CBI-Invested Kineta Announces Merger with Nasdaq-Listed Company

[Asia Economy Reporter Jang Hyowon] CBI announced on the 7th that Kineta, a U.S. new drug development company it invested in, signed a reverse merger agreement with Nasdaq-listed company Umanity Therapeutics (hereinafter Umanity) on the 6th (local time). Kineta was valued at approximately $200 million (about 250 billion KRW), and Umanity's stock price surged 170% over two trading days following the announcement.

Umanity, based in Boston, is a pharmaceutical company specializing in treatments for neurodegenerative diseases. It develops new drugs targeting various neurodegenerative diseases using a drug platform technology owned by Dr. Susan Linquist of the White Institute at the Massachusetts Institute of Technology (MIT).

From its inception, Umanity attracted attention as it was co-founded by Tony Coles, CEO of Onyx Pharmaceuticals which sold the company to Amgen for $10 billion, Ken Rose who led neurodevelopment at Biogen, and Dr. Susan Linquist of the MIT White Institute. In June 2020, Umanity successfully licensed its pipeline for amyotrophic lateral sclerosis (ALS) and frontotemporal lobar degeneration (FTLD) treatments to global pharmaceutical company Merck for $500 million. In August of the same year, Umanity went public on Nasdaq through a merger with a company called Proteostasis Therapeutics (PTI).

However, in the second half of last year, Umanity's stock price fell by up to 95% after some additional clinical trials for Parkinson's treatment were put on clinical hold by the FDA. In April this year, the company announced a restructuring plan including laying off 60% of its employees and reviewing strategic alternatives to enhance shareholder value. CBI explained that among the strategic alternatives reviewed by the securities firm appointed by Umanity, it was selected as a candidate after overcoming a 40-to-1 competition ratio, and through further negotiations, the reverse merger was announced.

Along with the reverse merger, Umanity also announced the confirmation of technology transfers for its pipeline. Umanity signed a total technology transfer agreement with Janssen for Parkinson's treatment and three other programs for $26 million, in addition to the $500 million technology transfer and co-development of ALS and FTLD treatments with Merck, the $100 million technology transfer of cancer treatment Fair Therapeutics to Genentech and Roche, and the $1 billion technology transfer of cystic fibrosis (CF) treatment. Although some clinical trials are currently on hold, this indicates a high evaluation of the drug development potential.

CBI CEO Oh Kyungwon said, "It is rare in Korea for a general investment company or pharmaceutical company to strategically invest in an overseas bio company and have it listed on Nasdaq within just over a year." He added, "We are even more pleased to merge after being recognized for Kineta's excellence by the management of Umanity, a renowned neurodegenerative disease new drug developer."

Sean Patrick Idinato, CEO of Kineta, said, "The approximately 170% rise in Umanity's stock price within two days of the announcement seems to reflect market recognition of Kineta's value." He added, "We expect additional milestone inflows within a year from the pipelines currently under co-development after technology transfer." He further expressed his ambition, saying, "We will lead immune-oncology drugs, neurodegenerative disease treatments, non-opioid therapies, and even Lassa fever treatments well to become an excellent biotech company."

Meanwhile, Lassa fever is classified as an emergency infectious disease by the World Health Organization (WHO). Kineta is the only company to have successfully completed Phase 1 clinical trials for a Lassa fever treatment and is preparing for Phase 2/3 trials. The company emphasized that all development funds are supported by the Wellcome Trust and the U.S. Food and Drug Administration (FDA) National Institute of Allergy and Infectious Diseases (NIAID), raising high expectations for the development of excellent antiviral treatments.