Paragon Therapeutics’ spinout Jade Biosciences has entered a reverse merger with Aerovate Therapeutics that will allow Jade to start trading on the Nasdaq.
The newly merged biotech will operate under Jade’s name and CEO Tom Frohlich, with plans to trade under ticker symbol “JBIO” once the deal closes, according to an Oct. 31 release.
Aerovate stockholders are expected to own 1.6% of the combined company, while premerger Jade stockholders will own 98.4%. Aerovate isn’t expected to contribute money to the new entity but will pay a $65 million dividend to premerger Aerovate stockholders before the deal closes, which is expected to happen in the first half of 2025.
In support of the merger, Jade locked in an oversubscribed private investment expected to total $300 million in gross proceeds. Investors were led by Paragon founder Fairmount, Venrock Healthcare Capital Partners and an unnamed investment firm, according to the release.
The financing will close right after the merger is finalized, with the anticipated cash runway set to stretch through 2027. The combined company will use the funds to advance Jade’s autoimmune disease pipeline, including advancing lead program JADE-001 to initial clinical proof-of-concept.
JADE-001 is a monoclonal antibody taking aim at a chronic kidney disease known as IgA nephropathy. Jade, which unveiled with $80 million this August, expects to initiate a clinical trial for the candidate in the second half of next year, with an initial data readout slated for the first half of 2026.
Jade is the fourth company spun out with assets from Paragon Therapeutics, a biotech based around the “hub-and-spoke” model. Just a few days ago, Paragon’s Crescent Biopharma inked a similar reverse merger with GlycoMimetics just minutes after the latter reported a phase 2/3 failure.
“We believe this merger with Jade represents the best path forward for Aerovate stockholders,” Aerovate CEO Tim Noyes said in the release. “The anticipated cash dividend, combined with Jade’s promising pipeline, offers a compelling opportunity for significant value creation, both in the near term and over the long run.”
Aerovate’s stock crashed 93% in mid-June when its inhaled formulation of Novartis’ cancer med Gleevec failed in a phase 2b trial as a treatment for pulmonary arterial hypertension. Based on the results, the biotech stopped enrollment and shut down a phase 3 portion of the study.