Swiss biotech Relief Therapeutics is slated to enter a reverse merger with private U.S. biotech Renexxion and forge ahead with the latter’s gastrointestinal pipeline.
Rare-disease-focused Relief would combine with California-based Renexxion, and the newly merged biotech would trade on the SIX Swiss Exchange and be quoted on the U.S.’ OTCQB, according to the terms of the proposal shared Nov. 4.
The initial merger would allocate about 72% ownership to Renexxion shareholders and 28% to Relief shareholders, a ratio based on valuations of each biotech’s equity interests. Renexxion’s fully diluted equity value is $260 million, while Relief’s is $100 million, according to the release. The proposal includes a one-year reset in which the ownership ratio could be changed based on the combined entity's market value after closing.
The deal is designed to strengthen the combined biotech’s competitive position in the industry, according to the companies.
Relief has signed a nonbinding letter of intent with Renexxion, and both companies will continue negotiations until Dec. 31.
“After an extensive strategic review and careful consideration of multiple alternatives, Relief's board of directors has determined that this combination with Renexxion is the most promising path to deliver sustained value for our shareholders and accelerate our impact on critical healthcare needs worldwide," Raghuram Selvaraju, Ph.D., chair of Relief’s board of directors, said in the release.
Renexxion touts lead compound naronapride, a selective dual-action 5-HT4 agonist/D2 antagonist prokinetic designed to improve GI motility with minimal systemic absorption. The phase 2b asset is currently being tested as a treatment for gastroparesis, a chronic condition also known as delayed gastric emptying. Top-line results are expected in the first half of next year.