Homology Medicines, Q32 Bio enter all-stock merger agreement

Q32 Bio and Homology Medicines (FIXX) announced they have entered into a definitive merger agreement to combine the companies in an all-stock transaction. The combined company will focus on advancing Q32 Bio’s wholly owned clinical development candidates for the treatment of autoimmune and inflammatory diseases. Upon completion of the merger, the combined company will operate as Q32 Bio, headquartered in Waltham, Massachusetts, and is expected to trade under the Nasdaq ticker symbol “QTTB”. In support of the merger agreement, Q32 Bio has entered into an agreement for a $42 million private placement with participation from existing and new investors including OrbiMed, Atlas Venture, Abingworth, Bristol Myers Squibb (BMY), Acorn Bioventures, Osage University Partners, CU Healthcare Innovation Fund, Sanofi Ventures (SNY), Agent Capital and other undisclosed investors. Proceeds from the proposed transactions will be used to advance the clinical development of Q32 Bio’s two wholly owned assets, bempikibart, for which Q32 Bio earlier today announced it regained all rights from Amgen, and ADX-097. Bempikibart, Q32 Bio’s lead program, is a fully human anti-IL-7Ralpha antibody that re-regulates adaptive immune function by blocking signaling mediated by both IL-7 and TSLP and is currently being evaluated in two Phase 2 trials, with one clinical trial evaluating the use in atopic dermatitis and one evaluating the use in alopecia areata. All data from the Phase 2 trials remain blinded and Q32 Bio remains on track to report topline Phase 2 results in the second half of 2024. ADX-097 is based on a novel platform enabling tissue-targeted regulation of the complement system without long-term systemic blockade, a key differentiator from current complement therapeutics. Q32 Bio recently completed a first-in-human, Phase 1 ascending dose clinical study of ADX-097 in healthy volunteers. Results from the Phase 1 clinical trial demonstrated a favorable tolerability and immunogenicity profile across all single and multiple dose cohorts and weekly subcutaneous dosing met exposures for predicted complete complement inhibition in the tissue with no systemic inhibition. Q32 Bio will be commencing an open-label Phase 2 basket clinical trial, with initial data expected by year-end 2024, and a Phase 2 clinical trial in ANCA-Associated Vasculitis, with topline results from the AAV and basket trials expected in the second half of 2025. Under the terms of the merger agreement, Homology Medicines will issue to pre-merger Q32 Bio stockholders shares of Homology Medicines common stock as merger consideration in exchange for the cancellation of shares of capital stock of Q32 Bio, and Q32 Bio will become a wholly owned subsidiary of Homology Medicines. Stockholders of Q32 Bio will receive newly issued shares of Homology Medicines common stock pursuant to a formula set forth in the merger agreement. Pre-merger Homology Medicines stockholders are expected to own approximately 25% of the combined company and pre-merger Q32 Bio stockholders are expected to own approximately 75% of the combined company. The percentage of the combined company that pre-merger Q32 Bio stockholders and pre-merger Homology Medicines will own upon the closing of the merger is further subject to adjustment based on the amount of Homology Medicines’ net cash at the time of closing. In connection with the closing of the proposed transactions, Homology Medicines stockholders will also be issued a contingent value right representing the right to receive certain payments from proceeds received by the combined company, if any, related to dispositions of Homology Medicines’ pre-transaction legacy assets. Homology Medicines has discontinued development of its R&D programs, including HMI-103 for the treatment of PKU, and has been exploring strategic alternatives for its programs and platform technology. If Homology Medicines has not otherwise disposed of its ownership position in Oxford Biomedica Solutions, a contract development and manufacturing organization (CDMO) jointly established by Homology Medicines and Oxford Biomedica plc, and monetized its development programs, including HMI-103 for the treatment of PKU, Homology Medicines stockholders of record will be issued a CVR for each outstanding share of Homology Medicines common stock held by such Homology Medicines stockholder prior to the closing of the proposed merger. The CVR would represent the right to receive certain cash payments from proceeds received by Homology Medicines related to the sale or license of its development programs and platform technology and the exercise of a put/call option or other sale or disposition of Homology Medicines’ minority ownership position in Oxford Solutions. The merger agreement has been approved by the boards of directors of both companies. Upon closing of the proposed transaction, the combined company will be led by current members of the Q32 Bio leadership team including: Jodie Morrison, Chief Executive Officer; Shelia Violette, PhD, Founder & Chief Scientific Officer; Jason Campagna, MD, PhD, Chief Medical Officer; Saul Fink, PhD, Chief Technology Officer; Maria Marzilli, MPH, Executive Vice President, Corporate Strategy & Program Operations; David Appugliese, JD, Senior Vice President, Head of People. The Board of Directors of the combined company is expected to be comprised of nine members, consisting of seven members designated by Q32 Bio and two members designated by Homology Medicines. The transaction has been approved by the Board of Directors of each company and is expected to close in the first quarter of 2024, subject to customary closing conditions, including the approval of the transaction by the stockholders of each company.