Gene therapy developer Rocket Pharmaceuticals is on track to seek FDA approval for its lead program but it’s also taking care to keep its pipeline stocked. The company has agreed to acquire Renovacor, a biotech developing a gene therapy for a genetically driven form of heart failure.
According to financial terms announced Tuesday, the all-stock deal represents an equity value of $53 million, or an implied value of $2.60 for each Renovacor share. That’s a 36.8% premium over the closing price of Renovacor’s closing stock price on Monday but a steep drop from a year ago, when the company went public via a SPAC merger and saw its new shares trade on the New York Stock Exchange for more than $10 apiece.
Cambridge, Massachusetts-based Renovacor develops gene therapies for genetically driven cardiovascular diseases. The company emerged in 2019 with an $11 million Series A round of financing for preclinical development of a gene therapy that addresses BLCL2-associated athanogene 3 (BAG3) mutations that lead to dilated cardiomyopathy, a severe form of heart failure. Renovacor was founded by Arthur Feldman, a cardiologist and professor of medicine at Temple University.
Lead Renovacor program REN-001 uses an adeno-associated virus (AAV) to deliver to cells a healthy version of the BAG3 gene. In preclinical testing, Renovacor said its gene therapy led to the production of functional BAG3 protein and improvement in cardiac function. Human testing is the next step. The company has said it expects to submit an investigational new drug application in the second half of this year to support a Phase 1/2 clinical trial. The Renovacor pipeline includes discovery-stage gene therapies addressing BAG3 mutations as well as the expression and function of that gene. The company has also expanded its research to include genetically driven arrhythmogenic cardiomyopathy.
“The acquisition of Renovacor aligns with our strategy to expand our leadership position in AAV-based gene therapy for cardiac disease and gives us a perfect opportunity to continue on our mission to transform the lives of heart failure patients through the power of gene therapy,” Rocket CEO Gaurav Shah said in a prepared statement.
Rocket’s cardiac gene therapy research focuses on Danon disease, a weakening of the heart muscle caused by mutations to the LAMP2 gene. The Cranbury, New Jersey-based company’s Danon program, RP-A501, is currently in Phase 1 testing. In a research note sent to investors, William Blair analyst Raju Prasad said the prevalence of BAG3-associated dilated cardiomyopathy is estimated to be as high as 30,000 patients in the U.S., a figure that is expected to grow with more genetic testing and disease awareness. He added that Renovacor brings synergies to Rocket, as both companies are using AAV-9 vectors to pursue genetically defined targets.
Rocket’s most advanced program, RP-L201, has reached pivotal Phase 2 testing for leukocyte adhesion deficiency-1 (LAD-1), a rare disorder caused by mutations to the gene that encodes CD18, a protein that helps white blood cells stick to blood vessels. Children born with LAD-1 are susceptible to fungal and bacterial infections that can become life-threatening. In May, Rocket reported data showing 100% survival in seven patients 12 months after infusion with the gene therapy. In its report of second quarter 2022 financial results last month, Rocket said it expects to file an application seeking FDA approval of its LAD-1 gene therapy in the first half of 2023.
The boards of directors of both Rocket and Renovacor have approved the acquisition, but approval by shareholders of both companies is still needed. The deal is expected to close by the first quarter of next year.