Rocket Pharmaceuticals is set to snap up gene therapy startup Renovacor, inking an all-stock merger that will give it control of a preclinical heart disease candidate and add $38 million to its cash reserves.
Renovacor went public one year ago in a merger with a special purpose acquisition company. However, the biotech, which exited the transaction with $95.1 million to take a cardiomyopathy gene therapy into the clinic, has struggled to drum up investor enthusiasm since listing its stock. Shares in Renovacor have fallen 81% over the past year, slumping from above $10 in the immediate aftermath of the SPAC merger to below $2 just prior to news of the Rocket deal.
Rocket has seized the opportunity created by Renovacor’s difficulties, buying the biotech in an all-stock deal that implies an equity value of approximately $53 million. Renovacor’s market cap had fallen to $33 million before news of the deal. Shareholders in Renovacor will own around 5% of the combined company.
The deal, which is expected to close in the first quarter of 2023, will see Renovacor’s AAV-based gene therapy REN-001 slot into the portfolio of programs Rocket is readying for its second wave of projects. REN-001 is a gene replacement therapy designed to treat a form of heart failure that affects people with a BAG3 mutation.
Using a vector that preferentially transduces cells that drive heart contraction, Renovacor aims to deliver the BAG3 gene and thereby restore the range of functions that the protein has in the heart. In mice, the gene therapy prevented the onset of cardiac impairment.
Renovacor had been gearing up to file an application in the second half of the year to enter the candidate into clinical trials. However, with its share price in the basement and its cash runway scheduled to end late in 2023, the biotech has chosen to accept Rocket’s offer. Rocket is planning to start a phase 1 trial of the candidate next year.