Combine Harvesting: The Advantages of a Reverse Merger
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The following article is an opinion piece written by Francois Rieger. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Technology Networks.
In 2022, mergers became a more common theme across the biopharma sector. This provided the opportunity for companies to grow quickly, potentially access new and public investment markets, and decrease development risks. For a long time, and until recently, biopharma companies had limited opportunities for the therapy they had put so much effort into creating and fostering to reach patients or late-stage development. These options were either through an IPO or a big pharma acquisition. The former was very risky, and the latter resulted in a parade of companies for big pharma to cherry-pick. Over the last couple of years, different options have presented themselves, with special purpose acquisition company (SPAC) acquisitions and reverse mergers being the most recently fashionable.
The reverse merger is far more beneficial than the SPAC option, bringing together two technologies and teams that can share and cross-pollinate rather than just buying an empty shell. BioSenic was created with the merger of Medsenic and Bone Therapeutics. This is a less common merger of two companies with neighboring but different technologies and platforms than merging companies operating in the same field. However, whilst combining these platforms will result in a few short-term operational challenges, this will carry far more substantial medium and long-term benefits.
We chose to bring together the autoimmune and cell therapy platforms within the newly created BioSenic for two distinct and complementary therapeutic considerations. The first is to devise the therapeutic means of controlling the complex elements of an activated immune system and prevent it from becoming awry. The second consideration is to find ways to repair the tissues and organs destroyed by the degradative activity of the immune system. Both the autoimmune and cell therapy platforms will play major parts in these objectives.
From a commercial perspective, merging the two companies decreases the economic risk of clinical or developmental delays or even failures in the development of one key product. Many biopharma companies create multiple products from a single platform. This increases the potential of a clinical failure of products from the same platform if one has failed already. Owning two platforms can be used to create joint and complimentary therapeutic portfolios that can also be used as combination therapies. The ultimate success would be to investigate and demonstrate that the two platforms are complementary in their biological action, being either synergic in their protective then repairing abilities. This would prove entirely commercially useful as well as therapeutically rare to develop combination therapies under one roof.
By merging the technologies from the two platforms, BioSenic expects to use mesenchymal stem cells (MSCs) from healthy donors’ bone marrow as carriers of differentiating elements, including molecules such as growth factors or chemokines, to increase the potential of various targeted tissues for repair. This will enable BioSenic to use the distinguished property of MSCs’ immune privilege of low antigenic recognition by host tissues.
Merging the companies, however, does not just mean merging the platforms, technologies and therapeutic targets under one new banner. Most important are the teams that have built the technologies and are driving these therapies through the clinic. BioSenic now comprises teams working on both the autoimmune and cell therapy platforms that are involved in high-quality type 2 (observational) and 3 (confirmatory) clinical trials. The teams have learned the regulatory and technical rules of conducting rigorous and meaningful clinical trials in scattered clinical centers both in Europe and the United States. As a result, bringing these together to share their expertise will result in a single, stronger and more advantageous team with a variety of scientific experiences and backgrounds that can be focused toward the goal of delivering therapies for patients.
Whilst merging the companies and teams, the final major consideration is securing the backing of investors. It is clear that there are no universal methods to get the interest and support of investors for merged companies, other than working to develop their understanding and enthusiasm for the goals of the resulting company. These goals for BioSenic are to quickly bring a clear benefit to patients in the targeted therapeutic fields of the merged company. This is a central objective since BioSenic is targeting diseases that are generally unmet medical needs, often also characterized as chronic and debilitating. Investors appreciate a strategy of using innovative techniques to control the course of such diseases, and one critical aim of the overall efforts of the company is to propose medications that can clearly delay or improve symptoms, and as an ultimate objective, provide a cure for a serious disease.
Targeting these diseases brings a responsibility – to deliver therapies for patients suffering from a range of conditions. This is the same right across the drug development field. The reverse merger increases the platforms, the therapies, the targeted indications, the experience of the teams and the potential for investors.
About the author:
Francois Rieger is CEO of BioSenic, formed between the merger of Medsenic and Bone Therapeutics. As co-founder of Medsenic, he opened a promising avenue for the use of multiple active arsenic formulations for the treatment of chronic autoimmune diseases.
Previously, in 2007, François created in Geneva a bi-national scientific interest group on the broader theme of aging and longevity, with the participation of several French-Swiss scientific leaders, to address both the molecular and societal aspects of this largely unexplored field. François is Director of Research at CNRS and author or co-author of more than 175 international publications.