Chardan's blank check company picks microbiome player BiomX for $70M reverse merger
An unorthodox reverse merger has catapulted Israeli biotech BiomX onto the American stock market and infused as much as $70 million into the startup.
The investment bankers at Chardan set up the blank check company Chardan Healthcare Acquisition Corp and listed it on the NYSE in wait of a biotech player that could benefit from a public listing and their cash resources. When investors bought into the IPO $CHAC last December, they were betting on little more than the vision and reputation of the managing partners.
CHAC finally went with BiomX, whose precision bacteria-killing platform puts a twist on the burgeoning wave of microbiome therapeutics and the age-old use of antibiotics. Instead of adding so-called good bacteria to the gut or killing harmful bacteria indiscriminately, it utilizes a technology out of the Weizman Institute and concocts phage cocktails to take out specific bacteria found to cause diseases like irritable bowel syndrome, acne and even colorectal cancer.
It’s an approach that’s enticed J&J for a partnership to develop gut microbiome biomarkers that could flag responders for one of the pharma giant’s IBD drugs, as well as consumer cosmetics.
“We see growing investment momentum and interest in phage as a potentially disruptive and safe precision tool for the eradication of specific harmful strains of bacteria,” said Gbola Amusa, head of healthcare research at Chardan and executive chairman of CHAC. “In addition, BiomX is targeting substantial commercial markets,” with acne, IBD and colorectal cancer markets figuring at $4 billion, $17.7 billion and $8.4 billion in 2018, respectively.
Operating under the BiomX name and the same leadership with CEO Jonathan Solomon at the top, the combined entity has secured at least $50 million in commitments from the biotech’s investors, including J&J, OrbiMed, Takeda Ventures, Seventure Partners and SBI Japan-Israel Innovation Fund. All told, BiomX shareholders will own 73% of the company. New backers also came on board, including RTW Investments.
Add that to the $56 million it’s raised in two venture rounds, and BiomX is armed with enough cash to begin testing its acne treatment in humans by the end of this year.
Another Phase I trial for Crohn’s disease and colitis is slated for 2020, while a primary sclerosing cholangitis program will enter the clinic in 2021.
They will also spend on preclinical research and manufacturing capabilities, CEO Jonathan Solomon added.