After megaround, Apexigen inks modest SPAC deal to advance melanoma prospect toward approval

Apexigen is braving a tough biotech stock market in a bid to land on the Nasdaq through a special purpose acquisition company merger. If the deal goes through as planned, Apexigen will emerge with $73 million to fund development of a CD40 agonist intended to treat melanoma and other solid tumors.

California-based Apexigen completed a $123 million series C round two years ago, equipping it to move its lead candidate through a clutch of midphase solid tumor clinical trials. Preliminary phase 2 data in esophageal cancer are due in the first half of 2022, with results in sarcoma patients following by the end of the year. Apexigen’s primary indication, however, is melanoma. 

Apexigen plans to talk to the FDA about a potential registration path for its CD40 agonist sotigalimab in melanoma in the coming months. The plan is to develop sotigalimab as a treatment for patients who have previously received PD-1/L1 checkpoint inhibitors such as Merck’s Keytruda.

In that setting, Apexigen thinks sotigalimab may improve outcomes by reversing immune suppression. The idea, which has attracted drugmakers including AbbVie and Roche, is to turn T cells, macrophages and other parts of the immune system against cancer cells by targeting the co-stimulatory molecule.

Merging with Brookline Capital Acquisition Corp. will give Apexigen money to put that idea to the test, although the sums involved in the SPAC merger are fairly small for a biotech that pulled off a megaround last time out. Brookline currently has $58 million in cash, and institutional investors have committed $15 million. The deal values Apexigen at $205 million on a net-equity basis.

There is also a deal between Brookline and Lincoln Park Capital that would position Apexigen to order up to $50 million in stock purchases over a 24-month period. Lincoln Park “looks for opportunities that may be currently out of favor with the investment community.”

Apexigen will use the money to advance sotigalimab while working to get its next candidate, anti-TNFR2 antagonist antibody APX601, into the clinic. An IND filing of the prospect, which is designed to reverse immune suppression in the tumor microenvironment, is planned for around the middle of 2022.