the FDA, LUM-201 would
provide an alternative to the injections that current PGHD patients
endure for many years of treatment. LUM-201 has received Orphan
Drug Designation in both the US and EU. For more information,
please visit www.lumos-pharma.com.
About NewLink Genetics
Corporation
NewLink Genetics is a clinical stage
biopharmaceutical company focused on developing novel oncology
product candidates to improve the lives of patients with cancer
where treatment options are limited. NewLink Genetics' IDO pathway
inhibitors, indoximod and its prodrug, NLG802, are immuno-oncology
drug candidates designed to harness multiple components of the
immune system to combat cancer. For more information, please visit
www.NewLinkGenetics.com.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking
statements of NewLink Genetics that involve substantial
risks and uncertainties. All statements contained in this press
release are forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. The words
“forecast,” “projected,” "guidance," "upcoming," "will," "plan,"
“intend,” "anticipate," "approximate," "expect," “potential,” or
the negative of these terms or other similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. These
forward-looking statements include, among others, statements
about NewLink Genetics' financial guidance for 2019 and
beyond; results of its clinical trials for product candidates; its
timing of release of data from ongoing clinical studies; its plans
related to execution of clinical trials; plans related to moving
additional indications into clinical development; NewLink
Genetics' future financial performance, impact of management
changes, organizational restructuring, results of operations, cash
position and sufficiency of capital resources to fund its operating
requirements; statements about NewLink Genetics’ expectations
regarding the capitalization, resources and ownership structure of
the combined company; NewLink Genetics’ expectations regarding the
sufficiency of the combined company's resources to fund the
advancement of any development program or the completion of any
clinical trial; statements about the potential benefits of the
transaction; the expected completion and timing of the transaction
and other information relating to the transaction; expected costs
associated with termination benefits and financial impact of the
reduction in force, and any other statements other than statements
of historical fact. Actual results or events could differ
materially from the plans, intentions and expectations disclosed in
the forward-looking statements that NewLink Genetics
makes due to a number of important factors, including (i) the risk
that the transaction may not be completed in a timely manner or at
all, which may adversely affect the NewLink Genetics’ business and
the price of the common stock of NewLink Genetics, (ii) the failure
to satisfy of the conditions to the consummation of the
transaction, including approval of the issuance of shares of
NewLink Genetics common stock in the transaction or the
contemplated reverse stock split, (iii) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the merger agreement, (iv) the risk that the
definitive merger agreement may be terminated in circumstances that
require NewLink Genetics to pay a termination fee to Lumos Pharma;
(v) risks related to the ability to realize the anticipated
benefits of the transaction, including the risk that the businesses
will not be integrated successfully, (vi) the effect of the
announcement or pendency of the transaction on NewLink Genetics’
business relationships, operating results and business generally,
(vii) risks that the proposed transaction disrupts current plans
and operations, (viii) risks related to diverting management’s
attention from NewLink Genetics’ ongoing business operations, (ix)
other business effects, including the effects of industry, market,
economic, political or regulatory conditions, future exchange and
interest rates, and changes in tax and other laws, regulations,
rates and policies, (x) the uncertainties inherent in research and
development, including the ability to meet anticipated clinical
endpoints, commencement and/or completion dates for clinical
trials, regulatory submission dates, regulatory approval dates
and/or launch dates, as well as the possibility of unfavorable new
clinical data and further analyses of existing clinical data, (xi)
the risk that clinical trial data are subject to differing
interpretations and assessments by regulatory authorities; (xii)
risks related to cost reduction efforts; (xiii) NewLink Genetics’
workforce reduction costs may be greater than anticipated and the
workforce reduction may have an adverse impact on the NewLink
Genetics’ development activities: and (xiv) the outcome of any
legal proceedings that may be instituted against NewLink Genetics
related to the merger agreement or the transaction. Further
risks that could cause actual results to differ materially from
those matters expressed in or implied by such forward-looking
statements are discussed in "Risk Factors" and elsewhere
in NewLink Genetics' Quarterly Report on Form 10-Q for
the quarter ended June 30, 2019 and other reports filed
with the SEC. The forward-looking statements in this press
release represent NewLink Genetics’ views as of the date
of this press release. NewLink Genetics anticipates that
subsequent events and developments will cause its views to change.
However, while it may elect to update these forward-looking
statements at some point in the future, it specifically disclaims
any obligation to do so. You should, therefore, not rely on these
forward-looking statements as representing NewLink
Genetics' views as of any date subsequent to the date of this
press release.
Investor & Media Contact:
Lisa W. MillerDirector, Investor RelationsNewLink Genetics
Corporation515-598-2555lmiller@linkp.com
NewLink Genetics (NASDAQ:NLNK)
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