Avrobio, Tectonic Therapeutic to combine in an all-stock transaction

Avrobio (AVRO) and Tectonic Therapeutic announced that the companies have entered into a definitive merger agreement to combine in an all-stock transaction. Under the terms of the agreement, Avrobio will acquire 100% of the outstanding equity interests of Tectonic. Upon completion of the merger, the combined company is expected to operate under the name Tectonic Therapeutic and trade on Nasdaq under the ticker symbol (TECX). In connection with the merger, Tectonic has raised or entered into agreements for a $130.7M private placement with a syndicate of new and existing leading life sciences investors, led by a major mutual fund, TAS Partners, 5AM Ventures, EcoR1 Capital, Polaris Partners, funds and accounts advised by Farallon Capital Management, Vida Ventures, PagsGroup, and other investors. The combined company is expected to have approximately $165M of cash and cash equivalents at closing, inclusive of the proceeds to be received in the private placement. These proceeds will be used to advance Tectonic’s pipeline through multiple clinical data catalysts and are expected to fund the combined company’s operations into mid-2027. The private placement is expected to close in conjunction with the merger in the second quarter of 2024. Upon completion of the Merger, pre-Merger AVROBIO shareholders are expected to own approximately 22.3% of the combined company and pre-Merger Tectonic shareholders are expected to own approximately 40.2% of the combined company, and in each case after giving effect to the aforementioned private placement financing. The percentage of the combined company that Avrobio shareholders will own as of the close of the transaction is subject to adjustment based on the amount of Avrobio net cash at the closing date, which is currently estimated to be approximately $65M. Immediately prior to the closing of the Merger, Avrobio shareholders will be issued contingent value rights representing the right to receive certain payments from proceeds received by the combined company, if any, related to certain pre-transaction assets of Avrobio. Following the closing of the merger, the combined company will be led by Dr. Reicin and other members of the Tectonic management team. Avrobio will be renamed Tectonic Therapeutic and the corporate headquarters will be located in Watertown, Massachusetts. The merger agreement provides that post-merger, one board member from Avrobio will join the board of directors of the combined company. The merger has been approved by the board of directors of both companies and is expected to close in the second quarter of 2024 subject to customary closing conditions, including the approvals by the shareholders of each company, the closing of the private placement financing and other customary closing conditions. In connection with the Merger, directors, officers, and certain shareholders of Avrobio and Tectonic have executed support agreements, pursuant to which they have agreed to vote all of their shares of capital stock in favor of the merger.