- By Barry Cohen
A Boston-area biotech has found a nifty way to go public--by sneaking in the back door.
After a merger with Proteostasis Therapeutics Inc. (NASDAQ:PTI), Yumanity Therapeutics will be listed on the Nasdaq under its own name, averting the need for an initial public offering. The deal will bring together the two companies' scientific know-how in the area of protein misfolding, which is thought to play a role in a number of neurodegenerative diseases. The merger is expected to close before the end of the year.
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Yumanity has the backing of some of the biggest names in the drug industry. The company, which was founded in 2014, has raised more than $100 million from investors such as Pfizer Inc. (NYSE:PFE), Biogen Inc. (NASDAQ:BIIB), Merck & Co. Inc. (NYSE:MRK) and Sanofi SA (NASDAQ:SNY).
In June, Yumanity announced a collaboration with Merck for an undisclosed upfront investment and $500 million in milestones to develop treatments for amyotrophic lateral sclerosis and a group of degenerative disorders called frontotemporal lobar dementia, according to an article in Endpoints. The agreement with Merck was the first validation for the company. Merck stopped its own work in neuroscience, focusing instead on early-stage research.
Investors can only hope the combined company performs substantially better than Proteostasis has on its own. That shouldn't be difficult since the bar has been set so low. Since mid-2016, when the company traded above $20, it's been on a slippery slope, tumbling all the way to a woeful $1.28.
Yumanity is just starting to begin clinical work on its own pipeline. BioSpace reported ts first clinical-stage product candidate is now in phase 1, being evaluated for development for the treatment and disease modification of Parkinson's disease. It has other drugs that will be tested for neurodegenerative disorders, including dementia with Lewy bodies, multi-system atrophy and ALS.
Unsurprisingly, the heads of both companies heralded the merger. "The combination of PTI and Yumanity brings together two technologies rooted in a shared scientific legacy of protein misfolding as the basis of disease, as well as capabilities and resources that offer shareholders a broad platform for value creation," Meenu Chhabra, president and CEO of Proteostasis, said in a news release.
Richard Peters, M.D., Ph.D., president and CEO of Yumanity, will assume the same positions with the united company.
"Our merger should enable the combined company to grow faster, deliver potential therapies to patients more quickly and create sustainable shareholder value well beyond what either of us would achieve separately," Peters said.
Disclosure: The author holds a position in Pfizer.
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This article first appeared on GuruFocus.