Equillium sees $26M Metacrine buy as opportunity to boost its balance sheet

Perhaps the writing was on the wall for Metacrine. It was back in October 2021 that the company’s asset MET642 failed a trial in a form of fatty liver disease, setting in motion a train of events that would lead to firing half its workforce and, ultimately, today's acquisition.

The San Diego-based company has been snapped up by Equillium, which sees the all-stock deal as a chance to extend its own cash runway into 2024. Specifically, the acquisition should add $33 million to Equillium’s balance sheet, the company announced postmarket on Sept. 6.

“The acquisition of Metacrine meaningfully strengthens Equillium’s cash position,” said CEO Bruce Steel. “As we continue to execute on our ongoing clinical development programs, this cash runway extension is expected to see us through multiple data catalysts and operational milestones.”

Those milestones include interim data from the EQUALISE study of the anti-CD6 monoclonal antibody itolizumab in lupus nephritis patients, which is expected to read out in a matter of weeks and be followed by top-line data next year. The company also expects to launch a phase 2 study of EQ101—a tri-specific inhibitor of IL-2, IL-9 and IL-15—in alopecia areata, as well as a phase 1 trial of the IL-15 and IL-21 inhibitor EQ102 in celiac patients.

Metacrine’s lead asset is MET642, a farnesoid X receptor agonist for ulcerative colitis that Equllium said is ready to enter phase 2. Its new owner added that the company will “carefully evaluate strategic partnership options” for the investigational therapy, with Metacrine CEO Preston Klassen joining Equillium’s board to support this ambition.

It’s tough news for Metacrine’s other remaining employees, however, with Equillium confirming it will not be taking anyone else along for the ride.

Under the deal, Equillium will issue stock valued at a 25% premium, totaling around $26 million. The agreement will also see the company take on Metacrine’s existing $15 million loan, along with the potential to access an additional $10 million in committed debt capital.

Equillium will then retire its own debt facility with Oxford Finance LLC and SVB, which currently has an outstanding principal balance of $10 million.

The differing fortunes for the two companies were highlighted back in February. That month saw Equillium acquire Bioniz Therapeutics for $21 million, while Metacrine made the far less envious decision of firing half of its staff and ditching work on a hydroxysteroid dehydrogenase program before it even made it into the clinic.