Just under a month ago, FierceBiotech reported that former Astellas executive Stephen Eck, M.D., Ph.D., jumped ship from his Aravive CEO role to Immatics US as its new CMO; now we have more color on why that unexpected move may have happened.
Monday, the 2017 Fierce 15 winner said it will “merge with a wholly owned subsidiary of Versartis in an all-stock transaction,” with the newly combined company’s focus on Aravive’s GAS6-AXL drug. The combined company is slated to begin trials later this year with an initial test in ovarian cancer.
The move also sees Aravive maneuver itself onto the Nasdaq via Versartis, a company in dire straits, coming late last year when its phase 3 effort, somavaratan, failed to match Pfizer’s Genotropin in a phase 3 pediatric growth hormone deficiency (pGHD) trial.
At the time, the potentially company-killing data wiped more than 80% off the biotech’s stock price. It’s now merging with Aravive to try and revive its fortunes, and shares in the biotech jumped 20% premarket on the news.
Menlo Park, California-based Versartis essentially bet the farm on somavaratan, the only drug in its clinical-phase pipeline.
Development of the long-acting recombinant human growth hormone in pGHD was the only task listed in the “use of proceeds” section when Versartis pulled off an upsized $126 million IPO in 2014. The failure of the phase 3 meant it needed drastic action to survive.
Jay Shepard, CEO of Versartis, said: “Following an extensive and thorough review of strategic options, we are very pleased to announce our agreement to merge with Aravive. The transaction will provide Versartis stockholders with a significant ownership stake in a promising biopharmaceutical company with a novel approach that has the potential to enhance therapeutic efficacy for patients facing a variety of resistant or metastatic cancers."
“The combined company offers a compelling pipeline, as well as talent and financial resources to advance the clinical development program to multiple important inflection points over the next 24 months.”
The newly merged company will be based at Aravive’s Houston, Texas, home.
Eck left last month as Aravive CEO, seemingly a casualty of the deal as Shepard, currently president and CEO of Versartis, will become CEO of the newly combined company.
Meanwhile, Srinivas Akkaraju, M.D., Ph.D., will serve as chair, and Ray Tabibiazar, M.D., currently Aravive’s executive chairman, will continue to serve on the board of the combined company.
“The remaining senior management team will be comprised of current Aravive and Versartis personnel. The board of the combined company is anticipated to be comprised of seven representatives, with three designated by Versartis, three designated by Aravive, and one independent director mutually agreed by the companies,” the companies state in a joint release.
Following the merger, Versartis and Aravive equity holders are each expected to own around 50% of the combined company. When the deal is signed off, the merged company will be called Aravive, with its common stock expected to continue to trade on Nasdaq, but under a new ticker symbol “to be announced at a later date.”
“This proposed merger will provide Aravive with the financial resources and experienced leadership to significantly advance the company in its aim to build a successful, innovative oncology business,” said Ray Tabibiazar, M.D., executive chairman of Aravive Biologics.
“Jay Shepard has the right qualities to helm the combined company. He possesses significant operating experience across the biotechnology and pharmaceutical industry including commercial development in oncology, as well as experience leading publicly traded companies and a successful M&A track record. Moreover, Versartis’ development and commercial planning expertise, as well as its operational proficiency, will complement the strong scientific and clinical capabilities of the Aravive team,” he added.