A complex fracturing at Bone brings together inflammatory, orthopedic biotechs in reverse merger-type deal

The orthopedics-focused biotech was out looking for, well, a bone. And it found one in Medsenic, which will combine with Bone Therapeutics in an all-stock, reverse merger-type deal that will create a newly named company: BioSenic.

Bone has signed on to a business combination deal with privately held-French arsenic salts biotech Medsenic as an act of derisking and to broaden its pipeline. The company was in need of an overhaul after rethinking a phase 2b trial for a tibial fracture cell therapy last month and executing a round of layoffs in March. 

Before we get to the nitty gritty of this complex, bone-chilling deal, the headline is this: the combined company will bring together a pipeline of therapies for inflammatory and orthopedic conditions. Both companies have a number of clinical trials in the works in the mid- to advanced-stage in lupus, chronic graft-versus-host disease (cGvHD), tibial fractures and other indications. The combination will help both companies weather the difficult economic, financial and operational times as the biotech industry battles a bear market.

No changes will be made to either company’s pipeline plans. Specifically, Bone will continue with the phase 2b ALLOB trial of a cell therapy for high-risk tibial fractures. Interim results are due in the first half of 2023. Last month, the biotech switched endpoints and added the interim analysis in the study in an effort to reduce the enrollment target.

Medsenic will proceed with a phase 2 trial of arsenic trioxide for first-line treatment of cGvHD, plus a phase 2a in lupus. The company is also planning a late-stage study in cGvHD to start in the first half of 2023 and a phase 2b trial in severe lupus.

And now, those details, a complicated fracturing of the two companies. A majority of Medsenic’s shareholders have agreed to combine the companies through a share exchange that values Bone at about €10 million ($10.3 million). The Medsenic shares held by the majority, representing 51% of outstanding shares, are worth €40.8 million ($42.1 million). Should the ALLOB trial be successful, shareholders will have the opportunity to subscribe for one new share of Bone at a price of €0.45.

If the deal is approved by Bone’s shareholders at an upcoming meeting in September, Medsenic will eventually hand over its entire pipeline to be controlled by Bone.

There are major changes ahead for the new Bone-Medsenic combination. Bone’s shareholders will be asked at the September meeting to approve a name change to BioSenic and a new board, which will include current chairman Jean Stéphenne and Jean-Luc Vandebroek until the ALLOB results are available. Remaining directors would be dismissed, and Medsenic’s chairman and daily manager Francois Rieger would become chairman and CEO.

The eventual leadership team will also include Medsenic’s current executive director Véronique Pomi-Shneiter as COO and Bone’s Chief Medical Officer Anne Leselbaum in the same role.

At the end of the deal, the combined company is expected to have a proforma cash position of at least €5 million ($5.1 million). BioSenic will then need to go on an expedition for funds via a private placement at the end of 2022.