Aquinox Pharmaceuticals to Acquire Neoleukin Therapeutics in $40+ Million Deal

On August 6, 2019, VCBeat (WeChat ID: vcbeat) learned that U.S.-headquartered Aquinox Pharmaceuticals will acquire Seattle-based startup Neoleukin Therapeutics, which was founded at the University of Washington just eight months ago. Based on Monday’s closing price of $2.88 per share, Aquinox will acquire the young startup with 14.78 million of its own shares, valuing the company at over $40 million.

The final price of the transaction will not be known until its completion, which is expected to occur on Thursday, August 8. Upon closing of the acquisition, Aquinox will adopt the name Neoleukin and will trade on the Nasdaq Stock Market under the ticker symbol NLTX.

Neoleukin launched a synthetic protein called interleukin-2 (IL-2) this January. This potent protein can combat cancer but is highly toxic to patients. Currently, IL-2 has been approved for the treatment of melanoma and renal cell carcinoma, curing 5% to 10% of patients.

Researchers at the University of Washington have created a synthetic IL-2 that can safely stimulate T cells to attack tumors. They used a protein design program called Rosetta to engineer a molecule that binds to two receptors on T cells but lacks binding to a third receptor, which is believed to be responsible for causing adverse effects.

This startup is one of many initiatives launched by the Institute for Protein Design, led by Professor David Baker. Other companies include PvP Biologics and Arzeda. PvP Biologics is developing a drug to treat celiac disease, while Arzeda designs proteins for industrial applications. Earlier this year, the institute received $45 million in funding from TED’s Audacious Project.

Neoleukin was also established with the assistance of CoMotion at the University of Washington (UW). CoMotion supports startups and has helped launch more than 20 new ventures in the past two years. Other biotechnology startups from CoMotion include PvP Biologics, which is developing treatments for celiac disease, and Cyrus Biotechnology, a software company specializing in protein design.

Dr. Jonathan Drachman, CEO of Neoleukin, stated, “The merger with Aquinox is transformative for our company, providing additional capital to support IND submissions, generate clinical data, advance additional preclinical programs, and enhance our computational technologies. We believe that cytokine mimetics, or Neoleukins, have the potential to deliver superior therapeutic efficacy while reducing toxic side effects.”

Drachman spent 14 years at Seattle Genetics, serving as Chief Medical Officer and Head of Research and Development. He will serve as President and Chief Executive Officer of the new company, which will be headquartered in Seattle, building upon Neoleukin’s existing headquarters. This deal injects fresh momentum into Seattle’s emerging life sciences industry.

Aquinox CEO Davide Main stated that the company was attracted to Neoleukin due to its robust platform technology, experienced leadership team, and compelling clinical development program.

Upon completion of the transaction, Aquinox shareholders will hold 61.4% of the shares in the combined company, with Neoleukin shareholders holding the remaining shares. The new board of directors will consist of two existing members—Seattle Genetics Chief Financial Officer Todd Simpson and AveXis Chief Executive Officer Sean Nolan—as well as new members: Cantey Boyd, Managing Director at Baker Brothers Advisors; Jonolehan G. Drachman, Chief Executive Officer of Neoleukin Therapeutics; Sah B. Noonberg, former Chief Medical Officer of Nohla Therapeutics; and Lewis “Rusty” Williams, former Chief Executive Officer of FivePrime Therapeutics.

Aquinox Pharmaceuticals is a pharmaceutical company that discovers and develops novel drug candidates for the treatment of inflammation, inflammatory pain, and hematologic cancers. Aquinox Pharmaceuticals primarily focuses on anti-inflammatory candidates targeting SH2-containing inositol-5'-phosphatase 1 (SHIP1). The company holds an extensive intellectual property portfolio and has preclinical candidates that activate SHIP1.

Neoleukin Therapeutics is a biotechnology company focused on the design and development of novel protein immunotherapies for cancer and inflammatory diseases. Its Neoleukin platform is used to develop new de novo synthesized proteins, overcoming the limitations of naturally occurring proteins and enabling targeted and precise treatments. The neo-proteins generated using the Neoleukin platform exhibit high selectivity and ultra-stability. These bioactive neo-proteins are designed to address biological challenges that have not yet been resolved by natural proteins.

(Compiled by: Tian Shuhang)