In a sign of the SPAC times, eFFECTOR Therapeutics was one of a whopping 90-plus biotech assets to be scouted by just one blank check company.
The clinical-stage biotech, which is focused on selective translation regulation inhibitors (STRIs) in cancer, ended up persevering in the battle to go public.
EFFECTOR and Locust Walk Acquisition Corp. today announced their merger deal, coming amid a major boom recently followed by a slowdown in special purpose acquisition company filings and deals following recent comments by the Securities and Exchange Commission. Locust Walk, which completed its IPO in January, is led by Chris Ehrlich, who has been on the board of multiple acquired biotechs including Amgen’s KAI Pharmaceuticals and Stryker’s Biomimetic Therapeutics and Invuity.
“We are confident that the highly experienced management team with a track record of pipeline advancement and business accomplishments are prepared to lead eFFECTOR as a publicly listed company,” Ehrlich said in a statement.
The deal, anticipated to close in the third quarter, includes up to $175 million in a trust and a fully committed $60 million private investment in public equity from founding series A investors like Abingworth and new investors like Pfizer Ventures.
“We’re entering into this transaction to accelerate eFFECTOR’s growth with the goal of delivering a new class of medicines to help drive improved health outcomes for people with cancer,” said Steve Worland, Ph.D., CEO and president of the biotech.
The business combination gives San Diego-based eFFECTOR a total enterprise valuation of $419 million and cash resources of about $210 million, which will aid the company in bringing its candidates through its trials.
The deal comes a few short months after eFFECTOR tapped Mike Byrnes as its new chief financial officer, giving Alana McNulty the chance to focus her duties on one role as chief business officer. Byrnes was previously senior vice president of finance at Principia Biopharma, bought by Sanofi in September.
The SPAC merger will give eFFECTOR the funds to report top-line data from the randomized phase 2b KICKSTART study for its lead product candidate, tomivorsertib. The oral small-molecule inhibitor of mitogen-activated protein kinases 1 and 2 is combined with Merck & Co.'s blockbuster cancer med Keytruda (pembrolizumab) in metastatic non-small cell lung cancer (NSCLC) in front-line extension and front-line settings. The study is currently open for enrollment.
"We decided to combine with [Keytruda] because it's the market leader," Worland said in an investor webcast about the deal.
EFFECTOR will also use the cash boost to initiate multiple midstage expansion cohorts for its small-molecule inhibitor of eIF4A, zotatifin, in breast cancer and NSCLC patients later this year.
Aside from its STRIs pipeline, eFFECTOR has a stake in the COVID-19 space, too. Earlier this month, the company inked a $5 million cooperative agreement for a planned phase 1b sudy of zotatifin (eFT226) as an antiviral for people with mild to moderate COVID-19 in an outpatient setting. The agreement is sponsored by the Defense Advanced Research Projects Agency and the Defense Health Agency and includes research from the Quantitative Biosciences Institute at University of California, San Francisco.
RELATED: Pfizer taps Effector to develop anti-cancer eIF4E inhibitors
The clinical-stage biopharmaceutical company also has a partnership with Pfizer, in which eFFECTOR received $15 million upfront in January 2020 to develop small-molecule inhibitors of eukaryotic initiation factor 4E (eIF4E). The long-pursued target has proven difficult for Big Pharmas like Eli Lilly. The deal includes up to $492 million in R&D funding, development and sales milestones.